How to budget and save money

Saving money is usually the first step everyone learns when managing their finances. But sometimes you may feel like there’s more you can do. Perhaps you need some help saving for a vacation or a down payment for your first home? Whatever your situation may be, budgeting can be a powerful tool to help you achieve your financial goals.

Learning how to manage your money may seem overwhelming at first, especially in a world with a multitude of complex and varying financial tactics — but the benefits can be invaluable when you find the right gameplan. With a simple budget, you can work to take control of your finances, review and prioritize your expenses, avoid overspending, and even set money aside for savings.

Explore below how you can get started with the basics of personal budgeting and saving, plus practical steps to keep you on track.

How to incorporate savings into your budget

Saving money can be difficult, especially if you’re on a tight budget. But with some creativity and determination, there are several ways you can help save money regardless of your income level.

Follow this quick guide for easy ways to help save money on a budget:

1. Calculate your monthly net income. Do you know how much money you bring in every month after taxes? With this number in hand, you can start to build a realistic budget that includes savings.
2. Consider the 50/30/20 rule. If you’re creating a budget for the first time, the 50/30/20 rule suggests allocating your money into three categories: needs, wants, and savings. You would allocate 50% for your needs, such as housing, food, utilities, and transportation. You would then allocate 30% for your wants, such as entertainment, dining out, and travel. Finally, you would allocate the remaining 20% for savings, such as an emergency fund, retirement savings, or paying off debt.
3. Set a goal. To help you stay motivated, set a money goal to work towards, such as saving your first $5,000.
4. Avoid unnecessary spending. If you’re on a tight budget with little wiggle room for savings, look for areas where you can reduce your spending. For example, you could cancel or share subscription services you don't use or reduce the number of times you eat out each week. The money you gain here can then be put into savings instead. Utilizing an expense tracker is a great way to find those places where you have unwanted spending.
5. Start small. If you can’t dedicate 20% to savings, don’t worry. Start with a small amount instead — such as $10 per week and gradually increase as you're able.
6. Automate your savings. Set up an automatic transfer from your checking account to your savings account each month. This will help you save money without even thinking about it. And utilizing a high-yield savings account, such as PayPal Savings, can help you save and earn interest at the same time, making your money go further without any extra work.

How to stick to your budget

Sticking to a budget can be just as tough as creating one in the first place — but can be essential for reaching your long-term goals.

If you find yourself struggling to stay on track, here are some tips to help you stick with your budget:

• Break down your monthly budget into weekly buckets. Keep a closer eye on your monthly budget by breaking it down into weekly expense lists, so you know exactly how much you can spend each day.
• Use a budgeting app. There are many budgeting apps available that can help you track your expenses, set goals, and monitor your progress. Find one that works for you and use it consistently.
• Find accountability. Share your budgeting goals with a trusted friend or family member who can hold you accountable and provide support when you need it.
• Reduce impulse spending. Avoid impulse purchases by making a list before you go shopping and sticking to it. Consider waiting 24 hours before making a big purchase to ensure it's a necessary expense.
• Reward yourself. Set small rewards for yourself when you hit budgeting milestones. For example, you could treat yourself to a favorite meal or activity when you reach a savings goal.
• Learn from mistakes. If you overspend or go off-budget, don't get discouraged. Instead, learn from your mistakes and make adjustments to your budget as needed.