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4 Ways to Save More Money

4 min read

30 sec brief

For many of us, saving money requires a bit of grit. It often isn’t easy to commit to saving for a future goal when the dollar you save could have been spent today. We’re not typically hardwired to appreciate delayed gratification. These four strategies can help you save more. Make it automatic. Grab every chance…

For many of us, saving money requires a bit of grit. It often isn’t easy to commit to saving for a future goal when the dollar you save could have been spent today. We’re not typically hardwired to appreciate delayed gratification.

These four strategies can help you save more.

Make it automatic.

Grab every chance to have some of your income automatically saved for you. That can be through the retirement plan at work that automatically deposits a portion of every paycheck into your retirement account. Or you can set up the same system between your bank account and an IRA or regular account at a discount brokerage.

Bake more savings into your game plan.

Many 401(k)s now offer to automatically increase the percent of your salary you are contributing to your account, typically at a pace of 1 percentage point a year. Check if your plan offers this “auto-escalation.”  If not, you can do this yourself. Write a commitment letter to yourself that once a year –on your birthday or the anniversary of when you started this job – you will increase your savings rate. Studies show that people who write down a goal often have better success at sticking to it.

Another writing exercise should be what you promise you will save from every future raise. A raise is a perfect time to save more because you have yet to spend any of your extra income. You can’t tell yourself you can’t afford to save more. That’s new money that has yet to become part of your spending! Decide on a percentage you will save. Aim for at least 50 percent. For example, if you land a promotion and an 8 percent raise, vow to increase your savings by 4 percentage points. Maybe you increase your 401(k) contribution rate or save more in your emergency fund.

Force yourself to hit pause.

For many of us, our closets, basements and garages are stuffed with items we never really used much, if at all.  Every time you are about to spend something on a non-essential, make it a habit to slow down and ask yourself if you really need it. That can be a 5-second rule if you’re at a store. Before you hit the checkout line, check what you’ve got in your basket and ask yourself if you really, really need it.

Or, when shopping online, consider leaving items in your shopping basket for 24-hours. When you return, see if you’re still as eager to purchase the item.

And shake loose of the “it’s just” crutch. Spending “just” $20 a week on purchases you don’t really need may seem like small potatoes. But that’s $1,040 a year. Just think for a few seconds what investing goal you could use that money for. Or how great it would be to put it toward paying down a loan.

Use a Debit Card.

Unpaid credit card balances hit $870 billion at the end of the fourth quarter of 2018. That matches the previous all-time high heading into the financial crisis. Credit cards are one of the most expensive ways to spend; fail to pay the balance in full every month and you get tied up paying way too much in interest. The current average interest rate is nearly 17 percent.

To stop yourself from charging more than you can pay off each month, switch to making a bank debit card your primary payment method. And make sure your debit card doesn’t have overdraft coverage. Your goal is to have payments denied if your checking account doesn’t have enough to cover the purchase. That’s how you spend responsibly. And don’t groan about the rewards points on credit cards. Spend a minute doing the math and you will see that the value of the points is likely a lot less than what you owe in interest on unpaid balances.


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Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

About the author

Carla Fried

Carla translates business and personal finance concepts into engaging content that helps individuals make more confident choices in how they manage their money. Her work appears in The New York Times, Money Magazine, Barron's and Consumer Reports.

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