Small steps can make a big difference over time.

A well-stocked savings account is the cornerstone of a healthy financial life.

After all, a robust emergency fund allows you to weather financial setbacks, health emergencies and income disruptions. A well-stocked retirement fund permits you to quit work sooner or pursue your job-related passions without needing to worry about money. A fat 529 college savings account gives you and your children access to a college degree.

In essence, saving gives you freedom, including the freedom to take risks, enjoy life and provide your children with a better future. Interested in getting your savings on track? Here's U.S. News' best advice for saving money.

Understand your expenses.

Before you can reduce spending and make room to fund your savings account, you have to know what your expenses are. A key part of boosting your savings is understanding cash flow and slashing spending in big and small ways.

Review your last month's credit card or bank statement to get a sense of where your money went. Alternatively, you can use an expense-tracking app to see cash flow in real time. Make an assessment. Are you spending too much on dining out? Clothing? An unused gym membership? Cut those expenses and redirect that money toward your savings account.


Build a budget.

Building a budget and sticking to it is another tenet of savvy saving. Having a budget requires tracking where your money is going, with certain buckets dedicated toward long- and short-term savings goals.

Remember: Don't design your budget in a way that's too restrictive or punitive. Creating an impossible-to-follow spending plan makes it more likely you'll fail and abandon it altogether. As you gain comfort with this new way of managing your money, you are allowed to adjust spending limits and rework your spending categories.

Consider the 50/30/20 method.

The 50/30/20 budgeting rule suggests dividing spending into three categories: 50% to needs, 30% to discretionary spending and 20% to savings and debt payoff.

This rule of thumb can give you a pathway to budgeting that still allows room for discretionary spending. Setting aside a healthy 20% for savings and debt payoff can help you build important savings accounts such as an emergency fund and retirement account. When building a budget, consider using this cash flow breakdown.

Reduce discretionary spending.

Slashing fun expenses doesn't sound like a good time, but think of the buzz you'll get when your emergency fund is fully stocked.

Cutting discretionary spending is an essential way to making room in your budget for savings. As you review your last month's spending, identify the expenses you could've skipped. This doesn't mean beating yourself up about every latte purchase or new pair of jeans. But identifying consistent spending in categories where you could scale back will help make room in your budget for savings. Common culprits include dining out, online shopping and regular subscriptions you're not using, such as a forgotten video-streaming service.

Write down your goals.

Saving money will be easier if you have motivation. Grab a few sticky notes or tack a piece of paper to your bulletin board with the financial goals you're hoping to reach by saving. Maybe you want to retire early. Perhaps Junior has his sights set on an elite local college, and you want to avoid taking on debt. Maybe you have an exotic vacation or a home upgrade you're working toward.

The best way to maintain motivation and steady progress toward your savings goal is to remember why you're saving in the first place.


Select the right savings vehicle.

Just as important as saving money automatically and regularly is choosing the right savings account for your goals. Retirement money should go in a different account than emergency fund money or college savings. So how do you know which to choose? Keep in mind that money you'd want to access immediately should be fairly liquid, probably not in a risky investment vehicle. Plus, some kinds of savings goals – retirement, health care expenses, child care needs – have special, tax-friendly savings accounts designated for them, so know which is which.

Nix fees.

A fee here and a fee there will start to chip away at your budget. Review your bank statement for bank fees, pore over your credit card statement for card fees and stop paying late fees by automating your bill payments.

These fees don't pay for shelter, food or clothing. They don't take you on vacation or treat you to a nice dinner. They're a waste of money, so do what you can to stop paying them. Redirect that money, even if it was just a few dollars, into your savings account. Now, instead of getting tripped up by sneaky fees, you're making good financial decisions.

Cut the cost of commuting.

Many workers aren't heading into the office during the coronavirus pandemic, but if you are, consider ways to cut the cost of commuting. This doesn't have to mean ditching your car, although that can certainly help. Instead it requires reviewing the changes you can make, even one day per week, to reduce commuting expenses and make extra room in your budget for savings.

Consider public transit, biking, walking or carpooling. Maintain your car, so it's working efficiently and doesn't break down in the middle of a commute. Shop around for cheaper car insurance, and consider making your next vehicle a used one.

Automate your finances.

Putting your money on autopilot can help boost your savings in several ways.

First, paying bills and other regular expenses automatically means you won't miss a payment and have to pay a late fee. That's a win for your budget. Second, automatically earmarking some money for savings will make sure that the cash never hits your checking account and tempts you to spend. The good news is that automation is common these days. Your bank, employer, credit card and other financial products will likely have a feature allowing you to automate bill payments, deposits into a savings account and money transfers each month.


Pay yourself first.

Paying yourself first means that the first thing you do after collecting a paycheck is funnel some of that money into savings, then figure out how to live on the rest. This strategy ensures that the money you want to save goes straight into a savings account instead of your wallet.

To enact this strategy, you could have money auto-deducted from your paycheck and redirected to a workplace retirement plan. It could involve having your paycheck direct-deposited into two different accounts, one for saving and one for spending. It might even mean taking most or all of any annual bonus and putting it in a savings account instead of spending it.

Pack a lunch.

If you're working outside the home, reduce spending by packing a lunch each day.

Dining out typically costs more than eating a home-prepared meal. Plan ahead on your grocery trips and stock up on cheap lunch ingredients such as bread and veggies. Better yet, if you have access to a microwave, bring dinnertime leftovers to cut down on food waste and stretch your food budget. Reducing this expense will make it easier to find money to put aside into savings.

Review your subscriptions.

Just like automation can work for you when it comes to saving, it can work against you when it comes to spending. Regular discretionary spending is especially pernicious because you don't notice it. You may not perceive the money automatically paid to subscription services such as Netflix, your gym or Amazon Prime.

Review your credit card and bank statements to identify any unused subscriptions. Now, if you truly get value from these services, don't feel obligated to cancel them. But if you're mindlessly paying for something you don't use, it's time to cancel your membership and redirect that money to savings.


Download a savings app.

Technology is your friend when it comes to boosting your savings, assuming you use it wisely.

There are tons of apps that help you save money, including Raise, Dosh and Sezzle, on the market from which you can choose. Find one that works for your style of spending and saving and use it to set goals, track cash flow and make your savings goals attainable. Take note if there are any fees associated with using the app and make sure to use strong password and security measures.

Use your workplace retirement plan.

If your employer offers a retirement plan, such as a 401(k), take advantage. These retirement accounts often come with tax benefits, which make them even more valuable than a savings account. Plus, if your employer offers a retirement contribution match on a set percentage of your paycheck, it's wise to get it. Not using that match is leaving free money on the table.

Keep in mind with many tax-advantaged accounts, you won't be able to take out your money before a certain age without potentially paying interest, penalties or fees. So they are not a replacement for a more readily accessible emergency fund.

Deposit a portion of your paycheck into savings.

If your employer gives you the option to use direct deposit to place your money in more than one account, take it. Choose to deposit, say, 85% of each paycheck into your checking account and 15% into your savings, or whatever ratio you're comfortable with.

This method of paying yourself first means that you won't even miss the percentage routed directly to your savings account. But when you need to access it one day, it'll be stocked and ready to use. A word to the wise: Link your savings to your checking account, so if you do overdraw your checking, you won't be charged a fee. Instead your savings will fill in the gap.

Use credit card rewards.

If you can handle your credit card and pay it off each month, using a rewards credit card is valuable. Whether you choose a cash-back card, a travel card or some other kind of reward, utilize the points or dollars reimbursed to you to stretch your budget and direct more toward savings.

Remember, a credit card is not a good budgeting tool if you can't pay it off each month. So make sure this is doable without carrying a balance.

Save change.

It's old-fashioned, but it works. Save any change, single bills and small amounts in a jar or a piggy bank. You won't earn thousands of dollars or any interest this way, but you may find you've got $50 or $100 saved up after a few months or a year. Deposit that money in your savings or investment account where it'll earn more interest than it would underneath the couch cushions.


Try round-up programs.

A round-up program is like saving your coins in the piggy bank, but with technology. These programs round up your purchases to the next dollar and deposit the remainder in a savings or investment account. So if you spend $45.25 on a new shirt, the program will round your purchase up to $46 and deposit the 75 cents in your savings account.

Some apps, such as Acorns and Chime, do this automatically. Banks may also include this program as part of their account offerings.

Attempt a no-spending challenge.

no-spending challenge takes place when you spend a day, week or longer slashing your discretionary spending. You won't go out to eat, see a movie or buy a pair of sneakers. Instead, you'll eat the food you have at home and find no-cost ways to entertain yourself.

This challenge may be completed more successfully if you enlist a friend or family member to do it with you. At the end, tally the money you've saved and squirrel it away in your bank account. If you can make these challenges a regular part of your month or year, you'll be able to save more.

Get a side hustle.

One way to save more is to make more money. If you're having trouble saving on a shoestring budget, consider ways to boost your earnings. Side hustles include driving for a ride-hailing service, taking on a seasonal job or working for an errand-running app. You may choose to work from home as a remote assistant or sell your crafts or artwork online.

Be aware that your side hustle may have an impact on your tax situation, so keep good records and receipts.


Decrease your withholding.

If you get a large tax refund each year, consider decreasing your tax withholding. Here's why: When you pay too much in taxes throughout the year, it's like giving Uncle Sam an interest-free loan. Sure, it might be nice to get that fat tax refund during tax season, but that money would work better for you earning interest in a savings or smart investment account.

If you're routinely getting big tax refunds, consider adjusting the withholding on your W-4 to accommodate any changes in your financial situation. You'll keep more money in your pocket throughout the year. Just make sure to save it, not spend it.

Save your annual raise.

You're used to living on your current salary, so when you receive a year-end raise, don't spend it, save it. Take that amount – say it's 3% – and earmark it for your savings account instead of a lifestyle increase. You won't have to scale back on your current spending habits, and your savings will be boosted automatically.

Depending on your goals, you can designate that raise for your retirement account, emergency fund, college savings account or another savings goal.

Don't pay for convenience.

Sure, time is money. But if you're trying to squirrel away any spare dollar, now's the time to prioritize cost over convenience. When possible, save your money and do the work yourself. That means cooking meals at home, not buying the sliced fruit and veggies at the grocery store and walking instead of taking a taxi.

Note when you make a decision to take the cost-saving approach, and reroute what you saved into your preferred savings account.

Adjust your thermostat.

It's important to keep your home at a comfortable temperature, but even adjusting your thermostat by a few degrees or programming it to cut back when you're out of the house can make a difference in spending. The average U.S. energy bill costs $117.65 per month, with heating and cooling accounting for 43% of this cost, according to the Energy Information Administration. Cutting back can save you more than $100 per year.

Say 'no' to takeout.

Saving more means spending less, so aim to spend less on restaurant food and takeout meals. Cooking at home is healthier and will give you more room in your budget to save.

There are dozens of easy one-pot and slow cooker meals that you can make with limited cost and low effort at home. Freeze leftovers for easy, quick weeknight meals to use instead of dialing up your favorite pizza place. Takeout meals aren't forbidden, just make them more of a special occasion than a weekday habit.


Plan your grocery trip to reduce food waste.

While cooking at home is more economical, throwing unused food away is bad news for your budget and future savings.

Plan your weekly meals to reduce food waste and save money. Focus on dishes that make good leftovers and buy nonperishable items such as dried beans and rice. Take stock of your pantry before you head to the grocery store to make sure you don't buy duplicates. If you can, make a solid grocery list to avoid impulsively purchasing unneeded ingredients.

Cut back on child care expenses.

Child care expenses can cost families around $9,000 to $10,000 per year, depending on the type of child care service and location.

Finding a substantial way to reduce that cost can free up hundreds or thousands of dollars to save instead. Consider a day care instead of a nanny or a nanny-share agreement with friends or family. Don't forget to take advantage of employee benefits, such as a dependent care FSA, to reduce costs. Look into child care subsidy programs and tap your personal network, if you have one, to reduce the price of child care.

Shop sales.

Good budgeters and strong savers know to never buy anything at full price. If you time your shopping carefully and use online tools and apps, you'll never pay retail again.

Shop for big purchases on shopping holidays such as Black Friday. Certain tools such as the Honey browser extension help consumers find coupon codes. Other shopping apps can help you price compare, research historical prices and find digital coupons.


Stock up on cheap and filling food staples.

Certain foods are cheap, keep well and fill you up. When money is tight, consider buying beans, oats, frozen vegetables and other staples. These ingredients can be fashioned into numerous recipes with the right spices and cooking tools. Keeping your grocery budget low will help you spend less and put more money toward savings.

Unsubscribe from shopping emails.

Those marketing emails from your favorite stores may come with major temptation. If you can't view an email from Macy's or Athleta without shopping the site, click "unsubscribe." This will help you spend less and save more.

If you want to keep those emails to find the best sales and promotional codes, that's fine. Make a separate shopping email account to which you route those messages. That way, you only peruse coupon codes and sales alerts when you are intentional about shopping, not when you're bored.

Go vegetarian.

Meat is expensive. Stretch your budget and increase your savings by nixing it from your diet altogether. Yes, it's a major lifestyle change, but it can help provide a major influx of money into your savings account. Low-cost foods such as beans, grains and frozen veggies can help keep you full without busting your budget. If you're not prepared to go full-on vegetarian, try saving meat for special occasions or weekends.

Ask your teens to pitch in.

If your kids are old enough to work, ask them to pitch in on certain expenses and start their own savings accounts. They don't need to necessarily buy groceries or help pay down your mortgage, but if they can pay for their own entertainment or clothes, it frees up some of your budget to save more. If you're comfortable asking your teenager to get a part-time job, go for it. It'll teach him or her some important life lessons while help you boost your savings.


Renegotiate salary.

While this may be difficult in tough economic times, if you're comfortable with it, asking for a raise can be a fast way to increase your earnings and ramp up your savings.

You may want to negotiate salary with your current employer or, if you are interviewing for new jobs, negotiate wages with a new employer. As long as you ask politely and come with evidence about your monetary value as an employee, the worst thing you'll hear is "no."

Get to know your HSA.

If you have a high-deductible health plan, don't forget to consider a health savings account, called an HSA, for health care expenses. These accounts, offered in conjunction with a high-deductible insurance plan, have tax advantages and are geared toward health savings. If you use the money for something other than an approved health care expense, know you'll pay taxes and a penalty on the amount.

Slash your housing expenses.

If you're able to reduce your housing expenses, you can free up lots of money to put toward savings. Consider what you can do realistically. Perhaps you can move to a cheaper home or location. Maybe you can rent a room to a roommate or as part of a room-renting app. Perhaps it's even time to move to a cheaper city or country, especially if your employer is allowing you to work from home. Whatever you can do, reducing that monthly mortgage or rent payment will make a major impact on your savings abilities.

To recap, here are some of the ways to save more money:

  • Understand your expenses.
  • Build a budget.
  • Reduce discretionary spending.
  • Write down your goals.
  • Nix fees.
  • Cut the cost of commuting.
  • Ask your teens to pitch in.
  • Get to know your HSA.
  • Unsubscribe from shopping emails.
  • Renegotiate salary.

Susannah Snider is the senior editor for financial advisors at U.S. News and a certified financial planner. In her current role, Snider assigns, edits and manages content for U.S. News’ Financial Advisors section, which offers practice management insights for financial professionals and actionable advice for consumers who work with financial or investment advisors. Snider also writes the Advisor Weekly newsletter, an email bulletin for financial professionals that includes practice management advice, financial research and industry insights. Snider earned her CFP marks in 2019 and uses her expertise to help shape the Financial Advisors section at U.S. News.
Kerr's work has appeared in the Frederick News-Post, the Chronicle of Higher Education and the Daily Beast, among others. She graduated from the University of Michigan with a degree in English Language and Literature and Middle East Studies. She also served as the managing news editor of The Michigan Daily. Kerr has been featured in numerous television, radio and print interviews as a personal finance expert.

Read the original article on the U.S. News & World Report website.