Saving money can be a bit of a chore — it takes discipline. You need to resist the temptation to spend, make a plan and stick with it. But if you’re unsure where to begin, we have some ideas to help you start saving fast.
1. Make a budget
If you don’t have a budget, take this as a sign to make one. Budgeting is vital if you want to save money. If you don’t know how much you spend each month, how can you know whether you can save $1,000 a month?
There are a million ways to budget, but some common budget methods include:
- 50/30/20. This classic and simple budgeting rule stipulates you spend 50% on expenses, 30% on wants and 20% on savings. You can adjust these amounts as needed, such as reducing the wants category to allocate more to savings or expenses.
- Envelope budgeting. This method involves labeling envelopes with all your expenses and placing money in each envelope with that expense’s monthly allowance. You can use physical cash with real envelopes or a budgeting app with virtual envelopes. This practice keeps your money separated and organized, and like any budget, you can adjust as needed.
- Zero-dollar budgeting. This budgeting tactic ensures that every dollar has a designated role, whether covering expenses, paying off debt, buying groceries or adding to savings. With the zero-dollar method, you shouldn’t have any “leftover” cash at the end of each month, as every dollar you earn has a specific purpose.
2. Have enough income? Make a simple plan
If you make enough to hit a $1,000 monthly saving goal but struggle to follow through, you likely just need a plan — an achievable one you can act on.
To save $1,000 a month, you can organize savings contributions in several ways:
- Save $33.50 each day
- Save $66 every other day
- Save $250 every week
- Save $500 biweekly
3. Stop relying on willpower and automate savings
One of the simplest ways to automate your savings is by splitting how your direct deposit is sent.
For example, you can allocate 80% of your paycheck to your checking and 20% to a savings account. Another option is to set up automatic transfers from your checking account to your savings on specific dates each month.
You can also implement automatic savings tools, such as savings round-ups, which round up debit card transactions to the nearest dollar and deposit the difference into your savings. Some accounts with these features include SoFi Checking and Savings, Current account and Bank of America’s Keep the Change program.
Another neat auto-savings tool example is Ally Bank’s Surprise Savings feature, which analyzes your spending to identify areas where you could save more and automatically transfers money into your savings account.
4. Pay yourself first
If you don’t like the idea of automatic savings, consider the tactic “pay yourself first.”
This method simply means contributing to your savings as soon as your paycheck or income clears. After saving and paying your expenses, you’ll see how much money you actually have left to spend on yourself, whether for dining out, entertainment or shopping.
5. Find a high-yield account
If you want to store cash safely, have it grow and combat inflation, a high-yield savings account is one of the better options.
A high-yield savings account is just a regular savings account with a high interest rate. High-yield savings can offer APYs around 4% to 5%. For context, the average rate on a savings account is just 0.45%. (1)
In addition to earning interest, these savings accounts are also FDIC- or NCUA-insured — a benefit you won’t get by storing cash under your mattress.
Savings APY | Balance | Interest earnings after 1 month | Interest earnings after 6 months | Interest earnings after 1 year |
---|---|---|---|---|
5.00% | $1,000 | $4.07 | $24.70 | $50 |
0.45% | $1,000 | $0.37 | $2.25 | $4.50 |
6. Take on a savings challenge
There are some great savings challenges to gamify your savings and stay motivated.
A great example is the 100 Envelope Savings challenge. This challenge involves getting 100 envelopes and numbering them one through 100. Then, for 100 days straight, you add an amount to the envelope that corresponds with its number. At the end of the challenge, you’ll have saved $5,050. Some savers go in order, while others bounce around — either way, the result is the same.
You can modify the 100-envelope challenge as you see fit. For example, you can turn it into a one-month, 30-envelope challenge, which nets $465 in savings.
There’s also a 52-week savings challenge, where you save an increasing amount every week. It starts with $1 for the first week, $2 for the next and so on. At the end of the 52 weeks, you should have saved $1,378. The 52-week challenge won’t yield $1,000 per month, but it can be a good place to start if you want to build discipline.
7. Look for savings on monthly expenses
It’s easier said than done, but you’ll probably need to reduce your unnecessary spending to save $1,000 per month. A great way to cut spending is by identifying expenses that can be reduced or eliminated.
Some places to look for savings include:
- Compare and switch car insurance policies
- Visit your local library for entertainment like games, movies and books
- Review your subscription services to cancel unused ones or find bundle deals
- Pay down credit card balances each month to avoid APR
- Wash clothes in cold water to save on utility bills
- Unplug unused electronics to save on electricity bills
8. Switch to a free bank account
If keeping your bank account open costs $5 to $20 per month, that’s $60 to $240 per year just to do your everyday banking.
There are plenty of free bank accounts to consider, including checking and savings accounts. Additional banking fees you can avoid include:
- Monthly maintenance fees
- Fees for falling below balance thresholds
- Inactivity fees
- Overdraft fees
- Monthly statement fees
Compare top savings accounts
Narrow down top savings accounts by monthly fees, APYs and features. For a closer comparison, tick the Compare box on multiple options to see the benefits side by side.
Bottom line
Reducing monthly expenses, opting for a high-yield account or challenging yourself with a savings game could make the journey easier. Just be sure you’re not stretching yourself too thin — a sign you’re saving too much is if you need to dip into your savings to pay your bills.
Saving $1,000 per month is a challenging goal, and you’ll need enough wiggle room in your monthly budget to make that happen. Everyone’s financial situation is different, so adjust accordingly.
See our savings account guides for more top accounts and options.
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