Money-saving strategies that work

How do we get motivated to save when spending is often more fun? I think we can all agree that spending brings more immediate joy than saving. It’s the age-old dilemma of enjoyment now vs. enjoyment later. Unfortunately, enjoying the present too much can lead to future struggles.

So how do we overcome our urge to consume so that we can build our savings? Read on for six money-saving strategies designed to lead you to financial freedom.

1. Budgeting basics
2. Cutting everyday costs
3. Building your savings
4. Save in spite of debt
5. Boost your income
6. Negotiate for better deals

1. Budgeting basics

If you don’t like the word “budget,” you’re not alone. One of the best tips on saving money is to think of it as a spending plan, which can feel more freeing. A plan for how to spend my money is much more pleasant than a constricting budget. However, they both accomplish the same thing — they help you plan how you spend your money so that you spend less than you earn.

Track your spending habits

As you develop your spending plan, start by tracking your spending. This is your starting point. Where is your money going? Look at your checking and credit card statements from the past few months and make a list of what you are spending your money on. You might be surprised just how quickly some purchases add up.

Create a realistic spending plan

Once you know how you’re spending your money, create a plan that focuses on what you want and need to spend your money on, and what you need to save for the future. Why is saving money important to you? What are your goals? How can you adjust your spending habits to help you meet them?
USAA believes in starting with a 20/50/30 budget, which you can learn more about in this article. Then you can start building or adjusting your budget by visiting USAA’s how to budget page.

Prioritize your needs and wants

Recognizing needs vs. wants is going to be a critical part of your spending plan — and a constant source of struggle. Many people, me included, can confuse needs and wants. You may feel that you need that brand new $1,000 cellphone, but if yours is working just fine or a cheaper one will fit your needs, that pricey upgrade could be a want and not a need. Spending less on that purchase could free up funds to put towards your saving goals.

2. Cutting everyday costs

One way to stay on the path to financial freedom and save is to cut everyday costs. Look at how much you are spending on restaurants, coffee, or entertainment. Can you do it cheaper or not at all? Here are a few ways you can cut expenses.

Save on groceries

There are several ways to save on groceries. One way is to plan your meals ahead of time and come up with a grocery list. That can help you avoid the temptation to grab items you don’t need, which helps limit how much you spend each trip.

Another way is to buy the store or local brand instead of the name brand. In my experience, it’s usually a little bit cheaper, you can often find more coupons, and it tastes the same (if not better).

Reduce energy bills

One way to save money is by reducing energy bills. I live in South Texas, where the summers are extra hot. To stay cool, we keep the thermostat on 75 degrees. If we bumped it down to 70 degrees, our utility bill would soar, reducing how much I have available to save. It’s a tradeoff, but one I’m willing to make.

Find entertainment on a budget

Spending less on entertainment is one way to find money to save. If you are planning a $5,000 family vacation to Europe, consider staying local instead and only spending $1,000. It might not be as exciting, but that one decision would free up $4,000 this year alone to put towards your savings goals. Sacrifice a bit in the present so you can save money for the future.

Whether you’re going on vacation or doing a staycation, look for a cheaper way to do it. Why pay more for the same thing? Look for local discounts and take advantage of weekday specials. If you are a member of the military, check with your local Information, Tickets, and Travel office as it often has some great deals. USAA Perks® also brings together top retailers and name brands to help you save on your everyday spending and travel.

3. Building your savings

Set smart savings goals

Now that you’ve set money aside for your savings, the next step is to imagine what you’re saving for. Having a goal is critical staying motivated to save over the long term.

Once you’ve identified your goals, find a way to keep money you are settings aside for that goal separated from other funds. This can be done through a bucketing or envelope method where you can separate funds within one savings account. Or, you can open different savings accounts. Name each bucket or account to identify its purpose — for example, “2026 Europe Trip” or “New Car” or “Roof Repairs.” That helps you remember what the funds are for and discourage you from using that money for anything else. That’s very important for your emergency fund.

Keeping your money all in one account makes it easier to spend what you’ve saved for one goal on another. For example, you might accidentally spend some of your emergency fund on vacation. But if you separate the funds to each goal, you're less likely to steal from yourself.

Automate your savings

Once you've established individual savings accounts or buckets for unique goals, set up automatic transfers as soon as your paycheck is deposited in your account so that you pay yourself first. If you wait until the end of the month to save, you might find that you have nothing left to save with. Save first and make it automatic.

4. Save in spite of debt

The setup was the hard part. You had to create a budget, decide how much to save, open the accounts and set up the automatic transfers. Now that you've laid the foundation for saving, don't let debt stand in the way.

We all have debt, and if we wait until we’re completely debt free to start saving, we miss out on valuable time. Learn more about deciding between saving or paying off debt.

In the beginning, more of your income might go toward paying off debt, and less might go toward your savings goals. But at least you’re saving something, and developing good savings habits. Learn more about paying down debt by visiting USAA’s how to pay off debt page.

5. Boost your income

Even if you manage your expenses down to the penny and always spend less than you earn, your income might not be enough to achieve your savings goals. In some cases, you might need extra income.

What are some ways you can boost your income?

• Can a non-income earning spouse get a job? Even a part-time one can help.
• Do you have a skill that you can turn into a side hustle? I know many parents looking for a good math tutor, for example.
• Do you get a tax refund each year? If so, decreasing your tax withholding can put more money into your paycheck each month.

These are just a few ideas, and there are many more. But remember this: If you use your extra income to boost your lifestyle instead of your savings, you’ll just be working harder and still be in the same place financially.

6. Negotiate for better deals

When it comes to goods and services, you may sometimes be able to negotiate to get a better deal. Of course, sometimes you can’t. But while you really can’t go into your local grocery store and haggle over the price of milk, you can use coupons when they’re available.

Making smart decisions can lead to better deals. If you need to make home improvements and choose to do them during the offseason, you can often score a discount. We had some landscaping done and since we did it in the winter, we scored a pretty good discount as opposed to if we hired the crew to work during the spring and summer, their busy seasons.

If you are a military member, don’t be afraid to ask for a military discount. Even if you aren’t a military member, sometimes even just asking if they can lower the price will score you a small discount.

If you’re buying a car in the near future, negotiating will be part of the process. If you are a bit rusty or it’s your first time, consider reading this article that helps you get the best deal on your car.

These six savings strategies are the first steps to securing your financial freedom. Even if you can’t implement all six of them, even focusing on just a few of them can help. These strategies, along with some discipline, can help you manage your present to secure your future.