How to Save Money
Save money with a 2-week spending log, a named target, an automatic transfer on payday, and cuts to spending you will not miss, starting with 1% of each paycheck.
You will end up with a record of where your money goes, a savings target with a date, and an automatic transfer that moves money on every payday. The method is to track first, automate a small amount second, and then cut the spending that matters least to you and send the difference to savings.
In the Federal Reserve's 2025 Survey of Household Economics and Decisionmaking, fielded in October 2025, 63% of adults said they would cover a surprise $400 expense entirely with cash, savings, or a credit card paid off at the next statement. Among the rest, the most common answer was to put it on a credit card and carry the balance, and 12% of all adults said they could not pay it at all. An emergency fund lets you pay a bill like that without new debt, so step 3 starts with one.
Track your spending for 2 weeks before changing anything
Before you cut anything, track every dollar you spend for 14 days. Use a notes app, a spreadsheet, or a pen and paper, and write down every purchase, including coffee, parking, subscriptions, and groceries. Do not change your habits during these 2 weeks, because the log has to show your normal spending. At the end, sort the purchases into groups: housing, food, transportation, entertainment, subscriptions, and miscellaneous. Add up each group. The totals are what you act on. A $5 coffee every day comes to $150 over a 30-day month, and three streaming services at $15 each come to $45 a month. Then go through your bank and credit card statements for the past 3 months and list every recurring charge, such as a gym membership you stopped using, an app subscription that renewed automatically, or a free trial you never canceled. Two weeks of tracking misses bills that arrive monthly or yearly, and the statements catch those.
Separate needs from wants
Go through your 2-week spending log and mark each expense as a need or a want. Needs are what you cannot go without: rent, groceries, utilities, transportation to work, insurance, and minimum debt payments. Wants are everything else. The aim is to know how much of your income goes to each, so that what you spend on wants is a choice. If you decide that $150 a month on dining out is worth it, keep it. Then look for the wants that give you nothing back, such as subscriptions you forgot about, purchases that sit unused, and convenience fees for things you could do yourself. A gym membership is a want, and so is a daily coffee shop visit. If you use the gym every week, or the coffee is the social part of your day, count it as a want you are keeping. Mark every other want as a candidate for step 5 or step 7.
Set a specific savings target with a purpose
Give the savings a target with an amount and a date. A target of $1,000 for an emergency fund by September can be measured, and a plan to save more money cannot. Start with an emergency fund if you do not have one. To size it, use the method in the Consumer Financial Protection Bureau (CFPB) guide to building an emergency fund, which says the amount depends on your situation and tells you to think about the unexpected expenses you have had in the past and what they cost. If you have no such figure, make $1,000 the first target. The common rule of thumb for a full fund is 3 to 6 months of essential expenses, and the CFPB itself sets no fixed number. After the emergency fund, save for named things, such as a vacation, a car down payment, or a move to a new city. If your bank lets you split a savings account into named buckets or goals, set up one for each target, so you can see each balance on its own.
Automate your savings on payday
Before you schedule anything, make sure your checking account will hold enough on payday to cover the transfer. The CFPB guide from step 3 calls automatic transfers one of the easiest ways to make saving consistent, and it warns that a transfer can cost you an overdraft fee if the money is not in the account when it runs. Then set up an automatic transfer from your checking account to your savings account for the day your paycheck arrives. If you get paid on the 1st and the 15th, schedule a transfer for each of those days. We recommend starting with 1% of each paycheck. If you take home $3,000 a month and get paid twice a month, each paycheck is $1,500 and 1% of it is $15. Over the 24 paychecks in a year, $15 comes to $360. Then raise the transfer by 1% of your paycheck every 2 to 3 months. At that pace you reach 5% in 8 to 12 months, and 5% of the same paycheck is $75, or $1,800 a year.
Good to know: Keep the savings in an account separate from your checking, at a different bank if you want more distance from it. The same guide says an emergency fund belongs somewhere safe, accessible, and where you are not tempted to spend it on non-emergencies. Check two things before you move the money. Confirm the account is federally insured (FAQ 3 below), and find out how long a transfer back to your checking account takes, so you know how fast you can reach the money in an emergency.
Cut the spending you will not miss
Start with the recurring charges you found in step 1, and cancel any subscription you have not used in the past 30 days. After subscriptions, go through the convenience spending in your log, such as delivery fees and premium gas in a car that takes regular. Cut the ones you marked in step 2 as giving you nothing back. For groceries, buy the store brand of one staple you buy every week and compare it yourself. If you cannot tell the difference, keep buying it and move on to the next one. Each time you cancel or cut something, add its monthly cost to the automatic transfer from step 4, so the money goes to savings and not back into spending.
Use the 24-hour rule for non-essential purchases
Before you buy anything non-essential above a set price, wait 24 hours. Pick the price yourself, and $30 is a workable starting line. Put the item on a list on your phone, and check the list the next day. If you still want it and it fits your budget, buy it. If you do not, delete it from the list. Then remove the prompts to buy. Unsubscribe from marketing emails and retailer newsletters, because messages like "Sale ends tonight" and "Only 3 left in stock" push you to buy now, whether or not the scarcity is real. Delete the shopping apps from your phone, or sign out of them, so that buying takes more than one tap.
Reduce recurring expenses without eliminating them
Step 5 dealt with spending you will not miss. This step is for spending you would miss, where the aim is to spend less on it and keep it. Set a lower monthly limit for each one. If you spend $200 a month dining out, set $120. If your phone plan costs $80, ask your carrier for a cheaper plan that still covers the data you use. If your gym costs $60 and you go twice a week, price a cheaper gym. Call your internet provider, insurance company, and cell phone carrier once a year and ask for a better rate. Tell them what a competitor charges, and ask what they can offer to keep you. For insurance, get quotes from at least three insurers for the same coverage when your policy renews, and ask each one what discount it gives for holding more than one policy with it. For groceries, plan your meals for the week before you shop and buy only what is on the list. The USDA estimates that 30% to 40% of the U.S. food supply is wasted, a figure built on its estimate that 31% was lost in stores and by consumers in 2010. Not all of that happens in your kitchen, but the part that does was paid for with your grocery money, and a list keeps you from buying food you will throw away.
If the transfer leaves your checking account short before the next payday, lower it to an amount the account can cover, and raise it again after your next cut from step 5 or step 7. If you keep dipping into the savings for things that are not emergencies, move it to an account at a different bank (step 4) and write down what counts as an emergency for you. If nothing is left over to save, go back to the log from step 1 and read FAQ 4 below. To set a limit for every category, our guide on how to make a budget builds a full monthly budget from your spending data. Once the emergency fund is full, our guide on how to invest in stocks covers money you will not need for at least 5 years.
Questions we get asked about this
Answers from experience, not a textbook.
Start with an amount you can keep up, even 1% of each paycheck, and raise it as in step 4. The common benchmark is the 50/30/20 split, popularized by Elizabeth Warren and Amelia Warren Tyagi in their 2005 book All Your Worth. It puts 50% of after-tax income toward needs, 30% toward wants, and 20% toward savings and extra debt payments together. Treat the 20% as a figure to measure against. Someone who saves $50 from every paycheck and is paid every 2 weeks has $1,300 at the end of a year, because there are 26 paychecks.
Do both, in this order. Keep making at least the minimum payment on every debt throughout, because a missed payment brings late fees and can damage your credit score. First, reach the first emergency fund target from step 3. Without it, the next unexpected expense goes onto a credit card. Second, put your extra money toward high-interest debt such as credit cards and personal loans. Third, once that debt is paid off, split your savings between a full emergency fund and your other goals. For lower-interest debt like a mortgage or federal student loans, compare its interest rate with what your savings account pays. The wider the gap, the more sense it makes to pay the debt down faster once your emergency fund is in place. This is general information, not personal financial advice, and the right order depends on your own rates and income.
A high-yield savings account is a savings account advertised as paying more than the average rate. Measure the claim against the national average. The FDIC's national average savings rate was 0.37% in its September 2026 update. A $5,000 balance held for a year at that rate earns about $18.50, and the same balance at 3.5% earns about $175. Rates change, so check the current rate on an account before you open it. Check the insurance too. Deposits at an FDIC-insured bank are insured up to $250,000 per depositor, per bank, for each ownership category, and the National Credit Union Administration insures accounts at federally insured credit unions up to $250,000 as well. Savings apps that are not banks are never FDIC-insured themselves, and the FDIC says its insurance does not protect you if the app company itself goes bankrupt. Find out which bank holds your money and look it up on the FDIC's BankFind tool. Before you rely on the account for emergencies, check how long a transfer to your checking account takes.
Start with the smallest amount you can keep up. A transfer of $10 from a paycheck that arrives every 2 weeks comes to $260 a year. If your income is irregular, or nothing is left at the end of the month, the CFPB guide linked in step 3 gives two more routes. Save all or part of a one-time payment such as a tax refund, and ask your landlord, utility, or card issuer to move a bill's due date so it falls after your payday. Raise your income where you can. Sell things you no longer use, and if you are due a raise, our guide on how to negotiate a salary covers asking for one. Use a cashback card only if you pay it off in full every month, so no interest is charged on what you buy. Check whether you qualify for assistance too. Utility discounts, reduced transit fares, and food assistance all have income limits, and the USA.gov page on government benefits and financial help covers food assistance, help with utility bills, and how to apply.
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