How to Save Money | YNAB (2024)

Table of contents

How to Save Money | YNAB (1)How to Save Money | YNAB (2)How to Save Money | YNAB (3)How to Save Money | YNAB (4)How to Save Money | YNAB (5)

How to Save Money | YNAB (6)

Table of Contents

So You Want to Save More Money

Three Reasons You’re Not Saving Money

The Best Ways to Save More Money

Where Should I Keep My Savings?

The Emergency Fund

Advanced Tips For Saving Money

Retirement: The Ultimate True Expense

Save the Day With Savings

Additional Resources

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This is the complete guide on how to save money.

This isn’t about living on rice and beans, or being cheap (though those things can certainly help you save more money).

It is, however, about setting up your finances in a way that gives you more peace, more security, and a cushion to fall on when life hits you with a financial surprise.

We’ll cover why you’re not saving money, how to successfully save, and how to level up your savings game.

It will change everything.

So, if you’re trying to save more money—and fast—keep on reading!

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chapter 1

So You Want to Save More Money

You want to save money, you really do. Perhaps you want to know how to save money fast for a car or a downpayment on a house. You may simply want peace of mind when you look at your bank account. However, it’s just not happening. Peace is the last thing you feel when you look at that dwindling balance.

This guide offers a step-by-step method to make and meet your savings goals, along with crucial money-saving tips. This isn’t a tutorial on how to save money fast; it is a framework to make saving a painless habit. Once you get this ball rolling, it just keeps gaining momentum, like a snowball rolling down a hill. Sound good? Let’s dive in.

When it comes to saving money, do any of these sound familiar?

  • You don’t feel like you are making enough money to save because there’s barely enough to cover day-to-day expenses.
  • It feels pointless to save because you have student loans or credit card debt to pay off, which seems more important.
  • You have an automatic transfer set up to move that direct deposit money from checking to savings each payday, only to shift that money back over to cover an unexpected expense.

You’re left feeling bad—you know you should be saving money. Why is it so hard?

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chapter 2

Three Reasons You’re Not Saving Money

People struggle to save for three primary reasons. You may relate to one, two, or all three of them.

Problem: You're not sure where your money is going

It’s hard to set money aside for savings if you’re really not sure whether you’ll have the money for your daily expenses. What if you move money to savings and then run out of money in checking? It’s account ping-pong: money moves from one account to the other, and the checking account seems to win every time.

This lack of clarity leads to a lack of confidence. You’re not confident about saving because you’re not confident you’ll cover this week’s bills!

Solution: Give Every A Job (Rule One of YNAB)

Look at the money you have and give each of the dollars a single task. Set money aside for bills, groceries, gas, the electric bill, and for all monthly expenses. This is YNAB’s Rule One, and it’s where you start to reduce money-related stress. As you track your spending, you’ll see where the money goes and get a clear picture of what’s left for non-monthly expenses.

Paying closer attention to your spending habits will also help you identify spending that isn’t even that important. Can you unsubscribe from some of those streaming service apps? Do you actually use that gym membership? Are those impulse buys on Amazon really that important? As you dial this nonessential spending in, your savings will increase.

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Looking for some of the best ways to save money? Try YNAB risk-free for 34 days. No credit card required.

Problem: Non-monthly bills may catch you by surprise

Most people tend to think of their expenses as the things they pay for every month. However, not all expenses fit into a nice little month-sized package.

Take these, for example:

  • You pay for your auto insurance every six months.
  • Christmas comes once a year—at least it’s the same day every year!
  • The cat got sick, leading to a costly vet bill.

When three expenses like that hit in the same month, it can feel like the universe is conspiring against you.

The truth is: those are real expenses that you can (and should) prepare for on a monthly basis. This turns big bills into manageable, month-sized bites.

Solution: Embrace Your True Expenses (Rule Two of YNAB)

What’s a True Expense? The irregular, non-monthly costs that often hit when you least want them to. We’re talking about things like the holiday season (it comes every year) and car repairs (it will break down eventually), and yes—we want you to embrace them.

We want you to prepare and never feel blindsided again. If you have six months to save for a $600 car insurance bill, set $100 aside every month. When the bill arrives, you’ll have the money to cover it. It’s a simple savings plan. No stress—just pull out your debit card and move on with your life. Suddenly, the things that used to be emergencies simply aren’t anymore. You’re ready for them and can deal with them with ease.

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Not sure where to start? See a list of irregular and non-monthly expensees you can start preparing for.

I’ll let you in on a little secret about Rule Two: it’s the ultimate debt prevention tool. If you save money for the car repair, you won’t have to reach for the credit card when it breaks down. No debt payments (with high interest rates) to deal with later!

You’ll also be a little less likely to pretend you don’t notice when the infamous Check Engine light makes its appearance.

Problem: You don't know what you’re saving for

Most people are not specific and clear enough about what they are saving for. If the money you’re saving is just “savings,” it can become easy to use that money for pretty much anything.

Perhaps you’re saving because, well, you know you’re supposed to—isn’t that enough of a reason?

Solution: Be specific about what you’re saving for

If you are saving for Christmas, new furniture for the living room, and a kayak, that’s much more clear. Be specific in your budget, too—you will become more protective of dollars when they receive a specific job in your budget.

Think about why you want to save and what you want to save for. Intention matters—the more intentional you are, the more successful you’ll be.

The best part? When you go to buy that new kayak, you can buy it guilt-free. You know that you have the money for it and that everything else is covered.

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chapter 3

The Best Ways to Save More Money

Looking for a few money-saving tips? Consider the following groups of expenses when it comes to savings:

  • Things you have to save for
  • Things you want to save for

Things you have to save for

Things you have to save for are non-monthly expenses that you know you’ll need at some point. Some of them are entirely predictable, and others are not. Examples of both types include:

Predictable Non-Monthly Expenses:

  • Annual car registration
  • Holiday shopping
  • Annual subscriptions

Unpredictable Non-Monthly Expenses:

  • Car repairs
  • Medical
  • Vet bills

Things you want to save for

Now that the not-so-fun stuff is out of the way, let’s move on to the fun stuff. You can save for whatever you want, but start by identifying these items. You might start with a short-term saving plan for something small, like new running sneakers (don’t laugh—they’re not cheap…), or something big, like a vacation to Europe in two years. Your budget can help you make this happen.

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Learn more about saving for fun things by adding a Wish Farm for your budget!

How to set up savings in your budget

Step One: Create a category for each item in your budget.

Now you’ve laid your priorities out right in front of you, where they belong.

Step Two: Decide how you want to approach each category.

Do you want to set a certain amount aside every month, no matter what? In YNAB, you can create a monthly Savings Builder target for things like “save $50 for new technology every month.”

Do you want to save a certain amount of money by a certain date? In YNAB, you can create a Savings Balance target for things like saving $1200 for your road trip next spring. Your budget will calculate how much you should save each month to hit your target.

Step Three: When extra money comes in, assign dollars to your savings categories.

Give your new dollars jobs within the savings categories you just created. You’ll be less tempted to splurge on impulse purchases if it means you’ll have to take money from these specific categories, and your savings will continue to build!

You will begin to prioritize as you work through this. Before you start adding money to savings categories, cover your monthly expenses and any imminently upcoming costs. Once you’ve covered these expenses, it’s time to take a longer view.

For example, in January, you decide that you want to save $900 for the holidays by next December.

  1. Add a Holidays category to your budget.
  2. Create a Savings Balance target for the category.
  3. Your budget does the math and tells you to set aside $75 every month.
  4. Each month you add $75 dollars to the Christmas category. In December, you can shop stress-free!

Regardless of your specific goals, your budget will keep you on track.

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chapter 4

Where Should I Keep My Savings?

You have some dollars saved for all sorts of things. You’re ready to roll when the car breaks down. Time to take Fido to the vet? It’s no fur off your back. That bi-annual car insurance bill? Bring it. And for added security, you’ve got your handy-dandy emergency fund.

Now that you’ve got it, where should you keep all this extra cash? Man, what a nice problem to have.

Bank accounts vs. the budget

Here’s a mind-blowing thought: the budget doesn’t care where your money is.

Of course, you care, but the budget remains focused on one task: what is the money for? You can keep it all in pennies in a sock drawer as far as the budget is concerned. Though that would need to be a pretty big sock drawer soon enough.

The budget focuses on its ultimate goal. Your accounts focus on the location of the money.

Imagine it like this: you just went to the grocery store and came home with a big haul. All those groceries enter your refrigerator as a part of the meal plan you have hanging on the outside.

Your dollars are like the grocery haul. Your accounts are the refrigerator and pantry. The budget is the meal plan telling you exactly how to use the food-slash-dollars.

So when it comes time to make dinner, you check your meal plan, grab the ingredients from the fridge and pantry, and go to town. Likewise, when you want to buy something, you check your budget for guidance, grab those dollars from their storage location, and make the purchase.

So, does it matter where you keep it? You could keep all your money in your checking account. “Oh no! The horror! I’ll spend it if I do that!” Actually, you won’t. Once you begin budgeting, you won’t look at your bank balance to make a spending decision—you’ll be looking at your budget.

The only way you’ll spend your precious vacation money is when you go on vacation. If you’re paying the cell phone bill, you’ll use the money in your phone bill category.

It’s cool—we get it. You can keep it in a savings account just as easily. But keep in mind: you don’t need eleven savings accounts, just one will suffice. Perhaps you’ve been keeping multiple savings accounts to stay organized. Does this look familiar?

  • Emergency Savings Account
  • Vacation Savings Account
  • Christmas Savings Account
  • New Car Savings Account
  • Medical Savings Account
  • Veterinary Savings Account

Folks, those are categories. Make a category for each of those things and you can keep all that money in one savings account. Ah, the simplicity. Life just got a lot easier.

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chapter 5

The Emergency Fund

At this point, we’ve hopefully conveyed that saving for True Expenses reduces financial stress, but you know what increases stress? Having your savings blown apart by an emergency. Imagine: you’d finally saved for new furniture but had to use that money because the kid next door threw a baseball through your kitchen window.

You don’t need a category called “When the Kid Next Door Throws a Baseball Through My Kitchen Window,” but you’ll definitely want to add a category for an emergency fund to your budget. Consider it one of your True Expenses.

An emergency fund category fulfills two very important needs:

  • It protects you from real-life emergencies. Rule Two is awesome, but unless you have a magic eight ball, you can’t see everything coming.
  • It protects your budget by helping you maintain the progress you’ve made in your other True Expenses.

How much should I keep in my emergency fund?

A great starting point is a $1,000 emergency fund. Beyond that, consider the following questions:

What’s your cash flow situation?

If your income is variable or unpredictable, a $1,000 emergency fund category is a good place to start. Aim higher once you hit that mark.

How dialed-in are your priorities?

It can take a while to identify and prepare for each Rule Two expense. The less you’ve got things dialed-in, the more use you’ll get out of an emergency fund. At the very least, you’ll have a place to move the money from.

Are you a risk avoider or risk taker?

If you’re risk-averse, a bigger emergency fund category can give you more peace of mind.

Do you have more financial responsibilities?

Do you have children or a house that requires maintenance? You may want a bigger emergency fund in that case.

Where should I keep my emergency fund money?

Keep your emergency fund money in any account you want, but since you hopefully won’t use it too often, consider keeping these funds in a simple savings account. Remember: assign dollars to the emergency fund category in your budget.

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chapter 6

Advanced Tips For Saving Money

Save more intentionally with budget category groups

Sometimes, a simple savings category is all you need to meet your financial goals. Saving for a new bike? Awesome! Just make sure you get one with a bell and a cool basket. Add a category for “My Awesome New Bike,” specify a target amount, and you’re off to the races! We’ve got a few money-saving tips just for you.

Savings sometimes become more complex. What if you’re saving for a wedding? You’ll need to save for:

  • Venue
  • Rings
  • Dress
  • Tux
  • Invitations
  • Rehearsal dinner
  • Reception
  • Actual Wedding

You’ll find it more helpful to create a category group in your budget for “Wedding.” Add each item as categories in the group. This will keep you focused on exactly what you need to save for to make your dream wedding a reality. Bonus point: it also helps keep you organized!

Start a wish farm

Creating a Wish Farm offers one of the best ways to save money, especially if you have many competing categories in your budget.

Add a category group called “Wish List” and include everything your heart desires—consider it a holding area for all your hopes and dreams. When you add a category, note whether it’s a small, medium, or large expense. You won’t do any budgeting in this category group.

Next, create a second group called “Wish Farm.” Move one small expense, one medium expense, and one large expense from the Wish List into the Wish Farm. This is where you will assign your dollars. Water these categories with dollars to help them grow.

Eventually, your wish will be fully funded! Go buy that wish, free of stress and guilt!

Your budget is about getting the things you want in life, not just the things you need. The Wish List keeps track of your total shopping list, and the Wish Farm is where you make things happen.

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chapter 7

Retirement: The Ultimate True Expense

Your budget is humming along nicely at this point. You’re covering your monthly expenses, giving every dollar a job, saving for non-monthly expenses, and tucking away money for later every single month. You’ve even reached the point where you are a month ahead in your budget, following Rule Four: Age Your Money like a boss. Look at you go!

Now, think long term. Like, long term. It’s time to consider saving for retirement.

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If you think about it, this is just one of your True Expenses. Eventually, you’ll want to retire. You’ll need to put money away in a retirement account for that. While it takes a year to save what you want to spend on Christmas, it will take much longer to save for retirement.

If you have money taken out of your paycheck and sent to a 401K, you’re already off to a good start. To turbocharge those savings, you can set up an investment account. We don’t offer investment advice beyond recommending that you set money aside for retirement, but we want to make sure you allocate dollars to that job every month. You can think of it as just another category in your budget.

For example, if you’ve set up a Roth IRA, create a category for Roth IRA and assign dollars there. When it’s transferred to the Roth, you’re done. It’s a bill you pay that pays you back. Later. When you retire.

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chapter 8

Save the Day With Savings

There you have it: the best ways to save money, no matter your situation. Let’s recap:

  • Use a budget to level up your ability to save.
  • Save for both needs and wants.
  • Give your savings specific goals.
  • It doesn’t matter where you put savings dollars when you use a budget.
  • Aim for $1,000 in an emergency fund for those unpredictable expenses.
  • Remember to include retirement savings as a part of your future plan: after all, it’s the ultimate True Expense.

Implement these steps, and before long, saving will become second nature. Take a peek at your account balances, and they’ll be higher than you’ve ever seen! Enjoy your newfound sense of security—the return on investment for peace of mind is priceless.

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chapter 9

Additional Resources

Feeling fired up about personal finance and inspired to save money? We’ve got even more information to help you get started:

  • How to Spend Less Money Starting Now
  • Three Ways to Curb Your Spending Problem
  • Do I Need an Emergency Fund?
  • How to Save Money in YNAB
  • Why Can’t I Save Money?
  • Six Steps to Make Your Money Go Further
  • How I Stopped Impulse Buying
  • Save Money, Live Better
  • 10 Ways to Get a Month Ahead on Bills
  • Do I Need a Savings Account?
  • How to Go Grocery Shopping Once a Month
  • Are You Overspending? Or Under budgeting?
  • DIY Budget Planner Printable Workbook

Join the More Money Challenge

Would you like a total spending reset and some friendly motivation to save $1000 in 30 days? Join YNAB’s free More Money Challenge! Simply follow three rules each and every day to reset your money, your mindset, and make a tangible difference in your current financial state.

Join Now

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chapter 10

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chapter 11

How to Save Money | YNAB (2024)

FAQs

What is the 30 day rule to save money? ›

The 30 day savings rule is simple: the next time you find yourself considering an impulse buy, stop yourself and think about it for 30 days. If you still want to make that purchase after those 30 days, go for it.

How can I save $1000 fast? ›

Financial expert Dave Ramsey has a lot of ideas on the subject, and here are some of the most practical ways to save your first $1,000 quickly.
  1. Cancel Subscriptions. ...
  2. Bring Your Own Lunch. ...
  3. Avoid Coffee Out. ...
  4. Re-Sell Old Items. ...
  5. Shop at Cheaper Grocery Stores With Rewards Programs. ...
  6. Buy Generic. ...
  7. Join a Carpool.
Dec 28, 2023

How to save $10,000 easily? ›

6 steps to save $10,000 in a year
  1. Evaluate income and expenses. To make room for saving, you'll need a meticulous budget that outlines all your sources of income and all your expenditures. ...
  2. Make an actionable savings plan. ...
  3. Cut unnecessary expenses. ...
  4. Increase your income. ...
  5. Avoid new debt. ...
  6. Invest wisely.
Apr 2, 2024

How do I save money easily? ›

8 ways to save money quickly
  1. Change bank accounts. ...
  2. Be strategic with your eating habits. ...
  3. Change up your insurance. ...
  4. Ask for a raise—or start job hunting. ...
  5. Consider a side hustle. ...
  6. Take advantage of a credit card that offers rewards. ...
  7. Switch up your transportation habits. ...
  8. Cancel subscriptions you don't really need or use.

How can I save $500 in 30 days? ›

10 Tips To Help You Save $500 in 30 Days
  1. Reset Your Mindset. Think of these 30 days as a time to hit “reset" on your spending habits. ...
  2. Set a Daily or Weekly Goal. ...
  3. Assess Your Current Budget. ...
  4. Identify Where To Cut Your Spending. ...
  5. Look For Additional Income Sources. ...
  6. Track Your Spending. ...
  7. Bucket Your Savings. ...
  8. Celebrate Your Goal.

How can I save 5000 dollars fast? ›

Ways To Save $5,000 in a Year
  1. “Chunk” Your Savings. The first step to saving $5,000 in a year is to break down your savings goal into manageable portions. ...
  2. Automate Your Savings. ...
  3. Save in a High-Yield Saving Account. ...
  4. Track Your Cash Flow. ...
  5. Boost Your Earnings. ...
  6. Declutter for Cash. ...
  7. Evaluate Your Subscriptions. ...
  8. Challenge Yourself.
Jul 11, 2024

Is saving 1k a month good? ›

Saving $1,000 per month can be a good sign, as it means you're setting aside money for emergencies and long-term goals. However, if you're ignoring high-interest debt to meet your savings goals, you might want to switch gears and focus on paying off debt first.

How can I save living paycheck to paycheck? ›

How to Stop Living Paycheck to Paycheck
  1. Get on a budget.
  2. Take care of your Four Walls first.
  3. Cut extra expenses.
  4. Start an emergency fund.
  5. Ditch debt.
  6. Increase your income.
  7. Live below your means.
  8. Save up for big purchases.
May 31, 2024

How to turn $100 dollars into $1,000 in a month? ›

10 best ways to turn $100 into $1,000
  1. Opening a high-yield savings account. ...
  2. Investing in stocks, bonds, crypto, and real estate. ...
  3. Online selling. ...
  4. Blogging or vlogging. ...
  5. Opening a Roth IRA. ...
  6. Freelancing and other side hustles. ...
  7. Affiliate marketing and promotion. ...
  8. Online teaching.
Apr 12, 2024

How much a week to save 5k? ›

The first step to reaching any financial goal is to break it into bite-sized pieces. If you want to save $5,000 in one year, you'll need to save approximately $417 a month. That's about $97 a week. Saving almost $100 a week may be a lot depending on your finances.

Can I save 10k in 6 months? ›

Saving $10,000 in a year is a good challenge. But what if you want to save that much in six months instead? To reach this goal, you'll need to save around $1,667 per month, or $56 per day. While that might seem like a lot, with the right mindset, it's possible.

Can I save 20k in a year? ›

Saving $20,000 in one year is a lot. Simply looking at this number can feel overwhelming, so Catie Hogan, head of curriculum and founding financial coach at Parthean recommended breaking it down into more digestible chunks. “Saving $20,000 per year is about $1,667 per month or about $385 per week,” she said.

Why is it so hard to save money? ›

Debt, especially from high-interest credit cards, significantly hinders the ability to save. Lack of budgeting contributes to poor financial management and savings shortfalls. Social pressures and lifestyle inflation can lead to increased spending, further impeding savings efforts.

What is the 50/30/20 rule? ›

The rule is to split your after-tax income into three categories of spending: 50% on needs, 30% on wants, and 20% on savings. 1. This intuitive and straightforward rule can help you draw up a reasonable budget that you can stick to over time in order to meet your financial goals.

Is saving money worth it? ›

Saving money is a cornerstone of financial well-being, providing stability, security, and opportunities for long-term growth. Whether you're saving for emergencies, future expenses, or retirement, cultivating a habit of saving is essential for achieving financial independence and realizing your goals.

Does the 30 day rule really work? ›

For those uninitiated, the 30-day no contact rule is generally peddled as a technique involving ignoring your ex for about 30 days to get them to miss you more, and then reaching out with some canned line or message. It's a common hoax dumpees fall for. Same story with 45 or 60-day no contact periods.

How does the 30 day rule work? ›

The 30 day rule is simple. When you feel the urge to spend money on a 'want' you have to put the amount you'd spend on it into a savings account. Then you wait 30 days. At the end of this period, if you still want to buy the item, you can.

What is the 70 20 10 Rule money? ›

The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.

What is the 30 day challenge to save money? ›

Here's how it works: When you have the urge to make an impulse purchase, wait for 30 days and give yourself time to think about it. While considering the purchase, deposit the money you need for it into a savings account. If you still want to buy that item after the 30-day period is up, go for it.

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