How To Save Money – The Complete Guide


If you don’t know how to save money, that’s okay. Because saving money is hard.

Saving money is REALLY hard when you are living paycheck to paycheck. You feel like you are stuck between a rock and hard place and don’t know where to start. It sucks. Trust us, we’ve been there too.

We grew up poor while being raised by a single mom and no one taught us about personal finance. But by using the steps below, we learned how to save and budget and have never looked back!

Where to Start if You Don’t Know How To Save Money

The single most important thing is to HAVE A PLAN. There’s a lot of ‘money diets’ or quick ‘money challenges‘ but you want to have something that’s sustainable over many years!

Having a plan for your money means making a budget. A budget is simply a written plan of how and when you will spend or make your money.

We like to call it a plan for a couple of reasons:

1) plans are never set in stone and change and

2) plans require time and effort.

Rome was not built in a day and your financial future won’t be either. It will require having a plan for YEARS and sticking with it. There will be bumps in the road along the way, but you’ll be glad that you started.

It does not matter if you are cooking a Thanksgiving meal for your entire family or planning a weekend road trip. In order to maximize either, you need to start with a plan. Your finances are no different.

If you do not have a plan your money will magically disappear after each paycheck. At the end of the month you will be scratching your head and wondering where all of the money went. You might even get a raise yet still be unable to save any of it, because you fall into a trap called lifestyle creep or lifestyle inflation. 

Sound familiar? Remember, plans are not perfect. Sometimes the turkey gets burned or you have a flat tire. That’s okay!

We aren’t shooting for perfection here; you just need to be committed to do your best.

How to Save? Spend Less = Save More.

How to Make Your Plan To Save Money

We have broken it down into 5 steps to help you get started!

#1 Know When And How You Spend Money
#2 See Where You Can Start To Spend Less
#3 Write Down Your Plan
#4 Stick With Your Plan!
#5 Review And Revise Your Plan

#1 Where is your money currently going?

Take a look at all of your regular expenses.

Your regular expenses include your rent/mortgage, car payment, gas, groceries, eating out, cell phone bill, internet, loans, everything. Add it all up.

This number should be less than how much you earn each month.

If not, you are probably relying on credit cards, loans, or some other help to make ends meet each month.

Looking at the numbers for the first time can be scary! That’s normal. We all start somewhere, and that’s by reviewing your monthly online banking statements.

#2 See Where You Can Start To Spend Less

Now that you know where your money has been going, you need to figure out where you can reduce expenses. This is the single best thing you can do in order to save more. By spending less each month, you build habits to live more efficiently and you will begin to realize you may not need everything you were spending money on.

More importantly, you’ll be able to take the money saved and begin to build your personal wealth. By cutting down your expenses, you also need to save LESS for retirement. You won’t need as much to get by if you can reduce how much you need!

Start to think of the money you’re saving as money you can spend in the future when you retire and are no longer getting a paycheck. Your retirement savings will be your paycheck to yourself!

Some areas where you might be able to save money are your rent, cell phone bill, cable bill, and eating at restaurants. Take a look and see which areas you can trim down. This will leave you with some extra cash each month.

If you aren’t sure how much money you’ll need to save for retirement, you can use this retirement calculator to give you a rough idea.

Bonus tip: If you find yourself spending too much on clothes, here’s an easy way to find cheap T-shirts.

#3 Write Down Your Plan For How To Save Money

So far you have not only figured out where all of your money goes each month, but how to reduce your expenses. You are now ready to write down your plan.

After writing down how much you earn each month, subtract how much you will spend on your must-have items.

Be specific with your plan so you know exactly how much will be spent on what. Every dollar should be accounted for!

For most people this includes rent, transportation (however you get to work and around town), food, and monthly bills (cell phone, minimum payments on loans, electricity, gas, etc.).

Now comes the fun part. You finally get to choose how the rest of your hard-earned money will be spent.

This remaining money will account for the following: entertainment (going out with your friends), paying more than the minimum on your loans, clothes, retirement accounts (IRAs, etc.), and so on.

Remember that plans change and each month will be different.

Early on, you may need to put all of the extra money into an initial emergency fund of $1,000.

The month after your emergency fund is saved up you can start really hitting your high interest debt. You may not be able to pay down as much debt one month because your roommate wants to go to a basketball game or a concert so you plan to spend $55 on the tickets. That’s okay!

Plans change when you are figuring out how to save (and even once you’ve mastered it!).

Just remember that when you want more money for one thing, it must come from something else. You only have so much money each month. There’s no place like home. Give each dollar you earn a home! Don’t forget that if you can’t measure or track something, you can’t change it.

Click to download our budget templates here! Our templates will help you account for every expense and our Excel template will add up all of the totals for you; It can also calculate your savings rate!

#4 Stick To Your Plan For How To Save Money

You now have a plan for the month and feel good about it. Congrats! Now you’re ready for the next challenge: sticking with it.

You made sacrifices in order to meet your financial goals and there will be times when it will suck. Skipping out on that latte before work, getting a roommate, or cutting the cable will not be easy.

It’s going to require a lot of discipline and self control to stay within the limits of your plan on how to save.

But it will be worth it! If you only planned for $75 each month for spending money and the shoes you want cost $100, you are going to have to save the $75 from this month and combine it with the $75 from next month to afford them.

You need to train yourself out of the habit of buying everything you want right away.

Your old mentality will mean you will have to work much longer before you can retire. Each dollar in your account will have a predetermined plan; now you just need to buckle down and follow through.

You can do it!

#5 Review And Revise Your Plan For How To Save Money

Every month will bring unexpected challenges that will attempt to sidetrack your plans on how to save. That’s to be expected.

Life is unpredictable and plans change.

Don’t fear change. Embrace it.

Revisit your plan every two weeks and see how you are doing. Spending 15 minutes before bed at the end of the week can save you thousands of dollars a year!

Maybe you ate out less than your plan allowed and you have $15 left. Shift that over to cover the parking ticket you weren’t planning on! It’s your money and you can control where it goes! Feel proud! You have a plan and are making it work.

It’s important to never be surprised about where your money is going again. Instead of scratching your head wondering where it all went each month, you will be rubbing your chin calculating where you may be able to trim your plan to put a little more toward your student loans!

You Might Not Be Able To Save Your Way To Wealth

If you aren’t sure how to save money, you might be thinking that you just simply need to stop spending money altogether. But the reality is that for a lot of people, spending less isn’t enough. They also need to earn or make more money.

This may mean picking up a few extra hours at work, developing a side hustle, or something as simple as selling things you no longer use for extra cash. Ideally, it’ll be something sustainable that you enjoy.

No amount of budgeting will make you wealthy if you aren’t making enough money. That’s the reality of it.

But if you are able to work hard to make more money and apply these principles to save money, you’ll be golden.