The Best Savings Methods

by Bonnie Conrad ; Updated July 27, 2017
Use a budget to find that missing money.

When it comes to saving money, the first step is often the hardest. So many of us simply have no money left at the end of the month, making setting up a savings account or emergency fund seem impossible. But with some careful planning and clever strategies you can start saving for the future and free yourself from living a paycheck to paycheck existence.

Employer-based Retirement Plans

If you have access to an employer-based retirement plan like a 401k or 403b, you can use that plan to jump start your retirement savings and build your fiscal discipline. Employer-based retirement plans are among the best savings vehicles, since the money comes off your paycheck on a pre-tax basis. Every dollar you contribute to a 401k or 403b is deducted from your taxable income, and the tax savings alone provide a strong incentive to participate. You can start your 401k or 403b contribution with as little as 1 percent of your pay, then slowly ramp up those contributions as time goes by.

Direct Deposit

If your employer allows you to split your direct deposit between more than one account, you can use your paycheck to spur your savings. You can start with a small dollar amount, or a small percentage of your pay, going into a savings account, then slowly increase the amount as you get better and budgeting and saving money. This strategy makes saving money automatic and forces you to live on what remains of your paycheck.

Bank Transfers

The "pay yourself first" method is an excellent way to develop the discipline it takes to build real wealth. This method treats your savings as just another bill, one that must be paid before you can spend the remaining money from your paycheck. Just as you would adapt to a rise in your taxes, health care withholding or other expenses, you adapt to the missing money by cutting your spending in other areas. The best way to adopt this strategy is to set up an automatic monthly transfer from your checking account to your savings, or to another investment.

Careful Budgeting

One of the most effective ways to save money is to set up a careful budget. Until you know where your money is going, it is very difficult to find extra money to save. By developing a budget and sticking to it, you can find those bits of excessive spending and free up more cash to save and invest. You can start with something as simple as carrying a small notepad with you each day and writing down each purchase, no matter how small. You might be surprised at how much those small purchases add up during the course of a week. Once you know how much you are spending, you can look for ways to cut back, and put the extra money right into your savings account.

About the Author

Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.

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