How To Make a Savings Plan: 7 Simple Steps You Can Take (2024)

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

See Also

33 Ways to Save Money | SoFiGet the Best Deals on TurboTax Software to File Your Taxes by April 15Cruise week report: Disney cruise pros and cons, lessons learned after sailing on Carnival, how to save money on cruises, and more!Just married? How to know whether to file your taxes jointly or separately.

Trusted by
Millions of Readers

You’re working hard for the money, but you’re not saving it. This of course isn’t great for your financial health, but you’re ready to make a change.

Thankfully, it’s never too late to create a savings plan that allows you to enjoy a sense of security. No matter what you’re starting with, saving even a little bit of money at a time gets you one step closer to achieving your financial goals. It also allows you to have money to fall back on in an emergency situation.

Making a Savings Plan: Key Takeaways

• Tracking your spending is the first step toward identifying potential savings.
• Cutting back on non-essential expenditures can free up significant funds.
• Setting specific savings goals helps provide focus and direction.
• Choosing the right savings vehicles can maximize your returns and safeguard your money.
• Automating transfers ensures consistency in saving.
• Monitoring your progress keeps you motivated and on track.
• Being flexible allows you to adjust your plan as life changes.

How To Make a Savings Plan: Step-by-Step Guide

Ready to create a savings strategy that will actually stick? Follow these steps to get started.

1. Track Your Spending

Start with a clear understanding of where your money goes each month. There’s a pretty good chance you’re spending more than necessary in at least one area — quite likely more.

You can do this manually or with a budgeting app. Some popular choices for the latter include YNAB, aka You Need A Budget, and Honeydue.

2. Look For Ways To Cut Back

After getting a clear snapshot of exactly what you’re spending money on, it’s time to look for ways to save. Maybe you have subscriptions you don’t actually use, or perhaps you’re spending way more money dining out than you realized.

Whatever the case, use this as an opportunity to make meaningful changes. You don’t need to give up all of your nonessential spending, but do start focusing on the expenditures that bring you the most joy.

Set limits on discretionary spending, so you can strike a healthy balance between what you want and what you actually need. This will allow you to save money without feeling deprived.

3. Set Specific Savings Goals

Vague ambitions won’t cut it. Define your savings goals using the SMART criteria — specific, measurable, achievable, relevant and time-bound.

For example, you might decide you’ll save $10,000 for a down payment on a house in the next 10 months. To do this, you’ll commit to putting $1,000 per month into your savings account.

SMART savings goals are important because they give you something specific to work toward. The structure around this type of objective leaves no room for slacking, so if you don’t follow through, you clearly sold yourself short.

4. Choose Your Savings Vehicles

Putting your savings in the right place(s) is key. For example, your retirement savings should be in a 401(k), IRA or similar retirement savings fund. On the other hand, it might be best to put your general savings in a high-yield savings account.

Different types of investment vehicles are appropriate for different situations. If you have any questions about the best place to put your money, consider meeting with a financial advisor.

5. Automate Transfers to Savings

You might have the best of intentions to put all the money left in your account in savings. However, if there’s no money left at the end of the month, this means you won’t actually be putting anything aside.

Therefore, it’s important to prioritize savings by setting up automatic transfers from your checking account. This ensures the money will actually make it to your savings account, instead of unwittingly being diverted to another cause.

You can always make adjustments to the transfers as needed. This is just a preventative step to remove any temptation that might come from putting the money in your hands first, before it heads to savings.

6. Monitor Your Progress

Admittedly, sending money off to a savings account might not feel too exciting. You know you’re doing something good, but it can be hard to feel proud of an accomplishment you can’t actually see.

While you can’t physically see the pile of money you’re growing, you can monitor your bank statements. Do this regularly to see how much you’ve saved — and how much you’ve earned in interest.

This will help you stay motivated to keep up the great work.

7. Make Adjustments as Needed

Nothing about your savings plan is set in stone. You can — and should — make changes as needed.

For example, if you get a raise, you’ll likely want to start saving more from each paycheck. Or if you’re hit with a large expense and need to use some — or all — of your emergency fund, you might divert more of your total savings to this account until you’ve paid the money back.

Final Take

Making a savings plan is crucial to your financial health. This will likely be multifaceted — i.e., an emergency fund, retirement savings, vacation fund, etc.

It’s important to remember that no two people — or families — will have the exact same savings plan. This strategy is highly personal and needs to be customized to fit both your income and future goals.

If you need help creating a savings plan that works for you, consult a financial advisor. They will work with you to determine how much you need to be putting aside each month to achieve your goals and help you create a budget that supports this strategy.

The article above was refined via automated technology and then fine-tuned and verified for accuracy by a member of our editorial team.