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YNAB Guides

How to Save Money

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!


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 house. You may simply want peace of mind when you look at your savings 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 build your savings, 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 debts to pay off, which seems more important.
  • You have an automatic transfer set up to move money each payday from checking to savings, 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?


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 Dollar 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, 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.

Tracking your spending will also help you identify spending that isn’t even that important. As you dial this spending in, your savings will increase.

Illustration of a stack of money following arrows to different illustrations representing budget categories including a house, car, coffee, shoes, groceries, travel, phone, and college

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 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 car 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. No stress—just pay it 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.

An illustration of twelve monthly calendar pages with the name of the month and $50 printed on each with a gift box and a holiday gift total of $600 that represents breaking big expenses down into manageable monthly chunks.

Not sure where to start? See a list of irregular and non-monthly expenses 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.

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.


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 saving 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.

An illustration of a woman with a towel wrapped around her head, sitting on the ledge of a pool holding a drink, as if at a spa

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

How to Set Up Savings in Your Budget

An illustration of a grocery bag, credit card, and stethoscope with pieces of paper labeled Cell Phone, Loan, and Electric to represent expenses and bills

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.

An illustration of a woman with her finger to her cheek in contemplation, surrounded by illustrations representing budget categories like electric, house, food, car, shoes, coffee.

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.

An illustration of three budget categories: Mortgage $1400, Water $70, and Groceries $200

Step Three: When 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 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.


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 money? Man, what a nice problem to have.

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.

An illustration of the YNAB mascot, a piggy bank, linking arms with a bank-shaped symbol labeled Accounts to represent the difference between the budget, where you make a plan for your money, and your bank accounts, where you store it.

Imagine it like this: you just went grocery shopping 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 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.


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.
A woman holding a hammer in front of a glass case containing a piggy bank that says "Break Glass in Case of Emergency" which represents an emergency fund

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.


Advanced Tips For Saving Money

Save More Intentionally With Budget Category Groups

Sometimes, a simple savings category is all you need. 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 list, and the Wish Farm is where you make things happen.


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.

A happy man and woman on the beach. She is sitting on a towel, with headphones attached to a phone. He is wearing a duck-shaped float.

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 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.


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.