Start Saving

We all know it's important to save. But if you're like most people, saving money is easier said than done.

A mother in a gray shirt sits on a bed in a bright room with her laptop in front of her as she looks over at her smiling baby.

Why save?

A 2016 GOBankingRates survey revealed that 35% of U.S. adults have between $1 and $1,000 dollars their savings accounts and an additional 34% percent have no savings at all.1 So let’s put that in perspective.

It’s your life—and you need to make it happen. For many of things you want to do in life, large and small, you need money.

Life also throws us curve balls. An unexpected repair, or a surprise medical expense? Also best handled with money.

Having savings set aside both for your dreams and for life’s realities can give you peace of mind and keep you stress-free. Saving really is one of the best things you can do for your state of mind.

Start saving the right way, today.

Start with savings goals

So you're ready to save. Where do you start? With a quick list of goals. Here's how you might think about them, in this order:

  • An emergency fund. If you don’t already have money set aside for emergencies, this should be the first thing on your list. This is money for any kind of financial emergency—a job loss, medical expenses, major repairs, or any other big surprises. Experts recommend a minimum of three months’ living expenses, six months’ worth ideally2.
  • Goals you can name. These might be a vacation fund, buying a home or car, lowering your debt.
  • Contributions to specialized savings accounts. If your or your spouse’s benefits package includes a 401k plan or a health savings account, or if you’ve set up an IRA account, you’ll want to take advantage of the tax savings (and, in the case of a 401k, any matching contributions) these accounts offer. Otherwise you’re leaving money on the table.

Do the numbers

Figure out how much you can save each month:

  • First, determine your monthly take-home pay, after taxes and other deductions.
  • Next, figure out your monthly expenses.
  • Now, subtract your monthly expenses from your monthly take-home pay.
  • This number is the starting point for figuring out how much you can save. It's a starting point because whether that number is small, or even zero, there are ways to make it bigger. Read on to find out how.
  • Use any of our handy savings calculators to understand what it will take to reach your savings goals.

How much can you REALLY afford to save?

Now that you know where your paycheck is going every month, let’s see if you can free up some money for yourself (instead of for Starbucks).

Needs vs. Wants

Divide your monthly expenses into needs and wants. Needs are expenses you can’t do without: food, shelter, clothing, healthcare, utilities, transportation. Wants are expenses you could live without, but choose to make: entertainment, leisure activities, and travel. Use our handy calculator to see how much you're spending.

Finding More Money

Evaluate and prioritize spending within those categories. Remember—you can make small modifications without cutting items out altogether.

Here’s where you can get creative. Just a few small changes in your daily routine can really add up over time.

It’s also an opportunity. By cutting down on or even cutting out certain expenses, you can free up money and minimize expensive or bad habits. You might even lower your overall healthcare costs and improve your health.

For example:

  • You have to eat, but can you cook more meals at home instead of going to restaurants?
  • You have to pay for utilities like your phone, but can you switch to a more affordable plan?
  • Spending time with family and friends is important, but are there free or low-cost entertainment options?

You can also cut expenses by planning ahead. Brew your own coffee instead of buying it at a store. Or bring a reusable water bottle to work instead of buying drinks at vending machines.

Rethink how you shop. Do you leave the grocery store having spent way more than you wanted to? Take a few minutes beforehand to plan ahead and bring a list. You’ll be much less likely to buy items you don’t need.

Check out What's It Worth To Reduce My Spending to understand how much cutting back could help you save more.

Other Ways to Build Your Savings

Automate your savings. If you have a checking account, your bank may be able to set up an automatic transfer that regularly moves money from your checking account to your savings account. Your own automatic savings plan runs on autopilot—you don’t have to think about it, while it runs in the background, socking money away month after month.

Save your next windfall. Whether it’s a pay raise, a tax refund, or some other source of extra money, consider saving some or all of it. If you were managing well enough without it, you probably won’t miss it.

Where to Save

Choosing a savings account may sound like no-brainer, but there are actually several choices. Again, the answer is, it all depends on your goals.

Wherever you deposit your savings the trick is to keep it accessible for when you need it, but not so easy to access that that you’re tempted to spend it.

Savings account

Because a savings account is a bit harder to access than a checking account, you’re not as likely to spend your savings. Most financial institutions pay interest on money deposited in savings accounts.

Money market account

Money market accounts offer higher interest rates than standard savings accounts, and may offer checkwriting privileges. But they often require a higher minimum balance.

Certificate of deposit (CD)

A CD holds your money for a specific period of time (from three months to five years or more), paying interest over the life of the CD that ranges from slightly higher than a savings account for short-term CDs to higher than money market funds for long-term CDs.

The catch: if you withdraw your money before the CD expires, you’ll pay penalties—and could end up losing all your interest and even some principal (your original investment).

Online savings account

Accounts that are managed and funded primarily online (all deposits and transactions done electronically) tend to feature higher interest rates than standard savings accounts. But they may not have all the options and services of a savings account from a brick-and-mortar bank.


This article is for informational purposes only and is not intended for use as legal, accounting, tax or professional financial advice by People’s United Bank or any of the bank’s subsidiaries. Financial calculators are for illustrative purposes only. Always consult your legal, accounting and/or tax advisor to fully understand how information may or may not apply to your personal or business financial situation.

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