How to start saving money from scratch

Yahoo

27-03-2025

Adults in the U.S. struggle with saving money. Thirty-five percent of respondents in a recent survey by Yahoo Finance/Marist Poll said they are 'very' or 'completely dissatisfied' with how much they saved in 2024. And one-third (33%) said they couldn't cover bills for even one month if they lost their income.
But it's not just bad financial habits that are to blame. Whether money is tight, you have a habit of overspending, or you simply don't know how to get started with saving money, there are ways to turn things around. Here are some simple tips for jump-starting your savings.
Let go of the idea that there's a certain amount of money you have to save — and just start. There really is no amount too small to make a difference in your finances, even if it's just a few dollars a week or month.
For example, if you save $20 a week, you'll have $1,040 in savings in a year, plus any interest you earn. That's certainly much better than saving $0.
Read more: How the 52-week savings challenge can help you save $1,300 in one year
The easiest way to build a life-long savings habit is to put your contributions on auto-pilot.
Reach out to your human resources or payroll representative — or to your bank — to set up an automatic contribution to your savings from each paycheck. When you do, you'll ensure you always save some of the money you earn. It's a strategy known as 'paying yourself first.'
This method also helps you save far more than you would if you only made a one-time contribution. Sure, you can deposit the random $100 to your savings on a whim, but if you contribute $20 from each paycheck (assuming you're paid bi-weekly), you'll have more than five times that amount saved at the end of a year ($520) plus interest.
Read more: How much of your paycheck should you save?
Look for a bank account that gives you incentives to put your money into savings with no monthly fees. For example, the best high-yield savings accounts currently offer upwards of 4% APY. That's significantly higher than the national average savings account rate of 0.41%. If you had $5,000 sitting in an account earning 4% APY, you'd earn about $200 in interest over the course of a year with no extra work on your part.
You can also look into Individual Development Accounts (IDAs), which are accounts that help people with low incomes save for specific goals, such as paying for school. The main benefit? Part of your contribution is matched, meaning you get free money to help you reach your goal.
Plus, when you put your cash into a savings account at a bank or credit union, your deposits are federally insured up to $250,000 in the rare instance the financial institution fails.
Look through your recent bank and credit card statements and highlight all of the unnecessary expenses, such as subscriptions you don't use.
Then, choose spending categories you can eliminate or swap out for cheaper alternatives, even if it's just temporarily. For example:
Go without streaming services for a few months and check out books or other media from the library instead.
Pack sandwiches instead of buying lunch at work or on the go.
Delete retail apps from your phone and buy clothing items you need at second-hand stores or on sale. You might also take some time to repair old clothing items.
How long should you cut back for? The answer is up to you. If you want a specific target to aim for, start by saving an amount equal to one month's rent or mortgage. Then, work your way up to an emergency fund equal to at least three months' worth of your living expenses. That way, you can rely on your savings instead of taking on debt if a surprise expense comes up.
Read more: 5 psychological money hacks to cut spending and increase savings
When your financial situation improves, it's natural to start spending more money. But if you do, you may never be able to save enough for emergencies or retirement.
This phenomenon — also known as lifestyle creep or lifestyle inflation — is one reason nearly 30% of people who earn over $100,000 say they don't have enough money saved for emergencies.
How can you avoid lifestyle creep? When you get a pay raise or pay off debt, increase your savings instead of your spending. For example, if your credit card payment is $150 a month and you pay off the card, increase your automatic savings contribution by $150 a month.
If you get a raise that increases your take-home pay by $200 per paycheck, increase your savings contribution by $200 per pay period. And if you get a one-time financial boost, such as a tax refund or an end-of-year bonus, add that money to your savings too.
Read more: How to save money in 2025: 50 tips to grow your wealth