To set up an automatic deposit, talk to the payroll staff at your job (or, if your employer uses one, your third-party payroll service). If you can provide account information for a savings account separate from your basic checking account, you should generally be able to set up a direct deposit scheme with no problems. If for some reason you can’t set up an automatic deposit for each paycheck (like if you support yourself with freelance work or are paid mostly in cash), decide on a specific cash amount to manually deposit into a savings account each month and stick to this goal.

If taking out a loan is unavoidable, try to make as big of a down payment as possible. The more of the cost of the purchase you can cover up front, the quicker you’ll pay off your loan and the less you’ll spend on interest. While everyone’s financial situation differs, most banks recommend that your debt payments should be about 10% of your pretax income, while anything under 20% is considered healthy. About 36% is seen as an “upper limit” for reasonable amounts of debt. [2] X Research source

Big goals, like retirement, take a very long time to achieve. In the time needed to reach these goals, financial markets are likely to be different than they are today. You may need to spend some time researching the predicted future state of the market before setting your goal. For instance, if you’re in your prime earning years, most financial commentators say that you’ll need about 60-85% of your current yearly income to maintain your current lifestyle each year you’re retired. [3] X Research source

So, in our example, if houses in the area you’re looking at are about $300,000 apiece, you’ll need to come up with at least 300,000 × 20% = $60,000 in two years. Depending on how much you make, this may or may not be feasible. Setting time frames is especially important for essential short-term goals. For instance, if your car’s transmission needs to be replaced, but you can’t afford the new transmission, you’ll want to save up the money for the replacement as quickly as possible to ensure you’re not left without a way to get to work. An ambitious but reasonable time frame can help you achieve this goal.

For instance, on an income of $3,000 per month, we might budget as follows: Housing/utilities: $1,000 Student loans: $300 Food: $500 Internet: $70 Gasoline: $150 Savings: $500 Misc.
$200 Luxuries: $280

It can be handy to keep a small notebook with you at all times. Get in the habit of recording every expense and saving your receipts (especially for major purchases). When you can, enter your expenses in a larger notebook or a spreadsheet program for your long-term records. Note that, today, there are many apps you can download to your phone that can help you keep track of your expenses (some of which are free). If you have serious spending problems, don’t be afraid to save every single receipt. At the end of the month, divide your receipts into categories, then tally each up. You may be shocked by how much money you spend on purchases that are far from essential.

Let’s say you’re at a bar with your friends and one of them orders margaritas for the group; make sure they don’t end up going on your card. Depending on favors like this to be returned later on is one way to find yourself in a financial hole - potentially, a very deep, deep hole. Don’t split the bill just for the sake of convenience. If your meal costs 1/3{\displaystyle 1/3} that of your friends, you should not pay for half of the bill. Consider downloading a phone app to help you more accurately calculate tips.

For example, let’s say that, by working a low-paying job during your twenties, you eventually save up $10,000 and put this money into a high-yield account with a 4% annual interest rate. Over 5 years, this will earn you about $2,166. 53. However, if you had put this money away one year earlier, you would have made about $500 more by the same point in time without any extra effort — a small but not insignificant bonus.

If you haven’t already done so, talk to your employer about the possibility of contributing to a 401(k). These retirement accounts allow you to automatically deposit a set amount of each paycheck in the account, making saving easy. Additionally, the money you deposit into a 401(k) is often not subject to the same taxes as the rest of the money in your paycheck. Finally, many employers offer proportional matching programs with their 401(k) services, meaning that they’ll match a certain percentage of each payment. As of 2014, the maximum amount of money you are allowed to place in a 401(k) per year is $17,500. [7] X Research source

For more information on making intelligent stock investment decisions, see How to Invest in the Stock Market.

If you’re discouraged about your financial situation, consider talking to a financial counseling service. These agencies, which often operate for free or very cheap, exist to help you begin saving so that you can meet your financial goals. The National Foundation for Credit Counseling (NFCC), a non-profit organization, is a great place to start. [9] X Research source

Unsubscribe from optional television or internet packages. Switch to a thriftier service plan for your phone. Trade-in an expensive car for one that is fuel-efficient and cheap to maintain. Sell any electronic gadgets going unused. Buy clothing and home furnishings from thrift stores.

If you’re renting, you may want to try negotiating with your landlord for a cheaper rent. Since most landlords want to avoid the risk that comes with looking for new tenants, you may be able to get a better deal if you have a good history with your landlord. If you need to, you may be able to exchange work (like gardening or maintaining the house) for cheaper rent. If you are paying a mortgage, talk to your lender about refinancing your loan. You may be able to negotiate for a better deal if you’re in good standing. When refinancing, try to keep the repayment schedule as short as possible. You may also want to consider moving to a cheaper housing market altogether. According to a recent study, the cheapest housing markets in the U. S. are in Detroit, Michigan; Lake County, Michigan; Cleveland, Ohio; Palm Bay, Florida; and Toledo, Ohio. [10] X Research source

Pick cheap, nutritious foods. Rather than buying prepared, processed foods, try checking out the fresh food and produce aisles of your local grocery store. You may be surprised by how cheap it is to eat healthily! For instance, brown rice, a filling, nutritious food, can come in large, twenty-pound sacks for less than a dollar per pound. Take advantage of discounts. Many grocery stores (especially large chains) give out coupons and discounts at the check-out counter. Don’t let these go to waste! If you frequently go out to eat, stop. It’s generally much cheaper to cook a meal at home than it is to order an equivalent dish in a restaurant. Regularly cooking your own food also teaches you a valuable skill you can use to entertain friends, satisfy your family, and even attract romantic interests. Don’t be afraid to take advantage of local free food resources if your situation is serious. Food banks, soup kitchens, and shelters can all provide meals for free to those in need. If you need help, contact your local Department of Social Services for more information.

Turn off the lights when you’re not around. There’s no reason to leave the lights on if you’re not in the room (or in the house), so flip them off when you leave. Try leaving a sticky note by the door if you’re having a hard time remembering. Avoid using heating and A/C when it’s not essential. To stay cool, open your windows or use a small personal fan. To stay warm, wear several layers of clothing, wear a blanket, or use a space heater. Invest in good insulation. If you can afford to pay for a substantial home improvement project, replacing old, leaky insulation in your walls with high-efficiency modern insulation can save you money in the long run by keeping your house’s warm or cool internal air from escaping. If you can, invest in solar panels. As a serious investment in your own future (as well as the planet’s), solar panels are the way to go. Though the up-front cost can be quite high, solar technology becomes cheaper with each passing year.

Investigate public transit options near you. Depending on where you live, you may have a variety of cheap options for public transit at your disposal. Most big cities will have metro, subway, or streetcar lines running in and out of the city, while mid-sized towns can have bus or train systems for you to use. Consider walking or biking to work. If you live close enough to your job for this to be feasible, both are excellent ways to get to work for free while simultaneously getting fresh air and exercise. Consider booking flights and train tickets in advance online, to not only save time but to also save money. Often ‘Early bird’ deals exist for those booking early. If taking a car is unavoidable, consider carpooling. Doing this allows you to share fuel and maintenance expenses with the other members of the carpool. Plus, you’ll have someone to talk to during your commute.

Keep up-to-speed on community events. Today, most towns and cities will have an online events calendar listing upcoming events in the local area. Often, events put on by the local government or community associations will be cheap or even free. For instance, in a medium-sized town, it’s often possible to explore free art exhibitions, see movies in a local park, and attend donation-based community rallies. Read. Compared to movies and video games, books are cheap (especially if you buy them at a used bookstore). Good books can be absolutely captivating, allowing you to experience life through the eyes of exciting characters or learn new things you might otherwise never have encountered. Enjoy cheap activities with friends. There is almost no end to the number of things you can do with your friends that require little or no money. For instance, try going on a hike, playing a board game, catching an old movie at a cheap second-run theater, exploring part of town you’ve never been to, or playing sports.

Don’t smoke. Today, the harmful effects of smoking are well-known. Lung cancer, heart disease, stroke, and a variety of other serious illnesses are known to be caused by smoking. [11] X Trustworthy Source Centers for Disease Control and Prevention Main public health institute for the US, run by the Dept. of Health and Human Services Go to source On top this, cigarettes are expensive — depending on where you live, up to about $14 per pack. [12] X Research source Don’t drink excessively. While a drink or two with friends won’t hurt you, regular heavy drinking can cause serious problems in the long run, like liver disease, impaired mental function, weight gain, delirium, and even death. [13] X Research source In addition, nursing an alcohol addiction can be a massive financial burden. Don’t do addictive drugs. Drugs like heroin, cocaine, and methamphetamine are extremely addictive and can have a variety of seriously harmful (even lethal) effects on your health and can be much more expensive than alcohol and tobacco. For instance, country musician Waylon Jennings is purported to at one point have spent over $1,500 per day on his cocaine habit. If you need help overcoming an addiction, don’t hesitate to contact an addiction hotline.

However, just because things like food, water, and shelter are important doesn’t necessarily mean that you have to splurge on them. For instance, cutting down on the amount that you go out to eat is one easy way to drastically reduce your food expenses. Along the same lines, moving to an area with cheap rent or home prices is a great way to spend less on housing. Depending on where you live, housing costs can eat up a large chunk of your income. In general, most experts recommend against agreeing to any housing arrangement that will cost more than one-third of your income. [14] X Research source

Note that living expenses can vary based on the local financial climate. While it’s possible to survive on $1,500 for a few months in Detroit or Phoenix, this might not even pay one month’s rent for a cheap apartment in New York City. If you live in an expensive area, your emergency fund will naturally need to be bigger. Besides giving you the peace of mind of knowing that you’ll be OK in the event of career difficulties, having an emergency fund can also earn you money in the long run. If you lose your job and you don’t have an emergency fund, you may be forced to take the very first job you’re offered, even if it doesn’t pay well. On the other hand, if you can survive without working for a while, you can afford to be much pickier and potentially land a better-paying job.

Once you’ve covered your essentials and built up a reasonable-sized emergency fund, you can safely devote almost all of your extra income to paying off your debt. On the other hand, if you don’t have an emergency fund, you may have to split your extra income up so that you use a portion to pay off your debt each month while simultaneously diverting some into your emergency fund. If you have multiple sources of debt that are proving overwhelming, look into consolidating your debts. It may be possible to roll all of your debts into one loan with a lower interest rate. It’s important to note, however, that the repayment schedules for these consolidated loans can be longer than those for your initial debt. You may also want to try negotiating with your lender directly for a lower interest rate. It’s not in your lender’s best interest to let you go into bankruptcy, so s/he may agree to a lower interest rate in order to allow you to pay off the loan. For more information, see How to Get Out of Debt.

When you get paid, it can be tempting to immediately make an impulse buy. To avoid this, deposit your savings into an account as soon as you get paid. For instance, if you’re trying to save 10% of your income and you get a paycheck for $710. 68, immediately deposit 10% (find this by moving the decimal point one space to the left), or $71. 07. This practice can help you avoid unnecessary spending and accumulate a good amount of money over the years. An even better idea is to automate as much of the saving process as possible so that you don’t even have the tempting money to begin with. For instance, talk to your employer about setting up an automatic deposit system through your bank or with a third-party app. This way, you can transfer a set amount or percentage of each paycheck to a checking or savings account without having to make any extra effort.

For example, buying an ergonomic chair to sit in while you work isn’t absolutely essential, but it is a smart long-term choice because it allows you to do more work while minimizing back pain (which, coincidentally, can be expensive to treat if it develops into a serious problem). Another example is replacing your home’s old, troublesome water heater. While the old one may have sufficed in the short term, buying a new one means you won’t have to spend money on repairs when the old one breaks, saving money in the long run. Other examples include purchases that allow you to get to work for cheaper, like monthly or yearly public transit passes, tools that help you work more effectively, like a phone headset if you’re in a job that occupies your hands, and purchases that make it easier for you to work, like posture-improving gel inserts for your shoes.

Luxuries include anything that’s not an essential good or service and provides little or no long-term benefit. This broad category can include things like trips to expensive restaurants, vacations, new vehicles, cable television, pricey gadgets, and much more.