After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs.

Decide on your priorities

<ul><li>Emergency fund (3–9 months</li><li>of living expenses, just in case)</li><li>Vacation</li><li>Down payment for a car</li></ul>

Short-term (1–3 years)

<ul><li>Use resources such as community event listings to find free or low-cost events to reduce entertainment spending.</li><li>Cancel subscriptions and memberships you don’t use—especially if they renew automatically.</li><li>Commit to eating out only once a month and trying places that fall into the “cheap eats” category.</li><li>Give yourself a “cooling off period”: When tempted by a nonessential purchase, wait a few days. You may be glad you passed—or ready to save up for it.</li></ul>

Cut short your spending

Once you have an idea of what you spend in a month, you can begin to <a href="https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/creating-a-budget">organize your recorded expenses into a workable budget </a>. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending.

Set s budget

One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—perhaps you’re getting married, planning a vacation or saving for retirement. Then figure out how much money you’ll need and how long it might take you to save it.

Set a saving target

Review your budget and check your progress every month. Not only will this help you stick to your personal savings plan, but it also helps you identify and fix problems quickly. Understanding how to save money may even inspire you to find more ways to save and hit your goals faster.

Watch your savings grow

The first step to start saving money is to figure out how much you spend. Keep track of all your expenses—that means every coffee, household item and cash tip.

Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so a portion of every paycheck goes directly into your savings account.

Make saving automatic

Looking for a few simple ways to save money? Explore this step-by-step guide on how to save money to help you achieve your savings goals from Better Money Habits.

Make saving automatic

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