How to save money each month

how to save money each month

Is this the year to focus on saving more? If you’ve been disappointed when you’ve checked out your savings account balance, let’s change that this year by figuring out how to save money each month.

How Much Should I be Saving?

Actually, advice on the topic of how much you should be saving differs based on who’s giving the advice. At a minimum, most people recommend saving 10 percent of your income. Dave Ramsey recommends saving 15 percent of your income as a good goal. Still others recommend 20 percent. However, no one will complain if you save as much as you possibly can.

For the purpose of this article, let’s focus on 10 percent. And let’s pretend that you’re average, with an average salary, even though you’re anything but average!

The median household income from 2015 was about $55,775 annually. Let’s try to save 10 percent of that, which is about $465 per month. At the beginning of the year, we probably won’t hit that much per month, but our goal is to save $5,500 by the end of the year.

Can we do it?

How Much Money to Save Each Month (and Where to Put It)

To actually save money each month, you need to find the money in your budget to save. Don’t even have a budget? Start there. Without a budget or spending plan, your savings goals will be covered by your bills and never see the light of day.

After you’ve created a budget and started to track expenses, you need to have a system for savings.

To leave your savings untouched by the end of the year, ask yourself:

  • Do I have a savings account set up already?
  • Are automatic deposits or manual deposits better for me?
  • How will I keep myself accountable to my savings goals?

Month-by-Month Breakdown

Once you have a savings system, let’s break down our yearly goal into months. By concentrating on different savings goals for each month and creating a savings snowball, we should have $5,300 saved by the end of year … almost anyone, on any budget, can do this.


Spend this month focusing on all your fixed expenses. By cutting these fixed expenses, changes this month will impact the rest of your year.

For instance:

  1. Cut your cable. This could save you $65 per month.
  2. Eliminate your landline. This could provide $30 in savings per month.
  3. Try a cell phone company like Republic Wireless that could easily cut your cell phone bill in half. Savings? Possibly $25 per month.
  4. Increase insurance deductibles. Some estimates indicate you can save 7 percent of your car insurance premium by increasing your deductible from $250 to $500. This is a savings of $56, according to my car insurance premiums. You may also be able to drop some of your insurance entirely.
  5. Keep the change … yourself. Throw all of your change in a change jar all month. It should yield $5 in savings.

Monthly savings total: $181 (This will be the base savings rate for the first few months.)

Running savings total: $181


This month is one of the coldest of the year. Nonetheless, make a commitment to drop your thermostat. By dropping your home temperature 3 degrees or so, you may save up to $20 this month. Wear heavy sweaters, if needed. If you feel tempted to warm up your house, just remember that February is also the shortest month of the year!

Monthly savings total: $201

Running savings total: $382


Your tax refund, if you’re getting one, is coming soon. Last year, the average refund was over $2,800. Can you save just $500 in your online savings account?

Monthly savings total: $681

Running savings total: $1,063


This time of year is prime yard sale season. Declutter your house by having a yard sale and save the proceeds. $200 perhaps?

Related >> Learn how to prep for a yard sale.

Monthly savings total: $381

Running savings total: $1,444


Make a commitment to pack your lunch at work all month. If you normally eat eight lunches out per month at $10 per meal and you can pack a lunch for $2, this saves you $64 this month.

Monthly savings total: $245

Running savings total: $1,689


If you live in the northern hemisphere, you can exercise outside for the summer (if you’re in a hot area of the US, use this tip for the cooler winter months). Cancel your gym membership for the next three months. Possible savings? $150.

Monthly savings total: $331

Running savings total: $2,020


Work on your grocery budget this month. First, create meals out of your pantry or any stored food. Next, meal plan ($5 Meal Plan can help). Then, use all the other grocery shopping tips: Don’t shop hungry, stick to your list, use coupons, and buy store brands. These strategies, depending on your shopping habits now as well as your family size, can easily save you $150 this month.

Monthly savings total: $331

Running savings total: $2,351


Concentrate on your debts this month. Does it make sense to consolidate any of your debts? Can you transfer one credit card balance to a lower interest rate card? Can you refinance your home to get a better rate or get rid of PMI? This could result in savings of $200 per month, or more — much more. You’re also still saving $100 per month in the food category from your strategies you used last month.

Monthly savings total: $481 (your base savings rate is now $481 due to refinancing and food savings)

Running savings total: $2,832


Cut your commute. The average commuter has a 30-mile, round-trip commute and the average car gets 23.6 miles per gallon. AAA reported the national average gas price was $2.22 per gallon as of Nov. 7, 2016. By carpooling one day per week, using public transportation one day per week, or working from home one day per week that’s about $2.82 per day or $11.28 per month (calculated as $10 below). That’s not even counting the wear and tear on your vehicle. You’ll save even more if you carpool more often.

Monthly savings total: $491

Running savings total: $3,323


By now, you’ve probably created a little more wiggle room in your budget, not even counting your growing savings account! Take this time make an investment or two. Maybe you can buy some food in bulk, or even buy a quarter of beef if you have freezer space. Or you can stock up on sale items. This will add savings of $300 over the rest of the year.

Monthly savings total: $781

Running savings total: $4,104


Can you make this a no-spend November? Use the library for books and movies. Barter or trade goods and services. Don’t eat at restaurants at all. Avoid the vending machines. And who knows? When you wait to buy something, you may decide you don’t need it all when December rolls around. Estimated savings this month would be $600.

Monthly savings total: $1,081

Running savings total: $5,185


Simplify your gift-giving by carefully evaluating who needs a Christmas gift from you this year and what they need. Use discounted gift cards to buy the important gifts. Savings? An estimated $100.

Monthly savings total: $581

Running savings total: $5,766

Even making conservative estimates, we still exceeded our $5,500 savings goal. Even if all of these options are not available to you, my hope is that your year-end savings account balance will reward your hard work and sacrifice throughout this year.

Stay Motivated

Lastly, how can you stay motivated to save money each month?

Have a visible goal that you check frequently. Track your progress. Course correct as often as necessary. And keep coming back to GRS to mingle with your fellow savers!

Are you up to start saving money each month? How much do you think you can save, and how do you plan to do it?

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There are 16 comments to "How to save money each month".

  1. My Factoring Network says 04 January 2016 at 04:56

    I think we have seen many ideas to save money in 2015. if we look over the web there are plenty of ideas of the same, but the actual savings depend on the type of expenses we occur and what formula we apply to save. Care should be taken that unnecessary expenses should be stopped. Nice post. Monthly allotment of savings idea will work. Thanks for sharing.

  2. Kalie @ Pretend to Be Poor says 04 January 2016 at 05:57

    Great ideas! One thing we do is have any money we want to save, invest, or give automatically withdrawn at the beginning of the month. Obviously this requires some awareness of your actual spending and how to reduce it. But we find that it isn’t too hard to make it work without that money, yet it probably wouldn’t be left at the end of the month if we didn’t put it where we wanted it right off the bat.

  3. Emma says 04 January 2016 at 06:50

    One way I’ve found that helps me track savings from cutting expenses was to create a “Challenge” savings account that I send the money to either automatically if it’s from a fixed expense or manually if I managed to come under budget.

    For example:
    Brought cell phone bill down … Auto savings $40

    Cut subscriptions (Magazine, Hulu, Gym, etc)… Auto savings $30

    Food budget spent $10 less than budgeted… Either manual savings or rollover to next month for bulk purchase

    Doing this makes it fun to see exactly how much those savings add up to instead of it getting mixed up with the regular savings I already doing. I think I got the idea from the Budgets are Sexy blog.

  4. lmoot says 04 January 2016 at 09:30

    My goal this year is to save approximately 60% of my income. I have regularly saved 30-50% of my income for the last several years (I don’t earn a lot so it’s not a lot). Right now I am “front-loading” my mortgage payments…paying extra at the beginning of the year, so that more of my subsequent payments go towards my principle for the rest of the year, and thereafter (just the 10k extra has caused my monthly principal paid to nearly equal interest paid…which it wasn’t scheduled to do for almost 2 more decades). To accomplish this I re-escrowed my mortgage and car insurance so that I could send what would have been a large up front cost, to my mortgage instead. I also took advantage of a 0% balance transfer option (which I don’t normally do); I transferred $6k of a previous 0% purchase offer that was expiring in Feb, and extending the 0% interest rate for 18 months; there was a 3% fee, but my mortgage is 5.375% and I immediately sent the money I had queued up to pay off the cc, to my mortgage, earning me a guaranteed 2.375%. I also have started working from home 2-4 days per week (as of last week!), saving me 2 hrs/ 40 miles of driving per day, and money from eating out for lunch (a re-emerging bad habit).

    All of this has allowed me to throw 10K towards my mortgage in the last month (5k in Dec, 5k in Jan), with approx. $45k left. I will be using my previously saved up property tax and homeowners insurance fund (which I no longer need since as of next month it will be escrowed into my house payment again), coupled with Jan savings, to send another $5k in Feb. And I will send March and April’s $5k with savings from the previous months, supplemented by my efund (1/2 my efund will be dumped into March and the other 1/2 into April), to make up any difference (risky, I know; I will be exposed for those 2 months…I have reasons to take on this risk that I won’t get into right now).

    Starting in May I will cease the extra payments in order to re-fuel my efund and save up for the second and final round of the “fast and furious” paydown, to begin in Dec, 2016, to be completed before my 33rd bday (May 2017), and before my 18 month 0% offer is due for the cc…which will be down to around $4k by then, reduced by minimum payments.

    That’s what my 2016 personal finance, personal calendar looks like.

    • lmoot says 04 January 2016 at 14:14

      To clarify:

      1) The 0% transfer offer was on an existing cc…I did not open another account. I transferred the balance from one existing card to another.

      2) When I pay off the mortgage in 2017, it will be 8 years into a conventional 30 year mortgage (20% down). To add to the idea of limiting monthly expenses, minimizing housing expenses when possible, can make the largest impact on your finances. If you can pass up the dream house in order to pursue a dream life (at least until you can afford both), you will already be so ahead of the game. 7 years ago, living at home and working part time at an art store making less than 15k/ year, I never would believe that I’d be paying off a house on a single (not large) income, by the age of 33. I keep saying it because it amazes me. Had I gotten the house that I wanted (but lost to another buyer), I would be paying a much higher mortgage and property taxes, and not saving nearly as much…and though I’d still pay it off early, it definitely wouldn’t be 22 years early.

  5. freebird says 04 January 2016 at 11:07

    I think ultimately savings are the net result of today’s spending decisions, and there’s little chance some vague undefined future potential can ever win this contest, so the best way to increase savings is to paint a clear bright picture of what the money will actually buy in the future to compete against the temptations of today. For those who dislike their work environments this should be easy– your savings can buy your freedom from an unhappy financial dependency. So make a card asking “how many hours of your life are you working to buy this?” and keep it in your wallet alongside your credit cards. Or if you write an app that calculates and displays this exact time value front and center whenever your web browser hits an order fillout menu, you may find a market for it!

    It may be harder to appeal to the happy campers who enjoy their jobs and feel no need to keep any savings at all because life is good. If you’re in this boat and have a pessimistic streak, remind yourself how unexpected stuff happens that turns great circumstances into bad. Ask around and find out what it’s like to work for a bad boss; you might be reporting to him one day, too bad if you don’t have the FU money at hand! For perpetual optimists look at the extra possibilities that big savings bring you– it’d be a shame if you hit upon some fantastic business idea, then couldn’t risk upsetting the paycheck to paycheck applecart to pursue it due to lack of financial cushion. A few quarters of living expenses stashed away gives you the freedom to stop out to pursue once in a lifetime opportunities that many (maybe most?) of us get but cannot take advantage of.

    Anyway for me savings are now in the rear view mirror, been there done that in spades, and a bit overwhelmed by the choices available now. For me having a clear picture of what the surplus could be used for, whether to buy my way out of jail or buy my way into an interesting startup was what motivated me into a persistently high savings rate.

  6. Karthigan Srinivasan @ StretchADime says 04 January 2016 at 14:13

    I have already done the basics like cutting the cable, low cost cell phone plan etc. I ‘m going to cut down on eating out at lunch and also as a family do meal planning to minimize food or grocery wastage.

    I read that an average American family wastes about $600 worth of food a year. To learn more, read my post –

  7. Christine says 04 January 2016 at 17:48

    Thanks for this great article! You should make this monthly checklist downloadable so people can post it to their fridge or bathroom mirror. “People need to be reminded more than they need to be taught something”. It’s a great list, make it accessible for people to be reminded. I’m going to print it out for myself. Happy New Year!

  8. James says 04 January 2016 at 22:42

    This is cool – I like how you spell everything out in a plan. I want to have a huge yard sale this year (if I don’t decide to donate nearly everything) so I will be putting that money towards my savings.

    … but, who still has a landline anymore? 😛

    • Sam says 06 January 2016 at 10:46

      We do. Keep it for the alarm system. Otherwise we don’t use it unless one of us has lost our phone, the home phone is actually unplugged most of the time and the line is just used for the alarm system.

  9. a woman says 05 January 2016 at 15:24

    Apply month August in January. Move January to February. Without too much effort in these winter months we can increase the volume of future economies just by paying less bills/invoices.

    In plus, every 3 months take the economies and go to the bank to pay the depth ( if there is any case): the next rate is going down so the saved money increase.

  10. Jeff says 05 January 2016 at 17:31

    As I often say with these cord-cutting tips, cutting cable only works if you have decent alternatives available for internet access. The majority of our cable bill is just the internet as we have basic TV and there is nothing else around here that is as fast and as reliable so cord-cutting is simply not an option.

  11. KGLisa says 06 January 2016 at 05:45

    Good advice on getting rid of cable/satellite IV. Our bill for satellite dish TV was getting higher and higher, even as the shows being offered were of poorer quality. When EVERY channel was showing reality show based on people with big families we decided it was time to quit. We bought a ROKU, now for 7.99 per month we get Netflix, which is more than enough TV. It also pulls in Sky New from the United Kingdom for free, so we get another perspective on what is going on in the world.

  12. Lesley Pearson says 10 January 2016 at 07:48

    Nice post with good ideas. Completely agree on the importance of a separate savings account. One savings approach we use is to plan our monthly budget based on 40 hours and then direct any overtime pay to savings each payday. One of our savings goals this year is funding Roth IRAs.

  13. Trudy Connor says 14 January 2016 at 17:39

    Every 3rd months is freezer month were we eat strictly out of what we have tossed into the freezer.
    We just stopped the newspaper subscription if I pick it up at the store it is $2 for The Sunday paper to have it delivered was $19.
    We have a home phone with OOMA no monthly bill
    Next I want to tackle the cable bill, not sure how to reduce it as we have our internet through it,

  14. Darius Gaynor says 13 February 2016 at 14:55

    Awesome ideas! My goal is to save 10% of my business income every month after I re-invest most of it.

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