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How to stop spending and start saving

Personal Banking Updated Mar 28, 2018

Are you worried about your savings? We get it – and you’re not alone. More than 40% of Americans worry they aren’t prepared for unexpected expenses.

While spending often comes easily, saving can be a tough task for most people. Luckily, it’s never too late – or too early – to start saving money.


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Follow these eight tips to begin adding more to your savings account today:

  • Start small

    Slow and steady wins the race, right? The key to starting a solid savings plan is just getting started – even if it’s in small dollar amounts. Begin by transferring $25 from your paycheck on payday into a savings account. You can always decrease the amount if, after a couple of paydays, it seems like a struggle.

    Once you've gotten comfortable with this regular payment, kick it up a notch. Cut out something that you normally buy regularly and add that savings to your contribution. Maybe the next time you get a raise or bonus, you could split the increase between your checking and savings account. For instance, say you get a 5% bump. You could send 2.5% of it straight to your savings account. That way, you can start saving more without even noticing a difference.


  • "The key to starting a solid savings plan is just getting started – even if it’s in small dollar amounts."


  • Stick to your budget

    Building a realistic budget is easier said than done. To create one you'll actually stick with, start by tracking your expenses for two months. You can do this in a simple Excel sheet, or use a tool like BMO Harris Total Look® or Mint that’ll break your spending down into categories. This will help you see exactly where your money’s going.

    Take an honest look at your expenses and identify one to two problem areas where you could cut back (like dining out too much). Then, break down monthly spending limits for each major category. Don't forget to include a line item for your monthly savings goal.

    Tip: You'll want to build your budget around your after-tax income, not any variable funds like bonuses and tax refunds.

  • Kick your bad habits

    There's a reason it's so hard to break our bad spending habits: they're literally etched into our neural pathways . Fortunately, there's a research-backed method that can help rewire your brain called habit replacement looping.

    The trick is to identify the habit you want to change, and then find a more positive action to replace it. For instance, are you spending $20 a week at fancy coffee shops? Instead of stopping for a latte each morning, find a brand of coffee grounds you enjoy and make your own cup at home. Eventually your new, more frugal habits will replace your old spending patterns. Try it!

    You might also like: 10 financial goals to set for yourself in 2018

  • Work up to saving 20%

    Have you heard of the 50/30/20 rule? It’s an easy way to help you break down your budget. The idea is that you divide your income into a few categories.

    Spend about 50% of your income on life essentials – like food, rent, and bills. Carve out 30% for discretionary spending, which can include dinners out, pedicures, or that trip to Bali. And last, but certainly not least, put 20% of your income toward your savings.

    Tip: If 20% isn’t a realistic target for you right now, don’t worry. Start with what works for you today, and then slowly build up your savings as we talked about earlier. For example, you could start saving 5%, and then bump it up to 10% in six months.

    You might also like: How to start an emergency fund

  • Ditch your debt

    Any debt can put a serious dent in your savings goals. If you owe money on a student or car loan, or carry a credit card balance, you’re losing hard-earned cash to high interest rates. For example, if you owe $3,000 in credit card debt at a 19% interest rate, it can cost you hundreds of dollars a year in interest alone.

    If you aggressively pay off your debt now, your money can start earning interest for you instead. The Consumer Financial Protection Bureau’s tips on consolidating credit card debt and paying off student loans can help.


  • "The trick is to identify the habit you want to change, and then find a more positive action to replace it."


  • Get an automatic savings plan

    Take advantage of products from your bank that will make it easier to save money and help you earn interest in the process.

    For example, with BMO Harris, you can set up automatic transfers from your checking account to add money on a regular basis to your savings account.

  • Set goals

    It helps to have an objective in mind – like saving for a new car, a fun trip or retirement. You can even give your savings accounts different nicknames (think “VW Beetle” or “Berlin”) to help you keep your saving strategies straight. Then keep yourself motivated by setting milestones and rewards (like going to a nice dinner once your account hits $5k).

    Also, make use of apps to help you track your progress. For example, Digit learns your spending patterns and figures out how much you can afford to save. Then it automatically transfers small amounts into different savings buckets you set up, like “grad school” or “rainy day fund.” You can also try the Save for a Goal calculator in BMO Harris Total Look®.

    You might also like: How much do you really need to retire?

  • Have a plan

    A majority of Americans are saving, but 57% don’t have a financial plan. While starting to save is important, having a plan is the key to savings success. Thinking about your long-term financial needs can give you a clearer picture of how much and how often you need to save.

    If you aren't sure where to start or have questions about planning for the future, you may want to sit down with a financial planner. They can help build a personalized financial plan and offer the support you need to reach your savings goals.

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