How to start saving money early — and still enjoy your life

Saving doesn’t have to mean saying goodbye to fun. Here’s how to kick-start your savings game now — without giving up your favorite splurges — so you can crush your future goals.

There are plenty of financial experts who love telling young adults that they’re wasting money on dining out, coffee, concerts and more, as if guilt is the best way to encourage people to save. But having fun and saving money isn’t an either/or choice. No matter your income, you can live your life and build your future with just a few simple habits, smart systems and mindset shifts.  

Why saving early matters

Any small habit, repeated consistently, will grow over time. The same is true about saving money. For example, let’s say you put aside $25 per week into a savings account. While saving $25 on its own doesn’t sound like very much, at the end of the year, you’ll have $1,300. 

And let’s not forget about compound interest — the interest earned on interest. Suppose you have a savings account that earns 3.00 percent APY, compounded daily. That $25 per week becomes $1,328 after one year. Now imagine how much it would grow after 10 years. Spoiler alert: about $14,000.

As you can see, the earlier you begin, the more your money works for you over time. 

How to start saving money

Just because you know that saving money is a good idea, it doesn’t mean you know how to begin. The good news is that several low-effort steps can help you get started.

Use the 50/30/20 budget rule

A good first move is creating a budget — and the 50/30/20 guideline is flexible and easy to follow (freeing up more of your mental bandwidth). In a nutshell, the goal is to spend 50 percent of your take-home pay on needs (such as rent, groceries, utilities, transportation), 30 percent on wants (such as entertainment or dining out) and 20 percent on savings and debt payoff.

What’s helpful about this guideline is that it doesn’t require exact numbers. You simply need to make sure you’re not exceeding your spending percentage in any category. Additionally, you can always tweak the 50/30/20 to fit your lifestyle — perhaps making it 60/20/20 or 70/20/10 if that makes more sense for you. Not a fan of percentage-based budgeting? Here are several other methods you can try. 

Open a separate savings account

Keeping your savings separate from your checking account is also a great way to ensure you’re keeping your nest egg intact. To further avoid dipping into your savings, open a separate account just for that “future you” money. U.S. Bank offers a number of different savings account options to fit your specific needs.

Make automation your new best friend

Once you’ve opened a savings account, you still need to actually move money into it. And that’s where automatic transfers come in handy. As the popular saying goes: “Set it and forget it.” 

How much should I save each month — and how much should I keep in savings?

While there’s no single “right” number (what matters is consistency), aim to save about 10 percent to 20 percent of your take-home pay if you can. You can also adjust as you go. If all you can afford to save right now is $50 per month, that’s a great start. Just plan on revisiting your budget in two or three months to see if you can increase your savings rate to $75 or $100 per month. Then do that again in another few months, then again and again until you’ve reached your income percentage goal.

As for how much money you should keep, think of your savings in terms of three buckets:

• Everyday savings: For short-term goals like travel, tech upgrades and gifts
• Emergency fund: For unexpected expenses, like the car battery that went kaput or the surprise root canal
• Long-term savings: For big goals like buying a car or saving up for a down payment on a house

The exact amounts you put toward each of these buckets will depend on your income, expenses, financial goals and timeline. But financial experts generally recommend keeping three to six months’ worth of essential expenses in your emergency fund, while continuing to contribute smaller amounts toward everyday and long-term goals as your budget allows.   

Small swaps that add up

One way to bolster your savings is finding lower-cost versions of your more expensive habits or services. For example:

• Buy high-quality secondhand clothes instead of brand new (bonus: This is also better for the environment).
• Recreate your favorite café beverages at home — flavored syrup and whipped cream can go a long way, for a fraction of the cost.
• Borrow movies and media from the library rather than paying for cable and streaming services. (Or perhaps just cancel a few of the subscriptions you currently have.)

Even while you’re saving money, you can (and should) budget for enjoyment. Fun should always be part of your financial plan. 

Make it stick: How to stay motivated

Turning saving into a game can keep your energy high when motivation dips. One way to do this is by using the savings goal tracker in the U.S. Bank Mobile App to create multiple savings goals. Set up automatic transfers to those buckets and watch as the progress bars grow. Challenge yourself to keep those trackers moving forward every week.

You can also stay inspired by pairing your goals with other visual cues. Saving for a vacation? Set a photo of your dream destination as your phone background. Saving for a wedding? Create a checklist of expenses, and cross them off each time an amount is put aside in your savings. 

And finally, celebrate small wins. You reached 25 percent of your goal? Go you! Invite some friends over for a game night, or cook a special meal at home. There’s no need to wait until you’ve finished the race to appreciate how far you’ve come.