How to Save More Money from Your Salary Each Month: How You Can Build Good Habits, Increase Savings

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How much money do you want to save each month?

The amount of money that you can save is directly correlated to the amount of income that you earn and your fixed monthly expenses.

If your goal is to save more money, then it’s important for you to focus on your habits and figure out how to increase savings over time.

In this blog post we will discuss some tips and tricks on how you can start saving more now!

If you’re looking for tips on how to save money fast, check out our tips on that topic.

Quick Tips to Save More Money:

  • Save with a Specific Goal in mind to help motivate you (i.e. a house or vacation).
  • Track Your Spending – use an app or spreadsheet to watch your spending like a hawk.
  • Create and stick to a budget with fixed monthly expenses and savings goals.
  • Find ways to decrease little spending habits that add up (i.e. eating out, going to the movies, shopping for new clothes, etc.).

How Much of your Income Should Go to Expenses?

There are some general guidelines out there that are designed to help you track your spending and savings.

Now, obviously the reality and feasibility of these recommended income to expense ratio is going to vary depending on:

  • Where you live.
  • The size of your family.
  • Medical situations.
  • The job you have.
  • Lifestyle choices.

However, it can still be a useful target to aim for.

Most experts recommend the 50 – 20 – 30 rule when budgeting your monthly savings and expenses.

The 50 – 20 – 30 income to expense rations states that:

  • 50% of your monthly income should go to living expenses.
  • 20% should go to savings.
  • 30% should be discretionary.

If your goal is to save more, you can either try to lower your living expenses or divert some of your discretionary spending to savings instead.

Understanding your Income and Expenses

If you want to save more money each month, the best place to start is at the source. This would be your income, which describes all the money coming into you each month, such as:

  • Money from your salary.
  • Dividends from investments.
  • Cash for odd jobs or side hustles.

Your monthly income sets your baseline, and it’s a simple formula.

If you want to save money each month, the money that’s coming in needs to exceed the money that’s going out.

Sometimes, that’s easier said than done.

Obviously, the best way to increase savings is to lower our expenses and/or increase our income (or both) so we can start saving immediately and easily every month.

There are pretty much 3 main categories of expenses that you can expect to always be there:

  1. Housing (rent, mortgage, utilities, etc.)
  2. Food.
  3. Transportation (car payments, gas, maintenance, insurance, etc.)

5 Tips for Saving More Money from your Salary Each Month

Now that you’ve got an overview of the income to expense relationship, check out some of these tips below on how to retain more of your salary every month.

  1. Start saving automatically.
  2. Lower your housing expenses.
  3. Be diligent about your food budget.
  4. Optimize your transportation spending.
  5. Cut out recurring expenses you don’t need.

#1 Start Saving Automatically

After you’ve analyzed your income and expenses to start making a monthly budget, the first step is to start paying yourself first.

The best way to get into the habit of saving money each month is to set up an automatic transfer from your paycheck to your savings account.

This way, you won’t even have to think about it. The savings are automatic.

By setting up an automatic transfer to your savings account, you’ll be less inclined to dip into funds that you intended to put away.

#2 Lower your Housing Costs

This next one is a little more difficult, but can have a big impact on how much money you save each month.

Most experts recommend that no more than 30% of your monthly income should go towards housing costs. Housing costs include rent or mortgage, property taxes, utility payments, and home or renter’s insurance.

With increasing housing costs around the country, that 30% target has become difficult to achieve.

Some ways you can lower your housing costs include:

  • Finding a roommate.
  • Managing your gas, water, and electricity use.
  • Downsize.

#3 Be Diligent About your Food Budget

Your food spending is another one that can really start to creep into your monthly savings.

Be diligent in tracking your food spending by logging everything you buy into a spreadsheet, or using an app like Mint to do it for you.

This will help give you the big picture and identify any leaks that are causing your monthly savings goals to evaporate quickly.

If there’s one area where people tend to spend more than they need, it is typically on groceries because of their abundance and ease of access.

You can cut back on grocery expenses by buying simple ingredients at home, shopping strategically (i.e., with meal plans), learning from people who cook, and only buying what you know you can use.

If you’re able to prep meals in advance and freeze them, you’ll be less inclined to order takeout when you don’t feel like cooking.

Eating out at restaurants too often can quickly deplete your savings.

#4 Optimize your Transportation Spending

Another big monthly expense is typically your transportation costs.

This includes:

  • Car payments.
  • Fuel.
  • Maintenance.
  • Car insurance.
  • Public transportation fares.

Luckily, this category has some good options for reducing cost.

First, think about the car you drive. If you can buy a used car and keep it well maintained, it’s going to be cheaper in the long run.

Keep good tire pressure and accelerate smoothly to get better gas mileage.

If you live in a city with good access to public transportation, consider using that rather than driving your personal car.

Compare car insurance quotes periodically to make sure you’re able to get the cheapest rates.

Finally – this one is a bit of a crossover – look into ways to live closer to where you work to cut down on your commute time and expense.

#5 Cut Out Unnecessary Expenses

Last, but not least, it’s important to audit your monthly spending to look for ways to cut out the unnecessary things.

Find out which purchases you can cut down on – a candy bar or coffee every day, for example.

Then find new and creative ways to avoid those expenses completely by doing something else that fulfills the same need but doesn’t cost anything.

If there’s an item in your monthly spending that is unavoidable, like gas or rent, look into getting it at the cheapest possible price!

Check out the subscriptions and memberships you have to make sure that you’re really getting enough use and value out of the ones you pay for each month.

Start Saving More of Your Salary Today!

If you want to save more money each month, there are a few steps that can help.

Start by saving automatically with transfers into your savings account and work on lowering housing expenses (maybe sell your house or find cheaper rent).

Be diligent about the food budget — don’t buy anything except what’s necessary for immediate use.

Optimize transportation spending by carpooling or biking whenever possible, and cut out recurring monthly expenses like cable TV and gym memberships when applicable.

You’ll be surprised at how much those little changes will add up over time! Get started now so you’re not scrambling to save later.