Nearly everyone understands the basic concept of spending less money than you earn and saving the difference. However, there are many reasons why learning how to save money is harder to implement than it sounds.

In this article, we’ll explore a few ideas on how to save money in 2021. We’ll look at ways that you can reduce your expenses, increase your income, and put your savings machine on autopilot.

We’ll share how much you should be saving, how to save money fast, and how to save for large purchases.

Know Where Your Money is Going

Do you know when all your money is coming in? And where it all goes each month?

The first step in saving money is to create a good budget. To do so, you need to understand how much money is coming in and where it goes.

Before you even start trying to decide how much and what to spend on, it’s best to first track your spending. Many spending patterns vary from week to week or month to month, so it’s best to track your spending for at least a month, if not more.

Remember that “budget” doesn’t HAVE to be a four-letter word.

A budget is a tool in the same way a hammer or a screwdriver is a tool. The best way to think about a budget is that it’s there to stop you from spending money on the things that you don’t find valuable so that you have money available to spend on the things that ARE important to you.

Still don’t believe you need a budget?

Read: 6 Reasons to Start a Budget Today.

How Much Should I Save Each Month?

Because everybody’s circumstances are different, there isn’t a set amount that you should save each month that works for everyone.  If you have the ability, saving 15% of your gross income is a worthy goal to shoot for.

But $300 per month is a bigger deal to someone making $2,000 per month vs. $1500 per month to someone making $10,000 per month—even though in both cases it’s 15%. 

The shift in mindsight is to avoid a scenario where you save only the money that you have leftover at the end of the month. If you don’t have a budget or a defined savings plan, this is what ends up happening by default.

The problem with saving at the end of the month is that it’s human nature to spend whatever money is around. So you’ll all too often find yourself in the situation at the end of the month where you have nothing left over.

Instead, “…have savings as the 1st item in your budget. I call that “Pay Yourself First” ”, says Patrina Dixon, a personal finance expert from It’$ My Money.

When you pay yourself first, it’s harder to spend that money. Sure, there will be months where you have unexpected expenses that force you to dip into your savings. But by setting aside that money FIRST, it reduces the temptation to spend.

How Can I Save Money on a Low Income?

As we mentioned earlier, saving a flat percentage of your money is easier the more total money you make.

If your monthly salary is $8,000, you may have more expenses than someone making $2,000 a month. On the other hand, with a more substantial pay, you probably have more frivolous expenses than someone who is using most of their income to buy the basics.

The most significant way to save money on a low income is “by cutting back on the big expenses such as housing and transportation.”, says Austin Weyenberg, the founder of The Logic of Money. “If you’re living on your own, maybe look for a roommate or two.”

Instead of buying a new car, maybe opt to take public transportation or buy a used car. These are the things that will make significant impacts on you financially, not cutting back on your lattes or skipping your date night at the movies.

How to Save Money in 2021
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The other way that you can save more money is by increasing the money that you earn each month.

Your ability to earn more money from your regular job or side hustles is going to vary with your specific situation. But, especially if you’re on a low income, there’s only so much money that you can CUT from your budget and still survive.

On the other side, your ability to earn MORE money is, at least theoretically, unlimited.

For more ideas on how to save money on a low income, read 5 ways to save money on a tight budget.

How to Save Money Fast

In most cases, saving money and creating a healthy financial picture is something that takes time, commitment, and dedication. If you want to make lasting change, you’ll want to take a longer perspective.

If your crazy uncle comes up to you with his latest “get rich quick” scheme, it’s best to probably turn around and walk the other way.

On the other hand, there are times when you need to save money fast.

This is usually in response to a specific and unexpected life event. If that’s the case, there are a few one-time things you could do to save money fast.

One way to get money fast is to sell unused household items on Craigslist, eBay, or at a garage sale. Or consider joining the gig economy by working for Uber, Lyft, Doordash, or Postmates.

Real change comes from small, incremental habits that you’ll stick to for the rest of your life, not from spending every waking hour driving for Uber or donating your plasma.

How to Save Money for a Big Purchase (Car, House, Retirement, etc)

If you have a big purchase coming up and are looking to save money, first of all congratulations!

It’s good to plan ahead and recognize the need to save for big-ticket expenses that fall outside of your regular monthly budget. One great way to save money for a big purchase like a new car or down payment on a house is with a sinking fund

With a sinking fund, you set aside a specific amount of money each month that’s earmarked towards your big expense.

It needs to be a real account (not merely a number in a spreadsheet). The more real and tangible you can make it, the better – there’s a reason the cash envelopes budgeting system is so useful!

Then when you reach your goal amount, you make your purchase. A sinking fund is also a great way to save for more substantial expenses like back-to-school expenses, Christmas presents, or family vacations.

6 Tips to Save Money

If you’re still looking for additional tips on how to save money, here are a few other ideas. Some we’ve touched on already, and others may provide the inspiration you’re looking for:

  • Before you start paying down any debt you have, create an emergency fund.
  • When you’re reviewing all of your monthly expenses, pay extra attention to any monthly recurring charges. Make sure you’re still getting value from all of your gym memberships, streaming services, and other subscriptions.
  • Have a financial checkup date night with your partner.
  • Before making any large purchase, write it down and put it on hold for 1-2 weeks. Then when you’ve “cooled down,” decide if you still want to make the purchase.
  • Don’t be overly fixated on price, even if you’re on a tight budget. Invest in quality and consider the total cost of ownership rather than the initial cost.
  • Set a goal and hold yourself accountable. Find an accountability partner (spouse, partner, family member, or close friend) to keep you responsible for your choices.

If you’re in a situation where you aren’t saving much money, hopefully, these tips can help you get started.

Learning how to save money isn’t easy, and you’re not alone if you’re struggling. Start slow and keep working at it – you’ll be a super saver in no time!