If you read a decent amount of financial advice, you might have seen advice that says the average person should save at least 20% of their salary.
If you’re aspiring to reach FIRE, or financial freedom and early retirement, you probably want to set your saving goal even higher.
Are you hitting this goal, or anywhere close to it?
Well, unfortunately, the average American sure isn’t.
In fact, only 16% of Americans end up saving more than 15% of their salary according to CNBC.
However, if you’re not quite at 20% (or whatever amount your goal is) and you want to start saving more, then there are definitely ways to improve.
Knowing how to save money from your salary every month is crucial to hitting your goal, so stick around to see over 10 different ways you can start saving today!
Let’s dive in…
How to Save Money from Your Salary
Before we get into it, I recommend sorting out a few pieces of information:
- Your actual salary amount and how much this is monthly.
- A summary of your monthly expenses, including fixed and variable spending.
- How much you currently save/invest.
Having these three key numbers will help you better understand these 12 ways to save money from your salary every month and to start building wealth.
1. Make it Automatic
Sometimes, the hardest part about figuring out how to save money from your monthly salary is to get in the habit of actually putting money aside.
Not having to think about your savings is the best way to stay on track with it. Or better yet, pretend that extra savings never came as part of your salary.
If you have a banking app, most of them include some version of an auto-deposit, where the bank automatically takes a set amount of money from your checking account and moves it to a savings account every so often.
You get to set the amount and how often you want it to deposit. Personally, I recommend setting those days to the same exact days your money comes in from work.
You can also consider opening an online bank account to start saving more money.
Plus, some online bank accounts, like Radius, are an awesome way to start building wealth.
Radius offers unlimited 1% cashback for purchases made with your debit card, free ATM withdrawals, and high interest earnings that are sure to beat a basic savings or checking account.
There’s no monthly fees or minimum balance after your first $100, so this is a great way to begin putting money aside from your paycheck if you’re just getting started.
Learn more about banking with Radius and keep more of your hard-earned money!
2. Stick to a Budget
Another great way to save money from your salary every month is to stick to a tight budget to ensure you always have money left over each month.
There are tons of budget templates that you can download/print online. Some of them are customizable to different situations.
Additionally, you can stick to a basic 50/30/20 budget system…
- 50% of your money goes towards necessary expenses (rent, food, utilities, bills, etc).
- 30% goes towards spending on anything you want.
- 20% goes directly to savings and is to be left untouched.
This budget is highly effective, especially if you’re trying to work on saving that 20% of your salary.
The main goal here is to decrease your expenses to maximize your savings. That 30% section is where you have some wiggle room to reduce those wants.
Whatever the case, pick a system that works for you.
The only way to put money aside from your salary is to reign in your spending a bit, so make sure you have a basic budget in place at all times!
3. Trim Your Expenses
While a budget can be a useful tool to follow in order to track your expenses, you can still work to increase your disposable income by decreasing some of your spending habits.
After all, saving money from your salary isn’t easy when there are numerous, necessary expenses to cover for.
If this is the case for you, being frugal is the only real option here.
If you can get in the habit of eating at home, making your own lunches, and cutting that online shopping habit, your monthly savings will certainly thank you.
Plus, you can also try getting better rates for some of the services you don’t want to cut out of your life.
For example, if it’s been a while since you’ve made a phone call or two, give your internet and phone provider a call to see if you can negotiate a better rate.
You can also try bill negotiation servies like BillShark, which negotiate with service providers on your behalf so you don’t have to put in the time.
Currently, BillShark can negotiate with the following services to secure lower monthly rates:
- Internet & phone.
- Satellite radio.
- Home security.
If BillShark secures a better rate, you pay them 40% of the annual savings upfront. You enjoy the rest of the rest of the savings so it’s a win-win.
Checkout BillShark andtake a bite out of your monthly bills!
Ultimately, as long as you can cut down on expenses by being more frugal and lower the bills you just can’t live without, you’ll be better off.
4. Eliminate Bad Habits
Bad habits such as buying coffee, fast food, cigarettes, or alcohol every day can really add up over time.
Things like daily coffee are often demonized in mainstream media, but hey, there’s a grain of truth about how these small purchases add up.
And don’t get started on bad habits like smoking or buying a 24 case of beer every couple of days.
Figuring out other ways to work around your habits should be a must if you want to save more money from your salary.
Cutting out the bad habits altogether is ideal, but at least work on reducing them if you can.
5. Tackle High-Interest Debt
It doesn’t matter if you make a decent salary or are still growing your income; tackling debt should definitely be a priority.
Now, there are two popular debt repayment strategies you might have heard of before:
- The Snowball Method: Pay off your smallest debts and then ‘snowball’ the payments into your larger debts.
- The Avalanche Method: Tackle your highest-interest debts first and then work your way down.
Mathematically, the avalanche method is generally best since the longer you hold on to high-interest debt, the more you end up paying down the road.
However, some people prefer the snowball method because you get the satisfaction of paying off debt quickly, which can motivate you to keep going.
Whatever the case, if possible, you should definitely tackle the high-interest debt first.
This would include any debt that goes over 4% interest such as credit card and personal loans.
As you reduce the amount of interest you pay each month, that also means you get to save more!
So, if you’re wondering how to save money from a monthly salary but still have a mountain of debt to tackle, it might be worth dealing with that debt first!
6. Put Bonuses into Savings
If you earn bonuses from your job or earn commission, take a good look at where you would benefit most with that extra money.
Instead of keeping it for a vacation or buying a new car, consider putting it into savings as if you never received that bonus.
Additionally, using that bonus to tackle your high-interest debt could also be a great idea…perhaps even better than putting it into savings.
In case you didn’t know, most 401k plans will allow you to contribute that bonus (up to a certain amount) to help that money grow even more over time.
Keep these factors in mind the next time you get a nice sum of money.
7. Enjoy Free Entertainment
Part of your monthly budget should factor in entertainment. After all, you want to enjoy life, not just hoard your wealth.
However, for many people, entertainment can eat up around 5-10% of your income, and that includes spending on things like cable.
The truth is, a lot of activities can be done for free or for very cheap.
You don’t have to drop $150 on a fancy dinner for two or go to the movies to see something just for the sake of watching something.
Again, don’t be afraid to spend, but only spend your money on things that actually bring happiness and fun.
Plus, you can get creative with outdoor entertainment by finding free shows, concerts, and activities to do nearby.
There are even Facebook groups that talk about new upcoming events to keep you occupied during the weekend.
If you can save just 5% on entertainment by taking advantage of free stuff, you’ll have more money left over from your monthly salary.
8. Buy Second-Hand
According to the Bureau of Labor Statistics, the average person spends nearly $2000 on clothes every year.
If you’re wondering how to save money from your salary but have an overflowing closet, I think we’re getting closer to one of the problems!
Plus, clothing is just the tip of the iceberg…think of all the things you could buy slightly used if you really wanted to:
You can even buy used gift cards! That’s how simple it is to find almost anything pre-owned.
Check apps such as Facebook Marketplace, Craigslist, Giftcardgranny, Letgo, etc. for any of your second-hand needs.
I actually went an entire year challenging myself to buy everything second-hand. After I did all the calculations, I saved close to $3,000!
Believe me, it all adds up in the end.
9. Use Grocery Rewards Apps
Thanks to the world of reward apps, there are tons of grocery rewards apps out there that can help you save some extra cash for your weekly grocery trips.
While it won’t save you a massive amount, it’s definitely nice to have some of that extra money considering you barely have to do anything anyways.
Here are a few grocery rewards apps to help you save money from salary:
- Fetch Rewards – An easy way to score free gift cards for your favorite brands.
- Dosh – Automatically earn cashback for shopping at over 100,000 locations in the U.S.
- Receipt Hog – Scan your grocery receipts and receipts from everyday purchases to earn rewards.
- Rakuten – If you shop for groceries (or anything) online, you can use Rakuten to earn cashback rewards, no strings attached!
Some of these apps will save you more than others depending on where and how often you shop.
However, you can use a few of them at once which can definitely pile up into something nice at the end of every month!
Extra Reading – 8 Apps Like Fetch Rewards to Earn Gift Cards & Cash.
If you’re leaning towards last resorts to get out of a big savings hole, your best options might be to downsize.
Downsizing can save you up to 15% on your mortgage when you switch homes.
If you can do with a little less now in order to help you benefit later, you may want to consider it. If you can’t, you can at least downsize in other areas.
Becoming a one-car family can heavily reduce your costs as well. Plus, it helps keep the family closer at the end of the day.
As long as having one car doesn’t interfere too much with work schedules and running errands, it can be 100% achievable.
11. Increase Your Income
If you’re wondering how to save money on a small salary, one solution could be to work to increase your monthly income to give a bit more breathing room.
After all, if you’re living paycheck to paycheck, it might be hard to find money to put aside at the end of the month.
There are multiple ways to go about this goal.
For starters, you could try picking up more hours, asking for a raise, or even looking for a second job.
You can also try different gig apps to boost your income in your spare time.
Some ideas worth considering include:
- Driving for Uber or Lyft.
- Delivering groceries for Instacart or Shipt.
- Working for DoorDash or Instacart.
- Trying apps like TaskRabbit.
- Doing handyman tasks with plaforms like Handy.
As long as you find something that works with your schedule, there’s no reason why you can’t boost your income to increase your savings.
Extra Reading – 27 Apps That Pay You To Drive.
12. Try a No-Spend Challenge
A no-spend challenge will not only save you money, but it can also be pretty fun.
If you don’t know what this is, it’s exactly what it sounds like: you decide to not spend money for a specific amount of time.
Usually, no-spend challenges last a few days, week, or entire month.
You’re allowed to buy groceries and essentials, but everything else if off the table!
If you live with a partner, it can almost become a little game to do everything in your power to not spend that money.
Here are a few things you can avoid on your no-spend challenge:
- Eating out.
- Home furnishings.
- Hobbies and entertainment.
- Lottery tickets.
- Toys and video games.
Having a no-spend challenge even twice a year for a month each can save you so much more than you realize.
Be frugal, resist the urge to spend, get creative with ways to occupy yourself, and the rest will fall into place!
When it comes to personal finance, no one is perfect.
We’re human after all, and it can be hard to save every penny when, you know, there’s life to enjoy! 😛
At the end of the day, you need to work towards building a lifestyle that works for your goals and finances.
Saving is a big part of this, especially if you’re starting to plan for the future and want to ensure you’re financially secure.
So, I hope this post on how to save money from a salary helps inspire you to put away a bit more money each month.
Even if you’re not hitting your goal right now, don’t give up…it’s all about consistency and getting better over time.
Ultimately, it doesn’t matter if you want to save $10,000 in a year, much more, or just a humble amount.
Make a plan, get started, and stick to it. Your future self will thank you!
Daniel is a 22 year old blogger from Los Angeles with a huge love for everything entrepreneurship, finance, and investing. When he’s not blogging at Modern Teen, you can catch him playing volleyball, shooting archery, or finding new ways to make money.