Sometimes the hardest part of saving money is just getting started. This step-by-step guide on how to save money can help you develop a simple and realistic strategy to save on all your short-and long-term savings goals.

Record your expenses

To begin saving money, you must first determine how much you spend. Keep track of all your expenses, including coffee, groceries, and cash tips. Once you’ve gathered your information, sort it into categories like petrol, food, and mortgage payments, and add up the totals. Check your credit card and bank statements to make sure you’re not missing anything.

Tip: To get started, look for a free-spending tracker. Using a digital software or app to automate some of this work may be beneficial. Clients of Bank of America may use the Spending & Budgeting tool in the mobile app or online, which automatically categorizes transactions for easier budgeting.

Budjet for savings

You can start organizing your reported expenditures into a workable budget once you have an idea of how much you spend in a month. Your budget should show how your expenditures compare to your revenue, allowing you to budget and avoid overspending. Always remember to account for expenses that arise on a monthly basis but not every month, such as car maintenance.

Tip: Include a savings category—aim to save 10 to 15 percent of your income.

Find ways you can cut your spending

It might be time to cut back if your expenditures are so high that you are unable to save as much as you would like. Determine can non-essentials, such as entertainment and eating out, you should cut back on. Look for ways to save costs on your fixed monthly expenses, such as your television and mobile phone.

Here are some ideas for trimming daily expenses:

To save money on entertainment, use tools like neighborhood event listings to find free or low-cost activities.
Cancel any subscriptions or memberships that you aren’t using, particularly if they are automatically renewed.
Commit to dining out just once a month and experimenting with “cheap eats” restaurants.
Allow yourself a “cooling off period”: If you’re tempted to buy anything unnecessary, put it off for a few days. 

Set saving goals

Setting a target is one of the most effective ways to save money. Begin by considering your savings goals—perhaps you’re getting married, planning a holiday, or saving for retirement. Then calculate how much money you’ll need and how long you’ll need to save it.

Tip: Set a small, attainable short-term target for something exciting and large enough that you won’t have the cash on hand to pay for it, like a new smartphone or holiday presents. Reaching smaller goals—and enjoying the enjoyable reward you’ve been saving for—can provide a psychological boost that makes the benefits of saving more apparent and strengthens the habit.

Decide on your priorities

Your priorities are likely to have the greatest effect on how you divide your savings after your expenses and revenue. Keep long-term ambitions in mind—critical it’s that retirement planning doesn’t take a back seat to immediate needs.

Tip: Learn how to prioritize your savings goals so that you know exactly where to begin. For example, if you know you’ll need to replace your car soon, you might start saving money now.

Pick the right tools

Certificate of deposit (CD), which is a form of savings account that locks in your money for a set period of time at a rate that is usually higher than savings accounts.

Consider these FDIC-insured bank accounts if you’re saving for a short-term goal:

For long-term goals consider:

• FDIC-insured individual retirement accounts (IRAs), which are tax-efficient savings accounts
• Securities, such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer. Remember that securities are not insured by the FDIC, are not deposits or other obligations of a bank, and are not guaranteed by a bank. They are subject to investment risks, including the possible loss of your principal.

Tip: You are not obligated to use just one account. Examine all of your choices carefully, taking into account items like minimum balances, fees, and interest rates to find the mix that will best help you save for your goals.

Make saving automatic

Almost all banks allow you to switch money between your checking and savings accounts automatically. You can choose when, how much, and where you want to move money, and you can also break your direct deposit so that a portion of each paycheck goes into your savings account.

Tip: Splitting your direct deposit and setting up automatic transactions are easy ways to save money so you don’t have to worry about it, and you’re less likely to waste it. Bank of America customers can easily set up automatic transfers between accounts using Mobile & Online Banking.

Watch your savings grow

Check your budget and check your progress every month. Not only will this help you stick to your personal savings plan, but it also helps you quickly identify and fix your problems. Understanding how to save money can even inspire you to find more ways to save and make your goals faster.