Simple ways to save money for the future

The best way to save money is to have a plan. These steps can help you create one.

How to start saving money?

Track your spending. The first step to starting to save money is figuring out how much you spend. Keep track of all of your expenses—that means every cup of coffee, household item, and cash tip, as well as regular monthly bills. Record your expenses in whatever way is easiest for you— a simple spreadsheet, a free online expense-tracking app or tool, or even a pen and paper . Once you have your information, organize the numbers by category, like gas, groceries, and mortgage, and total each. Use your bank and credit card statements to make sure you've included everything.

How do I include savings in my budget?

Turn savings into a monthly expense. Now that you know what you spend in a month, you can start creating a budget . Your budget should show your expenses in relation to your income, so you can plan your spending and limit overspending. Be sure to account for expenses that occur regularly, but not every month, such as car maintenance. Include a savings category in your budget and try to save an amount that makes sense for you. Plan to increase the amount you save over time until it reaches 20 percent of your income.

Save on what you don't need. If you can't save as much as you'd like, it may be time to cut back on spending. You can get ideas about where to save by seeing how your spending compares to others .

First, identify non-essential expenses that you can cut back on, such as entertainment and eating out. Then look for ways to reduce your monthly fixed expenses, such as your car insurance or cell phone plan. Other ways to save money every day include:

What kind of savings goals should I set?

Use goals to give purpose to saving. Working toward a specific goal can be one of the most effective ways to save money, because it puts a reward or accomplishment in your sights. Start thinking about what you might be saving for, both in the short term (one to three years) and the long term (four years or more). Then figure out how much money you'll need and how long it will take to save it.