How to Keep Saving Money in Hard Times

Slash Expenses—Even the Ones You Are Keeping
One place to start is by trimming your variable expenses. Buying groceries is generally cheaper than dining out. But before you hit the grocery store, check your pantry to see what you already have in stock. If you think ahead and plan your meals each week, you’re more likely to make smart shopping choices and avoid food waste, which can cost you thousands of dollars each year.  

If you’re not getting your money’s worth on a subscription to a streaming service or a gym membership, cutting out this type of recurring expense can be a big money saver. It also doesn’t hurt to call your cable or cellphone provider and see if you can negotiate your monthly bills, especially if you have an introductory offer that has expired. 

If you can find a bigger, regular expense to cut (like, say, getting a roommate to cut down on housing costs), you can really boost your bottom line.

Put Yourself on a Budget
If you don’t already live on a budget, now is the time to do so. Creating a budget is the only way to know exactly how much money you have coming in and going out. It can also help you make sure you’re spending in alignment with your values and goals. 

Start your budget by identifying all the money coming in and out of your accounts. Fixed expenses, such as rent, mortgage and car payments, stay the same each month, while variable expenses like entertainment, utilities and groceries tend to fluctuate each month. 

Make sure that your budget accounts for both your short- and long-term goals. Some experts recommend using the 50/30/20 rule, which suggests you spend 50% on needs,30% on wants and then put 20% toward your savings, whether that’s toward your long-term goal of retirement or a short-term goal of putting a down payment on a house. Those guidelines may not be realistic for you, so adjust accordingly. 

Make Saving Automatic
The easiest way to develop the habit of putting money away is to make saving automatic. Take five minutes to set up automatic transfers from your bank account to a high yield savings account, preferably one with a high interest rate. Even if you can only contribute $10 or $20 from each paycheck, putting away money on a consistent basis can help make saving second nature. 

By funneling money directly into savings before your paycheck hits your bank account, you’re less likely to consider spending it, or even miss it at all.

Keep Investing for Retirement
Though the stock market’s ups and downs can make novice investors feel queasy, don’t panic. Investing can help grow your wealth over time, and pulling all your money out of the market is a surefire way to derail your carefully laid savings plans.

During a period of turbulence, it helps to put stock market fluctuations into perspective: Since its inception, the market’s historical average return is 10%. For people in their 20s and 30s who have decades until retirement, take advantage of your long time horizon. The earlier you start investing, the more time your money has to grow, thanks to the power of compound interest. If you have a workplace retirement plan, make sure you’re putting enough away to get your employer’s 401(k) match. 

You’ll also benefit from the dollar cost averaging method, which requires regularly investing roughly equal amounts of money over a period of time. When the market drops, dollar cost averaging actually helps you buy more shares with the same investment amount. A market dip can help, in fact, so you’re not buying all your shares at high points in the market. 

Know When You Should Temporarily Pause Savings
If you’re struggling to pay for basic necessities like food and medicine, it’s OK to take a break from saving until you get back on your feet. 

Only 41% of Americans have enough money to handle a $1,000 emergency without having to dip into their savings. And if recent events are any indication, it’s important to have money on hand for a rainy day. If you’re having trouble making ends meet, focus on trimming your budget and getting through to that next check, and trust that you’ll get back to saving as soon as you can. 

Save That Tax Refund
If you receive a state or federal tax refund, it’s easy to see it as “found” money and give in to the urge to splurge. But your future self will thank you if you pop it into your savings, use it to pay down high-interest credit card debt or put it toward your student loans. Doing so can help you get out of debt faster and help you save interest over the life of a loan. 

In these tough times, you never know when you might need extra cash, so if you don’t already have one, starting an emergency fund is another good use for that tax refund. Experts suggest you should have enough saved to cover three to six months of basic living expenses. 

Keep Yourself Motivated
On the path to meeting a savings goal, it’s important to celebrate “small victories.” If you get halfway to saving six months’ worth of living expenses in your emergency fund, for example, take a moment to splurge a bit.

Maybe it’s buying new running shoes with the money you saved from canceling your gym membership and doing fitness videos online instead, or getting a new kitchen gadget you can afford with all the money you saved by buying groceries and cooking at home instead of dining out. And remember that buying the occasional latte isn’t going to prevent you from retiring on time—just make sure you’ve budgeted for it.