Effective money management is important to achieve your financial goals. But what does money management mean? Two important parts of money management are budgeting and saving. Creating a budget shows how much money is coming in and where your money is going. Having a clear picture of where your money is going is very important to financial success. Budgeting can help drive savings, help you manage and plan to pay off your debt, build savings for a big purchase or something long-term, like retirement.

There are many ways to save money. Some ways to save can be easy and others require creativity. Saving is a very important tool in getting out of debt or building wealth. Information about creating a budget and finding ways to save are below.

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Budgeting is a great way to track your spending and saving. Creating a budget, or spending plan, may seem overwhelming or tough, but it can be done. Start by tracking your expenses. This will give you a good idea of what you are spending your money on, how much you are spending, and when you are spending it.

You can simplify your budget by considering your needs and wants. You also want to make sure your budget is helping you reach your financial goals. The example below shows you one way to develop a budget.

Monthly Income:$3,600
Savings: $180
Eating out: $150
Auto Insurance: $100

When building your budget or spending plan, use the information below to help you decide how to best spend your money (these percentages should be based on your total net income):

  • Housing (rent or mortgage) 20 to 35%
  • Utilities (gas, electric, water, trash, telephone) 4 to 7 %
  • Food (at home and away) 15 to 30%
  • Family necessities (laundry, toiletries, hair care) 2 to 4%
  • Medical (insurance, prescriptions, bills) 2 to 8%
  • Clothing 3 to 10%
  • Transportation (car payment, gas, insurance, repairs, or bus fare) 6 to 30%
  • Entertainment 2 to 6%
  • Savings 10 to 15%

Get started by creating your own budget or use the resource we have created. It’s important to regularly review your spending plan. As you develop your spending plan, or budget, visit the All About Spending resource for more information.


Saving is a key part of reaching financial independence and building wealth. Think of saving as giving a gift, or paying a reward, to yourself. The money you save gives you so many benefits, like having cash in an emergency. It can also give you the ability to buy big things, like a car. Remember that building up huge amounts won’t happen overnight. But it can happen if you make saving a habit, make it automatic, and stick with it over time.


To get started, try to track all the money you spend. A simple way to track your spending is to keep a log or diary of everything you spend. Download the Spending Plan (PDF) to create your own spending.

At the end of the month look over the log and ask yourself a few questions:

  • What expenses make me proud or happy?
  • What expenses would I reconsider?
  • Can I organize my spending into larger categories?
  • What categories did I spend the most money on?
  • Are there expenses or items that I can cut out of my budget or spend less on?
  • What changes should I make given my goals and spending habits?

Think of one or two actions you can take today to help you reach your goals. Can you cut back in one area? Can you delay purchases to limit impulse buys? Consider picking a small action that can help you reduce your spending in one category. For example, eating out for lunch is something that you could possibly cut back on to save money. Using the money you saved, set a weekly or monthly savings target.


A spending plan is an evolving tool. As your goals change, update the spending plan. This will help you to gain control of your finances. Keeping track of your spending and prioritizing savings are two ways to reach your financial goals. In order to gain control of your finances try to remember EARN:

  • Embrace reminders. Use reminders to keep you motivated. For example, consider setting a reminder the day before your payday to remind you to review your spending plan.
  • Automate your savings. Consider setting up automatic transfers to make consistent deposits. If you set up automatic transfers, you can “set it and forget it”. Removing barriers and using automatic efforts has been shown to help increase your savings. 
  • Reduce your exposure. Leave extra money and credit cards at home to limit spending. If you, your friends and family like to shop, explore other activities with them that don’t involve spending money.
  • Network. Do you have friends or family that also have savings goals? Challenge one another and check in on your goals. This may help you stay on track and meet your goals faster.

Tips for saving more

Use these tips to become a better saver.

Are you buying products or services you don’t really need? You can save money by cutting back on impulse buys or buying the latest fads and fashions. Also, give some thought to items on which you could spend less.

Put a portion of every paycheck you or your spouse receives into your savings account by using direct deposit or automatic transfer. You’ll be much less likely to spend the money that way.

Set aside money for savings at the beginning of each month, rather than waiting to see what’s left at the end. Decide on a percentage of your monthly income (for example, 5-10%) to direct deposit or transfer into your savings account.

If you receive a tax refund, deposit it directly into your savings account. If you or your spouse gets an increase in pay, put the extra amount into your savings.

If you get cash as a gift, save at least part of it. If you have paid off a loan, keep making the monthly payments — to yourself, in your own savings account!

When you pay your bills on time, you avoid late fees; extra finance charges; disconnection of (and re-connection fees for) phone, electricity, or other services; the cost of eviction; repossession of cars or other items; and bill collectors.

Check cashing stores charge for each check you cash. This can add up to a considerable amount each year. Consider opening a checking account at a bank and cashing your checks there instead. Check cashing is part of the service you receive as an account holder.

If your job offers a retirement plan, consider signing up and getting started right away. Employer-sponsored retirement plans (401k, 403b, TSP, IRA and others) help you build your savings and offer tax benefits. If your spouse or partner works for a company that has a retirement savings plan, get them to participate. Many employers will match a percentage of your contribution.