Having trouble saving money? You’re not alone. 1 in 3 Americans have more credit card debt than savings. Why is that? How come so many people struggle to put money aside?
There has been a good reason in recent years: Inflation. While this is a solid argument, savings haven’t been high before inflation. Now we can point somewhere and tell ourselves: “I can’t save! It’s the inflation!”
Saving money is one of the most essential skills. It often means giving up smoking, alcohol, sweets, or that treat you “deserve.” What remains unseen is that saving money is an investment in a better life.
Struggling with bad money habits? Check out 5 Money Habits That Keep You Poor and 10 Signs You’re Bad With Money to identify behaviors that might be holding you back.
Why Should You Start Saving Money in 2025?
Let me share a personal story about when I learned the hard way why saving is crucial.
In 2016, I was broke. After quitting my job in 2015, I started a company with a friend. A few bad decisions and bad luck led to a complete disaster. At some point, I didn’t know how to pay the rent for my apartment.
A friend asked how to promote his personal training business. I shared my knowledge of homepages, landing pages, email marketing, and Facebook Ads. After our three-hour dinner, my friend said one simple sentence that changed my life:
That was when I realized I had a valuable skill. So, I decided to become a self-employed digital marketing advisor. After my first project, I vowed never to experience that again, so I pledged to save money.
My goal: live a year without new customers. I achieved this in 6 months, changing everything.
That experience taught me that saving money isn’t just about having more—it’s about gaining freedom and peace of mind. The true path to financial freedom.
Benefits of Saving Money
1. Freedom of Choice
Working self-employed isn’t always sunshine. Some customers are horrible and the type of people I don’t want to spend time with. My savings allowed me to be picky, but being picky is more difficult when you need the money. That’s why people work in jobs they hate and endure bosses they can’t stand.
By creating a financial buffer, you are gaining freedom. When you have enough money saved, you can tell your supervisor to treat you nicely or leave the scene.
2. Better Retirement Planning
Two things will likely happen:
- We have to pay more for retirement
- You will receive less for your retirement
Prepare smartly for yourself; your dignity depends on planning.
Saving money brings freedom of choice.
Working self-employed isn’t always sunshine. Some customers are horrible and the type of people I don’t want to spend time with. My savings allowed me to be picky, but being picky is more difficult when you need the money. That’s why people work in jobs they hate and endure bosses they can’t stand.
By creating a financial buffer, you are gaining freedom. When you have enough money saved, you can tell your supervisor to treat you nicely or leave the scene.
While financial freedom today is vital, planning for the future is just as important.
Saving money makes dreams come true
Are you familiar with the marshmallow experiment? Five-year-olds were asked to resist a marshmallow. If successful, they would get a second one.
The same is true for saving money: That’s your marshmallow today. Spending money on those fancy gadgets? Getting drunk with friends? Spending money on that thing you “deserve”?
Instant gratification, like “Amazon same-day delivery,” exemplifies poor money management. Learn to delay it to surpass your peers.
This is beneficial not just for you, but also for your loved ones. You can be the friend, parent, or spouse who provides and takes responsibility. Nothing feels worse than a parent who can’t ensure a good life for their loved ones.
Saving money isn’t just about numbers—it’s also about mindset.
What do you think about money - Your Money Mindset
Money is delicate: Without it, we may feel like failures. With it, we might feel guilty. Money amplifies our existing beliefs, for better or worse. Thus, it’s essential to examine our beliefs.
We must examine our relationship with money and our desires. Neglecting its power while focusing solely on it is unwise. Both mindsets have unique shortcomings. Money’s emotional power links directly to our ingrained self-perceptions.
- Do I feel like a valuable human?
- What do you think you deserve?
- What is my time worth?
Money’s role in our lives is significant, as we live in a capitalist system where we trade value—time, resources, knowledge—for money. If money equals value, it’s understandable we tie our worth to it.
Before losing myself over money—worth an article on its own—let’s focus on you. I have a little exercise for you. Find more about the money mindset here.
Your Money Thoughts: A simple exercise to understand your relationship with money
This won’t immediately change your view of money, but this exercise is powerful. If you think money is bad, why would it come to you? Believing money is bad causes avoidance, leading to unhappiness and poverty — a state I’d prefer to avoid.
When should I consider saving money?
In short? Immediately. Don’t waste time until the next month. Don’t wait until you get the next raise. Otherwise, it’s like a New Year resolution, and we all know too well how that ends.
The following steps help you to decide where you are and what you should do next:
Get Your Life in Order: Take control of your finances today
- Track Income and Expenses: Know where your money is going.
- Pay for Necessities: Focus on rent/mortgage, food, utilities, transportation, and healthcare.
- Do It Online: Visit canvas.dennistroeger.com to manage your budget—it takes 15 minutes!
Build an Emergency Fund
Be prepared for unexpected expenses:
- Quick Access: Ensure it’s money you can access within 48 hours, with minimal risk.
- Starter Goal: Save $1,000 or one month’s expenses.
- Long-Term Goal: Grow it to cover 3-6 months of living costs.
Maximize Employer Benefits
- 401(k) Contributions: Contribute enough to get the full employer match—it’s free money!
Pay Off Debt
Increase Retirement Savings
- Aim for 15%: Save at least 15% of your pre-tax income in retirement accounts like 401(k)s and IRAs.
Plan for Future Goals
- Big Expenses: Start funding future needs like education, a new car, or a home.
- Health Savings Account (HSA): Max out if eligible.
- College Savings: Contribute to your kids’ education if desired.
Invest and Plan for the Future
- Beyond Retirement: Use taxable investment accounts for long-term goals.
- Personal Priorities: Balance savings based on your values.
Once you’ve laid the groundwork, it’s time to explore techniques that make saving simpler.
3 Ways to Save More Money
#1 Save at the beginning of the month
Saving money is difficult. Our brains struggle against cheap dopamine or instant gratification. Survival instincts don’t plan for retirement. Planning was irrelevant in the Stone Age.
To simplify, set up monthly payments to your savings account right after receiving your paycheck. Discuss options with your employer. A 401k could also be beneficial.
#2 Earn more
“How can I earn more?” I understand; you’ve likely pondered this. Yet, this question is flawed as it centers solely on you. It neglects the role of others. Concepts like IKIGAI can shift your focus outward.
Before diving into complex models, ask: What can I offer? If you feel stuck, consult a friend, spouse, or co-worker about your strengths.
I write because a friend said, “Nobody helped me with personal finance as you do. You should help others, too!”. The question “How can I earn more money?” never leads to an answer.
#3 Best budgeting apps for beginners to save money
We all have unnecessary expenses. I could save $500 a month if I stopped buying books I don’t read! While I don’t want to call books “unnecessary,” it’s an area where I could be more mindful.
Additionally, I’m sure some expenses can be reduced or eliminated. “But, Dennis, I already spend only what I need.” Perhaps, but I can’t judge your situation. If that’s true, refer to #2 and consider earning more money.
What benefited me was utilizing “Finanzguru” (Finance Guru), a German budgeting app.
List of apps you can use
Where should you save your money?
Your current stage matters. If savings are under $1,000, keep it in cash in a savings account, ideally for amounts up to $10,000 or six months’ expenses. This offers flexibility for life’s challenges.
As a U.S. resident, consider a Roth IRA or 401k beneficial. Since these subjects deserve more attention, I’ll keep it brief for now. A Roth IRA allows tax-free withdrawals, providing financial security for the future regulations.
ETF - Exchange Traded Funds
These are like fruit baskets of stocks. By now, you’ve likely heard of ETFs. If not, check out great articles and videos (start here).
“0,2% is a lot!” - Yes, and no. This roughly equals $200 on $100,000 savings a year. When you reach these numbers, $200 is part of the normal fluctuation. I see it differently, but I like my life easy and don’t want to count every penny. More about finding the right ETF you can find here.
Stocks
Ah, indeed… stocks. Why not bypass the middlemen and invest directly in stocks? The prospect of becoming a self-made millionaire is appealing. Even with a 60-hour work week, 96% of professional fund managers do not surpass ETF performance.
Do you think you can do better? I encourage you to check my Wealth Triangle, which shows how much to invest based on your risk profile.
Check the Wealth TriangleBy now, you’ve seen the impact that mindful saving can have.
Saving Money - A summary
Saving money is vital for control and autonomy in life. It’s a crucial skill that helps you be a happy human being. The number of people who live from paycheck to paycheck is staggering.
Learning to manage money should start early. Happiness follows a rule: if you need money to be happy, it won’t change.
Start saving today. Don’t wait. Future-You deserve it.
Beyond Saving: Building Wealth
Once you’ve established a solid savings habit, you can start thinking about growing your wealth:
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Learn about investing: Ready to put your savings to work? Check out How to Start Investing in 2025 for beginner-friendly advice.
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Develop a framework: Consider using the Wealth Triangle to structure your finances for both security and growth.
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Improve your financial literacy: Understanding money concepts is crucial for long-term success. Learn more about mastering financial literacy to make better decisions.
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Visualize your financial journey: Use tools like the Wealth Canvas to see the big picture of your finances and plan for the future.
Remember, saving is just the beginning of your financial journey. The habits you develop now will serve as the foundation for building lasting wealth.
Conclusion: Your Path to Financial Freedom
Saving money isn’t just about accumulating wealth—it’s about creating freedom, security, and peace of mind. By implementing the strategies outlined in this article, you can transform your financial future regardless of your current situation.
Remember these key points:
- Start saving immediately, no matter how small the amount
- Automate your savings to remove the temptation to spend
- Track your expenses to identify areas for improvement
- Consider ways to increase your income alongside reducing expenses
- Use technology to your advantage with budgeting apps
The journey to financial freedom begins with a single step. Take that step today, and your future self will thank you.
What’s your biggest challenge when it comes to saving money? Share in the comments below!