Skip to Content
Financial Basics

Saving

Saving consistently can help you reach your financial goals

When you know where your money goes, you feel more in control. Creating a savings plan and budgeting will not only help you understand how much money you earn and spend over a period of time, but also help you create an action plan to pursue your goals.

Take the quiz

At minimum, what percentage of your income should you set aside for savings?1

Yes.

Ideally, you should set aside at least 15-25% of your income towards savings.

Not quite.

Ideally, you should set aside at least 15-25% of your income towards savings.

Note: These are general, recommended percentages. You should adjust for your personal budget as necessary.

 

man and woman working on laptop

The importance of budgeting: creating a roadmap

It’s nice to think that you’ll just somehow have enough money for everything. But drifting along without a plan is not a good idea. Very few people can do whatever they want without prioritizing and planning for major events and purchases. And that involves a budget.

 

Budgeting will give you control over your money, helping you to:

 

  • Evaluate your current spending habits.
  • Pay your bills on time every month without worry.
  • Track your spending to make sure it adheres to your budget.
  • Set savings goals.
man on phone with daughter in lap

Tools that can help

Use a tracking method that works for you, and dedicate time each month to review where you are against your plan.

Bank of America

Use the Bank of America app or online banking Spending & Budgeting tool2 to set up a budget and track bank, investment, retirement and even frequent flier accounts. Learn more here.

Other Budgeting Apps or Software

In addition to the Bank of America app, many different budgeting apps or software exists. Popular ones include Mint and Quicken. Browse the app store on your phone to explore the options available to you, or if you prefer, search online for software that you can install.

man on laptop

How to build a budget

1. Assess your current situation:

  • Gather your pay stub, bank, investment and credit card statements, utility and other bills and any other information related to your income and expenses.
  • Next, create a budget by listing out all of your income and expenses. Contact your advisor for ideas on income and expense categories to consider including in your budget.

2. Record all of your sources of income:

  • Include not only your salary, but bonuses, investment income and even any regular cash gifts you may receive.

Note: count only the amount you actually receive after tax and other required withholdings.

3. List out all of your monthly expenses:

  • Write down everything you spend money on.
  • For one-time expenses, divide them into monthly amounts and keep funds for these large, but infrequent, expenses separate from other money.

Note: If you aren’t sure where all of your money goes each month, spend a full 30 days tracking every single penny you spend – it will be eye-opening!

4. Subtract your monthly expenses from your income:

  • If your expenses are higher than your income, make adjustments to your spending habits.
  • If not, you are ready to create a savings plan.
  • Determine the amount of money you can afford to set aside for savings and insert that number into your budget.

5. Review your budget monthly and adjust your spending if necessary:

  • After the first month, compare actual expenses to your budget and see how well you did.
  • Make adjustments to make sure you are not spending more than you earn.
  • Do monthly reviews to stay on top of your progress.
  • Being consistent can help you achieve lasting results.

Get specific about your savings

When setting your savings goal, the more specific you are, the better.

  • You’re more likely to succeed when you can measure your progress against a fixed deadline and dollar amount.
  • Remember - your budget is a living document.
    • Review it every month to make sure it reflects your current situation and goals.
    • Adjust your savings goal as needed (but ideally, save as much as you can).
TOP