Best Way to Save Money: The One Strategy That Actually Works

The Problem with “Trying” to Save Money

Here’s a question: Have you ever promised yourself you’d save more money, only to find your savings account barely changed months later?

If so, you’re not alone. Most people approach saving the same way they approach dieting—with good intentions, lots of willpower, and eventual failure.

The problem isn’t you. The problem is the approach.

Relying on willpower to save money is like relying on willpower to breathe. It works for a while, but eventually, life gets in the way, and you forget.

So what’s the best way to save money? Let me show you the one strategy that actually works long-term.

What’s the Best Way to Save Money?

After studying thousands of successful savers, researchers found one common thread:

The best way to save money is to automate it.

That’s it. No fancy apps, no complex spreadsheets, no extreme frugality. Just automation.

Here’s why this works:

1. It Removes Decision Fatigue

Every time you manually decide to save, you’re using mental energy. Automation removes that decision entirely.

2. It Makes Saving the Default

When saving happens automatically, not saving requires effort. Most people stick with the default.

3. It Works Even When You’re Busy

Life gets hectic. Bills pile up. Emergencies happen. Automated savings continue regardless.

4. It Leverages “Out of Sight, Out of Mind”

Money you never see is money you don’t spend. When savings transfer before you see them, you naturally adjust your spending to what’s left.

Why This Matters for Your Financial Future

Let’s do some quick math.

Scenario A: Manual Saving

You try to save $300/month manually
Some months you succeed, some you don’t
Average actual savings: $150/month
After 10 years at 7% return: ~$26,000

Scenario B: Automated Saving

You set up automatic $300/month transfer
It happens every month without fail
Actual savings: $300/month
After 10 years at 7% return: ~$52,000

The difference: $26,000 — just from automation.

This isn’t theoretical. Studies show that people who automate their savings save 2-3x more than those who don’t.

Is Automated Saving Right for You?

Automated saving works for almost everyone, but it’s especially powerful if you:

✅ Have a steady income (even if it’s small)
✅ Struggle with consistency
✅ Often forget to transfer money to savings
✅ Find that money “disappears” before you can save it
✅ Want a “set it and forget it” approach

The only situation where automation might not work is if your income is highly irregular and you genuinely can’t predict whether you’ll have money to save. Even then, you can automate a small base amount and add more manually when you can.

How to Set Up Automated Savings: Step by Step

Here’s exactly how to implement the best way to save money:

Step 1: Open a Separate Savings Account

Don’t save into your checking account—it’s too easy to spend. Open a dedicated savings account, preferably at a different bank. This creates friction between you and your savings.

Good options:

High-yield savings accounts (currently offering 4-5% APY)
Online banks (often better rates than traditional banks)

Step 2: Calculate Your Saving Amount

Use the 50/30/20 rule as a starting point:

50% for needs
30% for wants
20% for savings

If 20% feels impossible, start with 10%, 5%, or even $50/month. The exact amount matters less than the consistency.

Step 3: Time It with Your Paycheck

Set your automatic transfer to happen the same day (or day after) your paycheck arrives. This ensures:

The money is available
You save before you spend
It becomes part of your routine

Step 4: Set Up the Automatic Transfer

Log into your bank and navigate to “Transfers” or “Automatic Transfers.” Set up a recurring transfer:

From: Your checking account
To: Your savings account
Amount: Your calculated amount
Frequency: Every payday

Step 5: Forget About It

Seriously. Don’t check it every day. Let it work in the background. Review quarterly at most.

Common Mistakes to Avoid

Mistake 1: Starting Too Big

Don’t automate 50% of your income on day one. You’ll overdraft and get discouraged. Start small, increase gradually.

Mistake 2: Not Having a Buffer

Keep at least one month of expenses in checking as a buffer. This prevents overdrafts when large bills hit.

Mistake 3: Raiding Your Savings

If you keep dipping into savings, it defeats the purpose. Keep savings at a separate bank to add friction. If you must withdraw, wait 24 hours first.

Mistake 4: Only One Type of Savings

Consider multiple automated savings for different goals:

Emergency fund
Vacation fund
Down payment fund
Retirement (401k or IRA)

Take Action Today

Here’s your homework for the next 24 hours:

Check your bank — Find the automatic transfer feature
Pick an amount — Even $25/week is a start
Set it up — Literally takes 5 minutes
Write it down — Note your start date and amount

One year from now, you’ll be amazed at how much you’ve saved—without even thinking about it.

Frequently Asked Questions

Does automating savings really work?

Yes. Studies show that people who automate their savings save 2-3 times more than those who rely on willpower. It removes the decision-making process, making consistency the default.

What if I live paycheck to paycheck?

Start small. Even automating $5 or $10 a week builds the habit without breaking your budget. You can increase the amount as your financial situation improves.

Should I pay off debt or save first?

Generally, it’s wise to build a small emergency fund (e.g., $1,000) first, then focus on high-interest debt. Once that’s manageable, ramp up your automated savings for other goals.

The best time to start automating your savings was years ago. The second best time is today. Which automatic transfer will you set up first?