How to start a savings plan
Learn how to start a savings plan step by step, from budgeting and setting goals to building an emergency fund and automating your savings.
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This content is for general educational purposes and is not intended as financial, legal, investment, or tax advice and should not be relied on as such. We do not guarantee the accuracy or completeness of the information found in this post.
Summary
A savings plan is a simple roadmap for how much you'll save, what you're saving for, and where you'll keep the money.
Many savings plans start with an emergency fund to cover unexpected expenses like car repairs or a sudden drop in income.
Tracking your income and expenses and building a budget can show how much you're able to set aside each month.
Automatic transfers and the pay yourself first approach can turn saving money into a regular habit instead of an afterthought.
OnePay features like Savings goals, Pay Autosave, and Round-ups can help you organize and automate your savings plan in one mobile app.
Saving money can feel hard when bills, groceries, and other everyday costs keep coming. A savings plan helps by giving your money a clear direction. Instead of saving whatever's left at the end of the month, you decide ahead of time how much to save and where it goes.
This guide walks through how to start a savings plan step by step, from looking at your budget to choosing where to keep your money and putting your savings on autopilot.
What is a savings plan?
A savings plan is a strategy for setting aside part of your income on a regular basis to reach your financial goals. It usually answers three questions. What are you saving for? How much will you save, and how often? Where will you keep the money?
Your plan doesn't need to be complicated. Even a simple plan, like moving a set amount into savings every payday, can help your savings grow over time. What matters most is having a savings strategy you can stick with.
Step 1: Look at your income and expenses
Before you decide how much to save, it helps to know where your money is going. Start by listing your income and expenses for a typical month. Include fixed costs like rent, utilities, and insurance, plus costs that change from month to month, like groceries, gas, and entertainment.
Once you see the full picture, you can build a budget that treats savings as a regular line item. There are many budgeting methods to choose from, so you can find one that fits your personal finances.
Step 2: Set goals for your savings
It's easier to stay motivated when you know what you're saving for. When you set goals, try to make them specific, with a dollar amount and a timeline. For example, “save $1,500 for a vacation fund by next summer” is easier to track than “save more.”
Savings goals can cover different time frames:
Short-term goals, like a vacation fund, holiday gifts, or a new phone, are usually things you hope to pay for within a year or two.
Medium-term goals, like a car or a move, might take a few years.
Long-term goals, like retirement or buying a home, can take many years or even decades.
Having a few clear savings goals can also help you decide which ones to fund first.
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Step 3: Build your emergency fund
Many people start their savings plan with an emergency fund. This is money set aside for unexpected expenses, like car repairs, medical bills, or a loss of income. The Consumer Financial Protection Bureau (CFPB) explains that setting aside even a small amount for surprise costs can help you recover faster and stay on track toward larger savings goals.
How much you need depends on your living expenses and your situation. You can learn more about how much to keep in emergency savings. Even a small cushion can help keep a surprise bill from ending up on a credit card.
Step 4: Manage debt alongside your savings
If you have high-interest debt, it's part of your savings plan too. Credit card debt can grow quickly because of high interest rates. According to Investor.gov, most credit cards charge high interest when you don't pay your balance in full each month, and it's hard for any investment to earn enough to match that cost.
Some people choose to manage debt and save at the same time by building a small emergency fund while also paying down balances. That way, a surprise expense is less likely to add to what they owe.
Step 5: Pay yourself first
Pay yourself first means treating savings like a bill you pay as soon as you get paid, before you spend on anything else. Instead of waiting to see what's left at the end of the month, you move money into savings right away.
This approach pairs well with direct deposit. If your paycheck lands in your checking account on a set schedule, you can plan your savings transfer for the same day.
Step 6: Automate transfers
Automatic savings takes the effort out of sticking to your plan. When you automate transfers, a set amount moves from checking into your savings account on a schedule you choose, such as every payday. Because automatic transfers happen on their own, you don't have to remember to do them, and you're less tempted to spend the money first. Here's a closer look at how to set up automatic savings, plus a breakdown of checking vs. savings accounts if you're deciding how to split your money.
Some banking apps also offer round-up savings, which round each debit card purchase up to the next dollar and move the spare change into savings. Small amounts like these can add up over time.
Step 7: Choose where to keep your savings
Where you keep your money depends on when you'll need it and how much risk you're comfortable with.
Savings accounts and high-yield savings accounts
A basic savings account keeps your money safe and easy to reach, which makes it a common home for emergency savings. High-yield savings accounts usually pay higher interest than traditional savings accounts, so your balance can grow faster. You can open a savings account at a bank, an online financial company, or a credit union, which is a financial cooperative owned by its members.
Certificates of deposit
Certificates of deposit (CDs) let you lock in a rate for a set term. According to the FDIC, CDs typically pay more than regular savings accounts, but you usually have to keep your money in the CD for the full term or pay a penalty. That makes CDs a fit for money you won't need for a while.
Investment and retirement accounts
For long-term goals like retirement, saving and investing often go hand in hand. Investment accounts can hold stocks, bonds, and mutual funds, which pool money from many investors to buy a mix of assets.
Retirement accounts, like an IRA (individual retirement account) or a 401(k), offer tax benefits for saving toward retirement. Keep in mind that investments aren't deposits. Mutual funds, stocks, and bonds aren't covered by FDIC insurance, and their value can go down as well as up.
Health savings accounts (HSAs) are another option if you have a high-deductible health plan. According to the SEC's investor education site, an HSA is a tax-advantaged account for qualified medical expenses, and some HSAs let you invest the money for future costs, including in retirement.
If you're not sure how to balance these options, a financial advisor can help you think through your choices. Investor.gov also has tips on working with an investment professional.
Step 8: Review and adjust your plan
Your savings plan isn't set in stone. Check in every few months to see how you're doing. If your income goes up, you might raise your savings amount. If money gets tight, you can lower it for a while instead of stopping completely. When you reach one goal, you can move that money toward the next one. Looking at how much to save each month can help you pick a new target.
How OnePay can help you start saving money
If you bank through OnePay, several features in the OnePay mobile app can help you put your savings plan into action.
Savings goals: Your OnePay deposit account comes with a Checking section for spending and a Savings section where your money earns interest. Within Savings, you can set numerous goals set up to three goals
Pay Autosave: Pay Autosave automatically sets aside a dollar amount or a percentage of each eligible direct deposit, so you can pay yourself first without having to think about it.
Round-ups: When you turn on Round-ups, each purchase with your OnePay Debit Card or Builder Card is rounded up to the next whole dollar, and you can choose to send the spare change to your Primary Savings.
Early Pay: With direct deposit, you may be able to get your paycheck up to 2 days early, depending on when your employer sends paycheck data. That can give your pay yourself first transfer an earlier start.
IRA: For long-term goals, a OnePay IRA lets you open a Roth or traditional IRA and contribute as little as $1, either anytime or on a recurring schedule. Keep in mind that all investing involves risk, including the possibility of loss.
Together, these tools can help you automate transfers, organize your goals, and keep your plan moving from one place.
Frequently Asked Questions
Start by looking at your income and expenses to see how much you can save. Then set goals, decide where to keep the money, and set up automatic transfers so saving happens on a regular schedule.
There's no single right number. It depends on your income, living expenses, debt, and goals. Some people start with a small, steady amount and raise it over time as their budget allows.
Paying yourself first means moving money into savings as soon as you get paid, before you spend on anything else. It treats saving like a regular bill.
It depends on your situation. Some people build a small emergency fund while paying down high-interest debt like credit card debt, since high interest can outpace what savings earn. A financial advisor can help you weigh your options.
An emergency fund is for unexpected expenses, like car repairs or a job loss. Other savings goals, like a vacation fund or a down payment, are for planned costs. Keeping them separate can help you avoid dipping into emergency savings for planned purchases.
Emergency savings are often kept somewhere safe and easy to reach, like a savings account or a high-yield savings account. That way, you can get to the money quickly when you need it.
Saving usually means keeping money in a deposit account, like a savings account or CD, where it's safe and easy to access. Investing means buying assets like stocks or mutual funds that may grow more over time but can also lose value.
Automatic transfers move a set amount of money from one account to another on a schedule you choose, such as every payday. Once they're set up, they run on their own until you change or stop them.
Yes. Many banking apps let you set goals, automate transfers, and track your progress in one place. In the OnePay app, you can use Savings goals, Pay Autosave, and Round-ups to build saving into your routine.
Common retirement accounts include employer plans like a 401(k) and individual retirement accounts, such as a traditional or Roth IRA. These accounts offer tax benefits, and the money is usually invested, which means its value can go up or down.