Woman holding an infant in a kitchen while researching ways to save money on a tight budget through Fifth Third Bank.

How to Save Money on a Tight Budget


Tracking spending is vital for financial control and peace of mind. Explore some of the best ways to budget money effectively.

While Americans saved a whopping third of their disposable income three years ago, many of those impressive savers have once again become spenders. Nearly half have dipped into their pandemic-era savings, according to research by Northwestern Mutual, and Americans’ current personal savings rate of just over 4% is just half the historical average.

Saving isn’t easy, especially if you only have a vague idea of how much money you need to cover monthly essential expenses, such as housing costs and food. Without knowing where your household income goes each month, it’s difficult to consistently put money aside.

Open a Savings Account

Having a budget can help you turbocharge your savings account. A budget outlines your monthly living costs so you have a clear picture of how much you are spending and what you can afford to save. Setting a budget gives you greater control over your money, which relieves anxiety about overspending and coming up short in a financial emergency. A budget also helps you stay accountable to achieving financial goals, such as saving for specific goals like buying a house, paying off debt, and establishing an emergency fund.

Create a Budget

Creating a budget doesn’t have to be complicated or time-consuming. One popular budgeting approach follows the 50/30/20 rule. You simply allocate your monthly net household income (after taxes and paycheck deductions for 401(k) contributions and health insurance) to three buckets: 50% for essential needs (rent, utility bills, transportation, groceries, minimum monthly debt repayments), 30% for spending on things you want (dining out, buying clothes, entertainment, cable subscriptions, gym membership), and 20% for saving, which includes building an emergency fund and debt repayment.

These are rule-of-thumb spending targets, however. Your income, priorities, and life circumstances will affect the percentages in the spending and saving categories and will likely change over time. Someone who lives in a city with a high cost of living, for example, will spend a greater percentage of their income on housing and essential expenses. Or a couple saving for a down payment on a house or close to retirement may want to accelerate their savings target by cutting back on discretionary expenses.

Utilize Online Banking

Online banking makes it easy to compile a list of your essential and discretionary monthly expenses. Average three months of variable expenses, such as groceries, dining out, and gas for more accurate monthly line items. And divide annual or semiannual expenses—car and home insurance, gym membership, Christmas and other gifts—by 12 and add that to your monthly costs.

Use Budgeting Calculators

With the help of Fifth Third’s Monthly Budget Calculator, you can easily track your monthly expenses. Continue to monitor your expenses for a few more months to see how accurate your estimates have been and to account for unexpected expenses. You can use a notebook or spreadsheet, one of the budgeting apps available online, or Fifth Third’s mobile banking app for keeping tabs on your expenses.

Note Your Salary vs. Lifestyle Choices

Once you see where your income is going every month, you can identify areas where you might be overspending and make some adjustments in your living expenses and spending habits. Depending on how far you are from your spending targets, you may want to pare living costs by taking public transportation, becoming a sales-conscious grocery shopper, consuming less home energy, cutting back on cable subscriptions, or if big cuts are necessary, finding more affordable housing or driving a less expensive car. And if you find your spending wants are exceeding 30% of your take-home pay, perhaps splurge a little less on yourself.

Open a Fifth Third Momentum® Account

There are other ways to create a budget; the trick is to find a budgeting strategy that suits you, so you are likely to follow it. To ensure that you stay committed to your savings goal each month, consider having a portion of your take-home pay automatically deposited into a savings account like Fifth Third Momentum® Savings. With Fifth Third’s Momentum Smart Savings feature, you can decide how much money will be automatically transferred from your Fifth Third Momentum Checking Account to a Fifth Third savings account up to twice a week, or on your own preferred schedule.

Track Spending and Saving in the Mobile App

Being intentional about saving and setting specific savings goals will help you stay motivated to save. Fifth Third’s mobile app allows you to designate up to four savings goals per savings account and to track your savings progress.

Through the structure of a budget, you can create healthy financial habits, put your financial priorities in order, and successfully save for your short- and long-term goals.For more information about how to set up a savings plan, click here, or visit a local Fifth Third Bank branch in person.

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