They pay off their credit cards every month, know where to get the best deal on groceries, and keep a healthy portion of cash set aside for emergencies.
They’re savers. And maybe you’re one of them—or maybe you're trying to be.
Saving isn’t easy. It takes strong habits to stay on track. And sometimes the same instincts that drive people to save can wind up holding them back.
Here are 3 types of savers and their best habits—as well as the ones that can slow them down. See which type of saver you are, and find tips for becoming a better saver.
Most budgeters don’t buy the overpriced coffee. They track their spending to the penny and know exactly how much they save by brewing it at home. They also know how much their money is earning (even their cash savings).
Habit to steal: Keeping track of every dollar. Budgeters can pinpoint the most effective ways to maximize their long- and short-term savings. They know that small amounts can make a big difference.
Habit to skip: Not putting enough value on their time. Many budgeters love a deal, so they take advantage of things like bank promotions with introductory interest rates. The problem: When the promotion ends, they have to move their money, or they'll end up earning less than 1% on their cash. It's a lot of work to juggle those ever-changing "deals."
A tip for budgeters: If you’re a budgeter, you can save yourself time and headaches by choosing deals carefully. It’s better to go with trusted companies that always give you a fair shake.
The keep-it-simple saver
These savers don’t like spreadsheets. They figure being careful about the big financial decisions means they don’t have to worry as much about the smaller ones. They buy homes and cars they can easily afford, and usually have cash left over every month. If they want that expensive coffee now and then, they feel okay about buying it.
Habit to steal: Automating their savings. These savers often use automatic deductions to set cash aside every month. It makes saving easy and effortless.
Habit to skip: Not sweating the small stuff. Unfortunately, even small expenses can add up and become big ones, so it pays to consider inexpensive purchases carefully too.
A tip for keep-it-simple savers: If you like to keep it simple, but find you're not meeting your saving goals, here are 2 approaches that can get you on track:
- Take a spending break. Cut out discretionary spending for a short time (1 or 2 weeks). This can help you break any costly habits. Also look for automatic renewals to cancel subscriptions you no longer use or want.
- Do a spending check. Review the last 3 months of your credit card and bank statements to identify problem areas. Pay attention to sneaky expenses, like online subscriptions (which tend to go up every year).
- Set an average daily spending limit. Also set an average daily average spending limit. This is cashflow management 101. Look at your take home pay, subtract out your fixed expenses (things like mortgage or rent payments, utilities and other debt payments), then subtract out your savings target for the month. You'll be left with your discretionary money. If you divide your discretionary money by the number of days in the month, you'll have a daily spending limit you can easily track. For instance, if the discretionary figure is, let's say, $3,000 and there are 30 days in the month, your average daily spending limit is $100. If you treat yourself to an expensive dinner out on a Saturday night, and spend $200, you'll know you have to cut back for a couple of days.
The cookie-jar saver
Cookie-jar savers know that every dime counts. But unlike budgeters, they don’t track their spending with a spreadsheet or app. They just don’t spend much. When faced with a choice between an expensive option and a cheaper one, chances are they’ll say, “I don’t actually need it after all.”
Habit to steal: Keeping a healthy emergency fund. These savers keep the recommended 6–12 months of expenses in easy-to-access, low-risk accounts. That way, they feel prepared for just about anything.
Habit to skip: Being too careful. Cookie-jar savers are uncomfortable with risk. They tend to choose familiar, low-yielding places to put their money—like a cookie jar. The problem: Over time, inflation can chip away at the value of that cash. Even at a low 2% inflation rate, $100 this year will be worth the equivalent of $91 in 5 years.
A tip for cookie-jar savers: If you don’t like risk, consider putting your savings into investments such as money market funds. They’re easily accessible and lower-risk than many other investments.
Make your saving personality work for you
Maybe you can relate to all 3 types of savers. Or maybe you have your own philosophy and system that works for you.
Whatever your strategy, one important key to successful saving is partnering with a company that puts your interests first. That way, you don’t have to worry about getting nickeled-and-dimed if you’re not paying attention.
You might think of Vanguard as a place for your brokerage assets or retirement nest egg. But its easily accessible, lower-risk money market funds also make it a great place for your cash.
At Vanguard, you (the investor) own the funds that own Vanguard. It’s a unique structure that turns clients into owners.* So you can feel confident your hard-earned cash is working for you.
For more information about Vanguard funds, visit vanguard.com/fundprospectus to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
*Vanguard is client-owned. As a client-owner, you own the funds that own Vanguard.
All investing is subject to risk, including the possible loss of the money you invest.
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