How to Save Money From Your Salary: 11 Simple Tips

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Learning how to save money from your salary is the first step you should take when working toward your financial goals. 

Did you recently land a new job with an excellent salary?  Or are you in the process of rethinking the way you handle your current paycheck?  

Whatever your reason for wanting to learn how to save money from your salary, I have you covered!  

It doesn’t matter if you have a salary or are paid hourly. The methods for saving money from your paycheck are the same.  

What does matter is that you take charge of your paycheck and make sure your money is going where you need it.  

Money is a tool that needs to be put to good use to benefit from having it.  You want your money to work for you so someday you won’t have to work for it!

 Disclosure: This post may contain affiliate links.  If you click and make a purchase, I may receive a small commission at no extra cost to you.  As an Amazon Associate, I earn from qualifying purchases.  You can read my full disclosure here.  

How to Save Money From Salary: Pay Yourself First 

The phrase “pay yourself first” means depositing a set amount of money into a savings account before you spend anything.  

Typically this refers to depositing money into a retirement account so that you can save it for your future. However, it also refers to putting money into a savings account to be earmarked for other reasons.  

Other reasons you may want to save money from your salary by paying yourself first are to:

  • Save money in an emergency fund
  • Save for a large purchase, like a new appliance
  • Save for a down payment on a house or car
  • Save for a family vacation
  • Save up for an elective medical procedure or surgery
  • Save up for upcoming time off from work (like for childbirth or medical leave)

How to Save Money From Salary:  Reduce Your Taxable Income

There are different savings vehicles you can contribute pre-tax dollars that decrease your tax bill for the year by reducing your taxable income. As you may know, Traditional IRAs, 401K, 403b, and 457 plans are funded with pre-tax dollars.

Since contributing to your employer-sponsored retirement account occurs before any taxes are deducted, you reduce your taxable income when you contribute to these tax-advantaged accounts.

Simply stated, you are giving less money to Uncle Sam and instead investing it for your future.  Not a bad deal, right?

And if your employer offers a company match, be sure to contribute enough to get the full benefit.  It’s free money, and you don’t want to miss out on that.

If you have a high deducible health insurance plan, you could also take advantage of a Health Savings Account. The money you deposit into your HSA is pre-tax money, which reduces your tax liability for the year while you save for medical expenses.

How to Save Money From Salary:  Use a High-Yield Savings Account

Ideally, you will pay yourself first by contributing to your retirement account before spending any money.  You can also directly deposit cash into a high-yield savings account, like an Axos High Yield Savings Account.

A high-yield savings account is a type of bank account where you earn a higher interest rate on the money you deposit than you would earn with a regular savings account. You have to claim your interest on your tax return at the end of the year.

The Axos High Yield Savings Account is my favorite online savings account because there are no monthly maintenance fees or minimum balance requirements.  So when you need the money, you won’t be penalized for withdrawing as much as you need.  

How to Save Money From Salary: Automate Your Paycheck

Automating your paycheck means directly depositing a specific amount into each of your accounts.  You won’t have to take your check to the bank to cash it when you choose to automate it.

When you pay yourself first, you will want to automate your contributions to your retirement account and deposits to your savings accounts.  

The remainder will go into your checking account, and this money is what you will use to pay your expenses.  

The great thing about automation is you don’t have to think about it. You don’t have to remember to transfer money into your savings account during the month; it just happens. It’s perfect for when you want to save money from your salary.

How to Save Money From Salary: Know the Truth About Your Spending Habits

If you want to learn how to save money from your salary, you need to figure out where your money is currently going.  Tracking your spending will help you find out.

You’ll want to decide how long you will track your spending.  Typically, monitoring for a whole month or even two months will give you the best idea of where your money is going.

Save all your receipts from your everyday spending and write down the amounts of all of your household bills.  Then sit down and total up all those receipts and write down all of your purchases.

What you see could be a real eye-opener.  There is a possibility you will be able to identify precisely where you need to cut back.  

Or, maybe it’s not so apparent where to cut back.  If you already don’t spend much on odds and ends throughout the week, your household expenses could be where you need to focus your attention when trying to save money from your salary.

How to Save Money From Salary: Develop a Spending Plan (AKA Budget) 

To save money from your salary, you will need to make a budget.  When you make a budget, you will need to know your income and expenses. 

Make sure your income covers your expenses, and you’re golden!  When your income covers your costs, you are living below your means.  Living below your means is crucial to meeting your financial goals and achieving financial wellness.  

Living below your means is also essential for reducing financial-related stress.  

If you need help creating a budget, I have a free printable budget binder to help you.  The binder includes:

Here is a preview:

Budget Binder

If you would like my free printable budget binder, you can grab it here.  

If you are having a hard time getting your income to cover your expenses, you can do things to help.  And even if you aren’t having a hard time paying your household expenses, you may want to learn more ways to save money from your salary.  

how to save money from salary: person writing on clipboard

How to Save Money From Salary:  Reduce Household Expenses

Finding ways to reduce your household expenses will help you save money from your salary or paycheck.  Here are some ways to save on household expenses.


Since your housing is typically the most expensive part of your budget, it makes sense to assess where you can save money there first.  

Refinance Your Mortgage

Lowering your interest rate will help reduce your monthly payments and the amount of interest you pay over the life of your home loan.

Get Private Mortgage Insurance Canceled

If you bought your home with less than 20% down, chances are you are paying PMI. However, if the value of your home has increased, another appraisal may qualify your home to have your PMI canceled sooner.  Check with your lender to find out.

Shop Around for Homeowners Insurance

Finding the coverage you need for a cheaper premium will help you put money in savings from your salary.

Food Budget

Your food budget is a large part of your household budget. But, if you aren’t careful, your food costs can quickly get out of hand.  Here are some ways to save money on food.

Meal Plan

Meal planning is the best way to save money on food because it helps you avoid buying takeout on busy weeknights or nights you don’t feel like cooking.  

When making your meal plan, you can plan quick and easy meals for the nights when you have other obligations.  You can cook ahead for these busy nights, and then all you have to do is heat your food.

If you need help with meal planning, I have some great resources for you.  I have several posts to help you and a free meal planning guide to get you started with a simple system for meal planning.  Here is a preview of it:

Free Meal Planning Guide

If you would like my free meal-planning guide, you can download it here.  

Here are some of my other posts that can help with meal planning:

Helpful Tip: If you absolutely hate meal planning or you have tried it, and you can’t seem to figure out a system that works for you, you should take a look at the $5 Meal Plan.

$5 Meal Plan is a meal plan service that sends you weekly meal plans right to your inbox and the grocery list for the meal plan already done for you!  

All you have to do is check off what you already have and head to the grocery store to get the rest.

Most of the meals work out to be around $2 per person.  And it’s only $5 a month!  

So if you would like to check it out, they have a free 14-day trial you can sign up for here.  

Use Ibotta

Ibotta is a cash-back app that is free to download and use.  You can use it at many different stores like Walmart, Target, Costco, Whole Foods, Kroger, and more!

You add the grocery offer to your account in the Ibotta app, take a picture of your receipt, and they deposit the money into your Ibotta account.  

Ibotta can also be used with Walmart Grocery Pickup, even though you don’t get a receipt with Grocery Pickup.  That’s how we use it the most.  

Before starting your grocery order at Walmart, you click on Walmart through the Ibotta app. Then, it redirects you, and you start your shopping.  

Once you pick up your groceries, the money is deposited into your Ibotta account.  

If you don’t have Ibotta yet, you can sign up here.

By signing up through my link, you can receive up to $20 in welcome bonuses!  

Shop Online for Groceries

Shopping online can help you save money on your food costs, allowing you to save more money from your salary.  You can avoid impulse buys and overspending by not going into a grocery store.

The best part about shopping online is seeing the total of your grocery bill before you pay.  Seeing the cost of your grocery bill allows you to remove or add things to your cart to stay under budget.  

There are many more ways to save money on food which will help you be able to save money from your salary.  Here are more of my posts that will help you save money on your food budget:


Your entertainment expense (aka fun money) is another area of your budget that can quickly get out of hand.  But reducing these expenses and still having fun is doable.  Here are some ways you can cut back on entertainment expenses:

  • Plan frugal date nights
  • Use Groupon to find deals on entertainment in your area
  • Entertain at home
  • Look for cheap or free activities to do with friends and family
  • Eat at home more
  • Budget for eating out at restaurants

Looking for ideas for budget-friendly activities or date nights?  Check out these posts:


Saving money on your car expenses will help you put more money in your bank account from your salary.  Here are some ways to save on car expenses and transportation.

  • Buy a used car
  • Plan your route to save on gas
  • Shop around for car insurance
  • Bundle your car insurance with homeowners insurance or renters’ insurance
  • Ride your bike or walk if possible
  • Carpool


Your utility bills are an excellent opportunity to save money from your salary.  There are tons of ways to reduce your utility costs.  Here are a few ideas:

  • Take shorter showers (set timers for kids)
  • Decrease the temperature of your water heater
  • Be sure to turn off the lights
  • Install a programmable thermostat
  • Use a rain barrel for gardening
  • Only run full dishwashers and washing machines
  • Replace incandescent light bulbs with LED light bulbs
  • Use timers for outdoor lights
  • Use ceiling fans
  • Turn the water off when shaving or brushing your teeth
  • Use insulating curtains and blinds on windows

Here are other posts on saving money:

70+ Frugal Living Tips to Help You Spend Less Money

20 Ways to Save More Money Every Month

How to Save Money From Salary:  Try a No-Spend Challenge 

If you are spending too much of your salary, a no-spend challenge could help.  A no-spend challenge is when you freeze your spending for a pre-determined amount of time.  It helps to reset your spending habits and save money.  

The main idea behind a no-spend challenge is that you don’t spend any money on unnecessary things.   You only spend money to pay your bills.  You don’t spend money on shopping, eating out, entertainment, etc.  

When doing a no-spend challenge, you determine the length of time.  It can be for a weekend, a week, two weeks, months, or any length of time you want to try.  

How to Save Money From Salary:  Live a Frugal Lifestyle

After reading up on how to save money from your salary, you may feel you are ready for a lifestyle change.  Living a frugal lifestyle will help you save money from your paycheck continually.

Frugal living is all about intentional spending habits. First, you decide your priorities and what matters most to you. Then, the things you value are what you spend your money on. 

You will also decide what budget areas you want to cut back on when determining your priorities. As a result, you will reduce your spending easier on the things you do not value.  

For example, my family puts a high value on taking family vacations. We do not value eating out at restaurants or getting takeout. 

So to fund our vacations every year, we save money by eating 99% of our meals at home.  

The real fun starts when you get into a frugal mindset.  Then you will want to try to save money on everything, even the things you don’t mind spending money on.  

If you want to learn more about living a frugal lifestyle, I have you covered!  Take a look at some of these other posts:  

How to Save Money From Salary:  Pay Off Debt

Debt is so expensive.  Whether you have student loans, car payments, credit card debt, or other personal loans, getting rid of your debt is key to living below your means.  

Paying off your high-interest debt will help you save money from your salary.  There are different strategies for paying off your debt.  Some people advocate paying off debts from the smallest amount to the largest amount (debt snowball method).

Others advocate paying down the highest interest rate debt first (debt avalanche method).  Then moving to the debt with the next highest interest rate, and so on.  

You should choose whichever method will keep you motivated and moving in the right direction. For example, when my husband and I paid down our debt, we started with the highest interest rate because it made the most sense to us.  But you should do what you feel will be best for your situation.      

If you would like to read more about paying down your debt and becoming financially secure, here are some other posts you may like:

How to Save Money From Salary:  Gradually Increase Your Savings

My last strategy for saving money from your paycheck is gradually increasing your savings rate.  Increasing the amount of money you contribute to your retirement account and your regular savings account in small increments will make saving money easier.  

You could try to increase your retirement account contributions by 1-2% every year.  Or, every time you get a raise, you could increase your contributions by that amount.  

For example, if you received a 3% merit raise, you could increase your retirement account contribution by 3%.  Or you could split it and increase your retirement contribution and your regular savings deposit by 1.5% each.  

The key is to steadily save more and more money from your salary as time passes.  Increasing your savings rate will help to improve your net worth and set you up for a secure financial future.  

Here are a few other questions that people frequently ask about saving money from your salary.

how to save money from salary: calculator and person writing on notepad

How Much Money Should I Save From My Salary (What Percentage)?

The 50/30/20 rule is a simple money management strategy you can use to guide your budgeting.  Under this strategy, you would divide your take-home pay into three categories.  

50% of your take-home pay would go toward your necessities.  Necessities are your rent, mortgage, utilities, debt repayment, insurance, etc.  Your necessities include the items in your budget that you pay for, like clockwork every month.  

30% of your take-home pay would go toward things you want.  You can think of it as your fun money or the money you use for your non-essential budget expenses.  

However, if you have a significant amount of debt, decreasing your fun money to 10-15% is an option, so you can use that extra money to pay down your debt.  

The 20% in the 50/30/20 rule is the percentage allocated toward savings.  Keep in mind this is just a general rule of thumb.  You will need to adjust this number based on your savings goals.  

You want to consider your long-term, intermediate, and short-term financial goals when determining how much money you should save from your monthly salary. 

Ideally, when saving for retirement, you want to increase your savings rate each year, with the goal being 20% of your paycheck.  However, I know that can be a high savings rate to achieve.  

Try increasing your savings rate by the amount of your yearly raise every year.  Then your paychecks won’t change, but your savings rate will increase.  

If you are saving up for something specific, say a down payment on a house, you will want to do the math to determine how much money you will need to save each month for your goal.  

If you need $30,000 saved in 5 years, you will need to save $500 a month to reach that goal ($30,000 divided by 60 months).  If that is not possible, you’ll need to decrease the amount or increase the time frame.  

How to Save Money From Salary in the Bank?

The best way to save money from your salary in the bank is to automate it. First, decide the amount you want to save and then have that amount directly deposited from your paycheck into your savings account.  

Setting a recurring monthly deposit to your savings account will help prevent you from spending it because that money will bypass your checking account.  

If you haven’t automated your savings deposit yet, talk to the HR department where you work.  You’ll need to fill out a direct deposit authorization form.  

How Can I Save Money on a Small Salary?

Saving money on a small salary when there isn’t much money left over after paying the bills can prove to be a challenge.  However, it is possible.  

You can use the same tips as above, but you may need to scrutinize your budget even more.  In addition, stack as many ways to save money on your expenses as possible to build up extra cash in the bank.  

Looking for ways to increase your income can also help you save money on a small salary.  Luckily, there are tons of ways to bring in more money.

Starting a side hustle, finding a part-time job, working overtime, or even asking for a raise are all tried and true ways to make extra money.  

Here are some other posts you may find helpful:

Final Thoughts on How to Save Money From Salary

Saving money from your salary is a vital part of living below your means and reaching your financial goals.  But it isn’t always easy to do.

When you live paycheck to paycheck and don’t have extra money to spare, it can get quite frustrating when trying to save money.

However, using some or all of these tips can help get you on the path to saving money and improving your finances. So take action today to start saving money from your salary so you can watch your bank account grow. 

What tips do you have for saving money from your salary? Let me know in the comments.

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