SOS! I Have Zero Savings—Where Do I Even Start?

Source: Karolina Grabowska | Pexels
Source: Karolina Grabowska | Pexels

I can remember the first time I thought about my savings as a real adult™. I was grabbing drinks with some work friends at my first post-college job and everyone was talking about what they were currently saving for. I had almost nothing to contribute to the conversation because I wasn’t saving for anything, just keeping afloat until my next paycheck. I went home that day and promptly Googled “How to start saving money.” If that’s you right now, you’re in the right spot. 

Building an emergency fund is something that’s often talked about as the first thing everyone needs when getting their finances together, but what do you do if you have zero dollars in savings at the moment and an emergency fund feels like a distant glimmer? I was in that position a few years after graduating college, and although it seemed really overwhelming at first, once I started taking a few baby steps in the right direction it was easy to build up a comfortable safety net. If you’re at square one of your savings journey, don’t panic. You’ve got lots of time and I promise it’s easier than it looks! Check out the steps below for an overview of how to start saving money today. 


1. Evaluate your spending 

A lot of finance writers will jump right into the importance of having a budget, but it’s hard to come up with a budget that will work if you aren’t even sure where your money is going at the moment. Block off an evening and pick up your favorite snacks, then print out your last six months of credit card and banking documents to find some areas to save. If it’s something that brings you a lot of joy (say, a daily coffee or your fitness membership), make a note to include it in your budget. Focus on those charges you don’t remember making (recurring streaming subscriptions, looking at you) or know you didn’t enjoy (those extra happy hour drinks, maybe?). Those are great places to mindfully cut back to create some extra money to save. 

It’s important to note that where you live and your current lifestyle will play a big role in how much you can save. If you’re working as an intern in NYC, you might not be able to put away thousands a month because of the cost of living in a large city and your current income. While I would never tell you to move in with your parents and completely change your lifestyle, it’s worth mentioning that your biggest expenses (rent, transportation, food, etc.) might be worth reevaluating if you want to change how much you can save in a small period of time. 


2. Think about what you’re saving for 

When it comes to finances, I always need to have a goal or else I get completely distracted and spend my money on random things. Whether it’s setting a goal for an amount you want to have saved by a certain time or a goal for what you’ll use that money for, creating clear targets for yourself will make it easier to stay on track. When you’re asking yourself if you need something (see step 4!), you can add in the goal you’re saving for as the alternative. For example, “Do I want to go to that gym studio that charges $35 per class, or do I want to get $35 closer to my goal of traveling to the south of France?”. It’s so much easier to opt towards saving when you have a clear alternative to motivate you. 

The second part of setting goals is to make sure they’re visible! Whether it’s a vision board above your desk (my personal fav) or on your phone, or an old-school tracker where you color in a bar each time you hit a new number in your account, keeping your savings goals top of mind is key to making them happen.


3. Create a budget 

Once you’ve figured out what you enjoy spending your money on and why you’re saving, you can move on to creating a budget. There are many different methods you can choose from, like the 50-30-20 system or using specific budgeting apps, but the goal is to figure out what your fixed costs are (things like rent and transportation to work) and your variable costs (things like groceries, activities, eating out, and fitness) so you can find areas to save. Based on what you highlighted as being important in the first step, you can figure out which variable costs are worth adding to your budget and which are worth cutting out. After you’ve cut out some areas, earmark that money for savings. 

Alternatively, if you know you’d like to save a certain amount, work backward to figure out what you need to reduce or cut out of your budget to be able to hit that goal. Although budgeting is never the most fun, it’s helpful to remember that it’s an investment in YOU and a blueprint to help you achieve your goals. 


4. Start small 

When you’re starting with zero, it can be easy to feel like you have to save hundreds or thousands a month to make a dent, but that’s just not true. By starting small and finding places to save $5 here and $25 there, you can build momentum that will quickly add up to large savings. One trick I used when starting out my savings journey (and still use today!) is asking myself if I really need something or if it’s just a temporary desire. Do I need to buy a fancy salad when I brought my (admittedly less exciting) leftover lunch? No, I can save that money for something else that I’ll appreciate a lot more. Do I need yet another magazine subscription? Probably not. You get the gist, but asking this question will force you to pause on small purchases and really consider if you want something or if it’s better to save your money for the longer term. 


5. Use automatic savings tools 

Once you have your budget and goals sorted, you can now move on to actually saving money. I like to create separate savings accounts for each goal (look for a high-interest savings account!) and rename them with the goal, like “downpayment for future house” or “vacation fund.” I then go back to my budget and figure out how much I can contribute to each goal. Let’s say you have $500 a month to put into savings. You might put $200 into an emergency fund, $150 into an investment account, $50 towards your “other people’s weddings fund” (not the most fun, but necessary), and $100 towards your dream vacation. Once you know how much you want to move into each account every month, you can set up automatic transfers that will pull that amount of money every month. By having everything automated, you remove the need to constantly be thinking about saving because it’s already happening in the background. 

One thing to be mindful of with automatic savings is that you don’t get carried away and set them up before you know that your budget works. Test drive your budget for a few weeks before you automate anything to prevent any insufficient funds issues (which can happen, for example, when you budget $50 for coffee a month but actually spend $80, and then you’re short $30 for your automatic transfer). Make sure to also set up your withdrawals to be a day or two after you get paid, just in case there’s an issue with your paycheck for some reason.  


6. Increase your income 

While all of the above tips are super important starting blocks, they focus mainly on the cost-reduction side of savings. If you’ve done all of the above but want to hit your savings goals faster, it might be time to consider finding other sources of income or increasing your salary. This could be temporarily picking up more shifts at work until you’ve got your emergency fund sorted out or it could be a longer-term play, like building out a roster of freelance clients for projects on an ongoing basis or finally asking for that raise. I opted to pick up some writing and editing freelance work to help me save for my goals when I was a new grad and I was able to hit my target savings number so much faster. It helped me build up momentum and once my bank accounts started getting bigger and bigger, I was able to gain more confidence toward achieving my goals. This can also be an easy way to label where your money goes—for me, if it comes from my extra work, it goes straight into savings.