Guidebook icon with text, Starting to save

Ah, financial freedom. Who doesn’t like the sound of that? But start thinking about what it takes, and you might be tempted to bury your head under the covers and hit snooze. But it doesn’t have to be that way.

Although the details of each individual’s finances are different, one thing’s for certain: Nearly everyone is striving for financial freedom. And taking the steps to build a savings strategy is one way to achieve it. Truth: It’s going to take more than just skipping your pricey morning joe — but it’s far from an impossible task. Here are five steps to take as you get started saving money.

1.   Start with your budget.

To figure out how much you can save, you’ve got to take a good look at your income and expenses. If you don’t have one already, now is the time to come up with a budget. Don’t worry — creating one doesn’t have to be complex. For a quick-and-easy starting point, try the 50/30/20 plan.

How detailed you get with your budget is entirely up to you. But no matter what budgeting method you follow, the point is to know what’s coming in, what’s going out, and what’s left over.

2.   Define your savings goals.

If you’re like most people, you have a lot of things you want to save for. It’s easier to achieve your goals if you divide them into short-, mid-, and long-term savings goals and make them easier to visualize.

  • Short-term goals: These are things you’re working toward for the next year or so. They might include gifts for the holiday season, an anniversary weekend getaway, or a new mountain bike.
  • Mid-term goals: Think of your mid-term goals as the expenses that land within a 10-year window. Things like making a down payment on a home or car, fully furnishing a room, or turning your backyard into an entertaining oasis are common mid-range goals.
  • Long-term goals: For most people, this typically includes the big one: retirement. But you may have other long-term things you’re saving up for, too, like a vacation home or starting a business.

It’s even easier to visualize your goals if you can keep them separate from each other. That might mean keeping them in different accounts — for instance, some of your goals might be best suited for an investment account or Certificate of Deposit. Or you can keep the amounts separate within one account — an option we offer with the buckets tool in our Online Savings Account, where you can divide up your funds by goal.

3.   Factor in paying down debt.

You know high-interest debt (read: credit cards) works against you. Put paying down debt — any debt, including student loan debt and personal loans — on your list of savings goals, so you can be realistic about tackling it. Remember, the sooner that debt is gone, the sooner you can put that money toward your other savings goals.

Added bonus: Reducing your debt load can improve your credit score since it lowers your debt-to-income ratio.

4.   Prioritize your savings goals.

Once you’ve listed your savings goals, decide which ones are most important to you. The results may surprise you, and, if you’re in a relationship, will probably require some compromise.

Once you give it some thought, you may realize a new car is further down the list than, say, a once-in-a-lifetime girls’ trip with your college friends.

And with your priorities straightened out, you’re probably in good shape to crunch numbers.

Give each of your priorities (besides retirement, which we’ll talk about later) an ideal dollar amount and deadline. If you take the total amount for each one and divide that by the number of months it’ll take to achieve it, you’ll end up with a general amount to save each month toward each goal. This is where our buckets tool really comes in handy. Once you divide each of your goals into a separate bucket, it’s easy to keep track of how much you’ve saved toward each one — no math required!

You’ll likely need to adjust your timeline or dollar amount according to how much you can afford to save. But here are two things you should not kick down the road: an emergency fund and retirement savings.

Emergency savings

healthy emergency fund can keep unexpected expenses — job loss, car repair, broken bone, you name it — from causing a financial disaster. Experts suggest having enough savings set aside to cover three to six months of necessary expenses.

This handy emergency fund calculator can help you visualize a target amount to save.

Retirement savings

Retirement may seem a long way away, but there’s a reason every older person you’ve ever met has told you that time flies. So, take advantage of the time-value of money and the magic of compounding interest to get the most from your retirement savings.

Many experts recommend you put 10% of your income aside for retirement. Of course, your goal amount will vary according to your expected lifestyle and tax bracket, among other factors. It’s a good idea to consult a professional familiar with your situation to help you evaluate or set up a solid retirement plan.

In the meantime, you may want to learn how IRAs can add value to your long-term plans.

Related: Savings by Age: How Much to Save in Your 20s, 30s, 40s, and Beyond

5.   Stay positive — and realistic.

Don’t expect to end up with a perfect plan the first time you run this exercise. It’ll be a little messy, and you’ll likely find that you can’t set aside as much as you want for every goal right away. But keep at it, and revisit and reprioritize as your circumstances change.

Play around with lowering your target amounts and adjusting target dates. Find creative ways to increase your income or reduce necessary expenses. Keep track of where your money is going, so you can spot any unnecessary expenses or places where you can afford to save a little — something the Surprise Savings tool in our Online Savings Account can help you with.

Don’t forget that once you achieve one savings goal or pay off a debt, that monthly amount is freed and can be put towards the other goals on your list. These starter steps are a good way to kickstart your savings strategy — just keep an eye on your goals, and you’ll be that much closer to checking them off one by one.

Make your money perform smarter with the smart savings tools in our Online Savings Account.

Check out our Online Savings Account.