17 Savings Strategy Tips That Help You Create More Breathing Room

In the Federal Reserve’s 2024 survey, 63 percent of U.S. adults said they could cover a $400 emergency expense using cash or its equivalent. What about the other 37 percent?

The Fed reports this number every year in its Economic Well-Being of U.S. Households report, based on its Survey of Household Economics and Decisionmaking. “Cash or its equivalent” includes cash, money in a savings account, or a credit card that would be paid off at the next statement. The share was 50 percent in 2013, rose to a high of 68 percent in 2021, and has stood at 63 percent in each of the last few years I could find, 2022, 2023, and 2024. For the people who couldn’t cover $400 that way, the survey asked how they’d manage, and the answers included borrowing, selling something, or not being able to pay at all.

Some cautions. The figures come from a survey in which people say what they would do, so they’re estimates and not bank records. And $400 isn’t a full emergency fund. I use it as a reference point, since it’s a small, concrete amount, and breathing room starts there.

The 17 tips below are savings strategies for creating that room. They’re my own, and the survey doesn’t test them. I’ll say where I’m drawing on its numbers.

Start Building Your Breathing Room

Grab my free Money Reset Workbook. It’s a good place to start planning your cushion.

Get the Free Workbook

1. Start with a goal of $400 in cash you can reach

The Fed’s question gives you a first target. Four hundred dollars in a savings account or in cash is a small step that covers many minor surprises. It’s close enough to feel possible.

Write the number down and give it a home. A separate savings account works well. That target comes from the survey, and the plan is mine.

Try this: Open or label a savings account “First $400,” and set your target.

2. Check what you could cover today

Find out where you stand. Add up your checking and savings, and subtract anything you’ve already promised to bills. That’s your real cushion.

A few years ago, I did this and found I had less than I’d assumed. It was uncomfortable, and it showed me exactly how far I had to go. That’s my experience.

Try this: Add up your reachable cash today, and write the number down.

A Small Reminder to Keep Building

I make prints, mugs, and shirts at Premier Print Works. Some people like a reminder where they can see it.

Visit Premier Print Works

3. Automate a small transfer on every payday

Set up an automatic move to savings. Even $10 works. The point is to make saving happen without a decision.

Over a few months, small transfers add up. That’s my favorite way to build a cushion, and it’s not from the survey.

Try this: Schedule an automatic transfer for your next payday.

Breathing room is what a small cushion feels like.

4. Save windfalls first, then spend the rest

Tax refunds, bonuses, and gifts can jump-start your cushion. Decide ahead of time how much goes to savings. Even half makes a difference.

Planning the split before the money arrives avoids arguing with yourself. That’s my suggestion.

Try this: Choose what share of your next windfall goes to your cushion.

Take a Week to Plan Your Cushion

My free 7-Day Life Reset is a short week of reflection on your own routines. It’s a good place to start seeing what gets in your way.

Start the Free Reset

5. Keep your cushion in a separate account

Money in your checking account blends into your spending. A separate account makes it easier to leave alone. Many banks let you open one online for free.

Name it after what it’s for. A clear name makes it easier to keep your hands off. That tip is mine.

Try this: Give your savings account a name that reminds you of its purpose.

6. Build a small buffer in your checking account too

A few dollars of extra room in checking can prevent overdraft problems. It doesn’t replace your savings. It’s a first line of defense.

I keep a small floor I don’t spend below. That’s my own habit, and it’s prevented many fees.

Try this: Choose a minimum balance for your checking account, and treat it as off limits.

7. Grow your goal from $400 to one week of expenses

Once you have $400, aim for a week of basic expenses. Write down what a week costs, and work toward it.

A week is concrete, and it’s more useful than a vague “emergency fund.” That step is mine.

Try this: Estimate a week of essential expenses, and set it as your next goal.

8. Then aim for a month of expenses

After a week, go for a month. It takes longer, and it gives you much more room. Keep the account separate and keep adding.

Take your time. Slow is fine. That’s my view.

Try this: Multiply your weekly essentials by four, and write the total as your next goal.

9. Lower a fixed cost to free up money for savings

Look at your biggest bills. Is there one you can reduce? Call your provider, shop around, or downgrade a plan.

Every dollar you free up can go to your cushion. That’s my approach, and it works without hurting your daily life.

Try this: Pick one bill, and call to ask about a lower rate.

10. Pay attention to high-interest debt

Interest on debt can work against your savings. List your debts with their rates, and consider paying down the most expensive one while you keep building your cushion.

Balancing the two is personal. A qualified professional can help you decide. That’s my caution.

Try this: List your debts with their interest rates, and note the highest.

11. Avoid dipping into your cushion for wants

Keep the cushion for real surprises, like a car repair or a medical bill. Decide in advance what counts as an emergency.

Write down a short definition. It helps when you’re tempted. That’s my own rule.

Try this: Write a one-sentence definition of what your cushion is for.

12. Set aside money for costs you know are coming

Some costs aren’t emergencies. They’re just infrequent, like insurance premiums, registration, or holidays. Divide each by the number of months until it’s due and save a little each month.

That way, they don’t raid your cushion. That’s my tip, and it keeps the cushion for true surprises.

Try this: List three non-monthly costs, and divide each by the months until it’s due.

13. Refill the cushion after you use it

If you spend from your cushion, don’t feel bad. That’s what it’s for. Then rebuild it, even slowly.

Put a reminder on your calendar to start refilling. That’s my own habit.

Try this: After any withdrawal, set up a small automatic transfer to refill it.

14. Raise your savings amount a little each quarter

Every few months, increase your automatic transfer by a small amount. A few dollars more barely changes your day.

Over a year, the increases add up. That’s a slow strategy, and it works. That’s my experience.

Try this: Put a quarterly reminder on your calendar to raise your transfer.

15. Track your progress where you can see it

Draw a simple bar or a line to track how close you are to your goal. Put it somewhere visible. Watching it fill is motivating.

It turns a vague goal into something you can see. That’s my suggestion.

Try this: Draw a progress bar for your current goal, and color it in each month.

16. Know your deductibles so you know what a surprise could cost

Check your car and health insurance deductibles. That’s the amount you’d pay before insurance begins to cover costs.

Knowing these helps you see how much cushion might be useful. I’m not advising what coverage to buy, and a licensed professional can help. That’s my caution.

Try this: Look up your deductibles and write them down next to your cushion goal.

17. Celebrate each step, and be patient with the process

A first $400 is a real milestone. So is a first week of expenses. Notice them.

If you can’t save right now, that’s not a failure. Some months are tight. If money stress feels heavy or constant, a nonprofit credit counselor can help, and in the U.S., you can dial 211 for local resources. That’s my caution, not a finding.

Try this: Choose a way to mark your first milestone, and do it when you get there.

Ready to Create Some Breathing Room?

Download my free Money Reset Workbook and plan your first savings goal.

Download Free Now

A Small Reminder to Keep Building

Take a look at Premier Print Works for prints, mugs, and shirts made for people who like a small daily reminder.

Visit Premier Print Works