How to set it up
Pick an amount you can keep every month, even a small one. Set an automatic transfer from checking to a separate savings account for the day after payday. Treat it like a bill that can't be skipped.
Worked example
$200 a month into savings earning 4% a year, compounded monthly, grows to about $13,260 after five years. $12,000 of that is what you put in; the rest is interest.
Rates on savings change and can go down. Use the rate your bank actually pays in the calculator.
What to save for first
Start with a small emergency fund so a surprise bill doesn't become credit card debt. Then build it toward a few months of essential costs, and add longer goals once that is in place.
If money is tight
Start with $25 or $50. The habit matters more than the size, and raising the amount later is easier than starting from nothing.
Try the calculator
Run your own numbers in the free compound interest calculator. It works in your browser and nothing you enter is saved or sent.
Do it in Wrenfold
Wrenfold's savings goals track each goal's progress and the date you are on pace to reach it. Wrenfold is the budgeting app we make. Your data stays in a file on your own device, and you can try it free in your browser with up to 60 entries.
Sources
Common questions
How much should I save each month?
A common target is 10% to 20% of take-home pay, but any amount you can keep up is a good start.
Where should the savings go?
A separate savings account at your bank or credit union keeps it apart from spending money.
What if I need the money before the month ends?
Start with a smaller automatic amount that you will not need to pull back, then raise it once the habit holds.
This guide is general information, not financial, tax or legal advice. Rates, fees and rules change, so confirm current terms with the lender, store or agency involved. All dollar figures are invented examples.