How to Save and Spend Money Wisely in the USA

 Life in the United States opens up numerous financial opportunities, but it also requires a smart approach to personal finance management. In this article, we'll explore how to properly plan a budget, save, and invest money in the American reality.

Creating and Maintaining a Personal Budget

Effective financial management begins with creating a budget. Here's a step-by-step approach:

Determine your after-tax income. In the US, taxes are often withheld by employers, but it's important to know the exact amount that reaches your account. 

Divide expenses into fixed and variable. Fixed expenses include housing rent, loan payments, and insurance. Variable expenses include food, entertainment, and shopping. 

Follow the 50/30/20 rule: 

50% of income for necessary expenses

30% for wants and entertainment

20% for savings and investments 

Regularly review and adjust your budget. Financial situations change, and your budget should reflect these changes. 

Real-life example: The Johnson family from Minnesota with a combined income of $7,500 a month after taxes distributes their finances as follows: $3,750 (50%) goes to mortgage, utilities, insurance, and food; $2,250 (30%) is directed to restaurants, travel, and hobbies; the remaining $1,500 (20%) is regularly contributed to 401(k) accounts and a savings account for purchasing a second car. They use the Mint app to track all expenses and hold a "financial evening" monthly to discuss the budget and adjust it as needed.

Main Expense Categories for Budget Planning

When planning, consider the following categories:

Housing (25-35% of budget): rent or mortgage, utilities, home insurance

Food (10-15%): groceries, dining out

Transportation (10-15%): car, fuel, public transport, insurance

Medical expenses (5-10%): insurance, doctor visits, medications

Savings (minimum 10-15%): emergency fund, retirement savings

Personal expenses (5-10%): clothing, entertainment, hobbies

Debt obligations (up to 20%): credit cards, student loans

Education (varies): courses, educational materials

Taxes (if not automatically deducted)

Popular Financial Tracking Tools and Applications

The following tools are widely used in the US:

Mint – a free app for tracking expenses, creating a budget, and managing accounts

YNAB (You Need A Budget) – helps plan every dollar

Personal Capital – focuses on investments and retirement planning

Quicken – a comprehensive financial management solution

Excel/Google Sheets – for those who prefer to create their own spreadsheets

Goodbudget – uses the "envelope" method for distributing money

PocketGuard – shows how much money is left after paying bills and reaching goals

Optimal Savings Size and "Safety Cushion"

Financial experts recommend: 

Emergency fund: 3-6 months of expenses in case of job loss or unexpected costs. Keep this amount in an easily accessible account. 

Savings goals: 

Short-term (1-3 years): vacation, new computer

Medium-term (3-10 years): down payment on a house

Long-term (10+ years): retirement, children's education 

Automating savings: set up automatic transfers of part of your salary to a savings account on payday.al-life example: Alex, a nurse from Portland, created an emergency fund of $15,000 (equivalent to her 4-month expenses) in a high-yield savings account at Ally online bank. When her car unexpectedly broke down, requiring $2,800 in repairs, she was able to pay for it without using a credit card, and then gradually replenished her emergency fund over the next three months. She also set up an automatic transfer of 5% of each paycheck to a separate account for a trip to Japan, which she is planning in two years.

Types of Savings Accounts and How to Use Them

Several types of accounts exist in the US:

Regular savings accounts: low interest but high liquidity

High-Yield Savings Accounts: higher interest rates, often at online banks

Certificates of Deposit (CDs): fixed rate for a specific term

Money Market Accounts: higher interest rates and a limited number of transactions

Purpose-specific accounts: educational accounts (529 Plans), medical (HSA)

Tax Benefits and Savings Accounts

The US offers tax advantages for investing in the future:

401(k): employer-sponsored retirement plan with tax deferral, often with additional contribution from the company

Traditional IRA: individual retirement account with tax deduction now and taxation upon withdrawal

Roth IRA: contribute after-tax money, but withdraw tax-free at retirement age

HSA (Health Savings Account): for medical expenses with triple tax advantage

529 Plan: for education payments with tax benefits

ESA (Education Savings Account): an alternative to 529 for educational purposes

How to Save on Major Expense Categories

Housing

Consider living with roommates or outside the city center

Optimize utility costs (energy-efficient bulbs, programmable thermostats)

Review your lease annually or look for better offers

Food

Plan your menu for the week and shop with a list

Cook at home and take lunches with you

Use coupons and supermarket loyalty programs

Buy seasonal products and items in bulk

Transportation

Use public transportation or bicycle when possible

Compare fuel prices using apps (GasBuddy)

Optimize car insurance (compare offers from different companies)

Properly maintain your car to prevent costly repairs

Medical

Choose an appropriate medical plan (don't overpay for unnecessary coverage)

Use telemedicine for non-urgent consultations

Buy generics instead of brand-name medications

Consider opening an HSA or FSA for medical expenses

Real-life example: A young couple from Chicago, Mike and Sarah, reduced their food expenses by 40% by starting to cook at home on Sundays for the entire week (meal prep). They spend about 2 hours every Sunday preparing lunches and some dinners, using ingredients purchased at a discount at Aldi and Costco. This practice not only saved them about $400 a month but also helped them eat healthier food. Additionally, they moved from an apartment in the city center ($2,200/month) to a neighborhood located 20 minutes away by public transport ($1,650/month), which gave them an additional savings of $550 monthly.

Discounts, Coupons, and Loyalty Programs

The US has a well-developed culture of discounts:

Coupons: use apps like Ibotta, Rakuten, Honey

Cashback services: get back part of the money spent

Store loyalty programs: Target Circle, Kroger Plus Card, CVS ExtraCare

Reward credit cards: choose cards with cashback in categories where you spend the most

Wholesale club memberships: Costco, Sam's Club, BJ's for bulk purchases

Student discounts: use student ID to get discounts

How to Avoid Impulse Purchases

Several strategies:

The 24-hour rule: postpone the purchase for a day and reassess its necessity

Keep a wish list instead of making instant purchases

Shop with a list and stick to it

Avoid emotional purchases: don't go shopping when hungry or upset

Unsubscribe from store mailing lists if they provoke purchases

Use cash for more mindful spending

Ask yourself questions: "Do I need this?", "Will I use this a month from now?"

Planning Large Purchases and Sales

For maximum benefit:

Study sales cycles: electronics are cheaper in November (Black Friday), furniture in January and July

Track prices using CamelCamelCamel (for Amazon) or Honey

Create a separate fund for large purchases

Best seasons for shopping:

January: winter clothing, fitness equipment

July: furniture, clothing

August-September: technology, school supplies

November: electronics (Black Friday, Cyber Monday)

December (after Christmas): holiday items

Optimizing Education Expenses

For students and parents:

Tax benefits: American Opportunity Credit, Lifetime Learning Credit

Textbooks: rent, buy used or electronic versions

Housing: consider the role of resident assistant (RA) for free campus accommodation

Grants and scholarships: apply for FAFSA and private scholarships

Loans: federal student loans usually have better terms than private ones

Community colleges: start with a more affordable option and transfer to a university

Work-study programs: combine studies with work on campus

Habits for Building Long-Term Savings

Implement these habits in your life:

Pay yourself first: automatically transfer part of your income to a savings account

Live within your means: spend less than you earn

Increase savings when income grows, not expenses

Invest regularly, even small amounts

Avoid consumer debt with high interest

Set specific financial goals and track progress

Continue financial education: read books, listen to podcasts

Protecting Savings from Inflation and Financial Risks

To prevent money from devaluing:

Asset diversification: distribute money among different types of investments

Investing in index funds: historically outpace inflation in the long term

Real estate: can serve as protection against inflation

I Bonds: government bonds tied to inflation

TIPS (Treasury Inflation-Protected Securities): treasury securities with inflation protection

Insurance: protect yourself from unforeseen expenses

Regular review of investment strategy considering the economic situation

Common Rookie Mistakes in Managing Money in the US

Avoid these financial traps:

Living without a budget: you can't control what you don't track

Accumulating credit card debt: high interest quickly eats up the budget

Ignoring retirement savings at a young age

Lack of emergency fund

Misunderstanding credit scores and their importance in the US

Ignoring tax benefits and advantages

Purchasing too expensive a car or housing

Declining insurance for short-term savings

Ill-considered investments without understanding the risks

Following financial fashion without considering personal circumstances

Real-life example: David, an immigrant from Eastern Europe who moved to Boston, made several typical financial mistakes in his first year in the US. He bought a new car on credit for $35,000, although his annual income was $65,000, resulting in monthly payments of $650. He also did not understand the American health insurance system and chose the cheapest plan, which did not cover his chronic conditions. When he needed treatment, he was forced to pay $4,500 out of pocket. After consulting a financial advisor, David sold the car and bought a used one for $12,000, changed his health insurance to a more suitable one, and began setting aside 15% of his income for an emergency fund and a 401(k) retirement account, which allowed him to receive additional contributions from his employer.

Conclusion

Financial literacy in the US is a skill that develops over time. Start by creating a budget, forming an emergency fund, and automating savings. Gradually study more complex tools and investment strategies. Remember that the path to financial stability is a marathon, not a sprint. Regularly review your financial habits and adapt them to changing life circumstances.

Proper money management in the US opens up opportunities to achieve your life goals, whether it's buying a home, educating your children, or having a comfortable retirement. Start applying these principles today!

Sources 

Consumer Financial Protection Bureau (CFPB). "Your Money, Your Goals: A Financial Empowerment Toolkit." https://www.consumerfinance.gov/consumer-tools/your-money-your-goals/ 

Internal Revenue Service (IRS). "Tax Time Guide 2025: Essentials Needed for Filing a 2024 Tax Return." https://www.irs.gov/ru/newsroom/tax-time-guide-2025-essentials-needed-for-filing-a-2024-tax-return

 

 

Internal Revenue Service (IRS). "IRS Encourages Taxpayers to Prepare for 2025 Filing Season with Online Tools and Key Reminders." https://www.irs.gov/ru/newsroom/irs-encourages-taxpayers-to-prepare-for-2025-filing-season-with-online-tools-and-key-reminders 

Federal Reserve. "Report on the Economic Well-Being of U.S. Households." https://www.federalreserve.gov/publications/report-economic-well-being-us-households.htm 

Bureau of Labor Statistics. "Consumer Expenditure Surveys." https://www.bls.gov/cex/ 

Federal Student Aid. "Types of Financial Aid." https://studentaid.gov/understand-aid/types 

USAHello. "Immigration Policies 2025." https://usahello.org/ru/2025-иммиграционные-политики/ 

Rambler Finance. "US Treasury Department Allowed Americans to Pay Taxes in Russia Until April 9, 2025." https://finance.rambler.ru/money/54014741-minfin-ssha-razreshil-amerikantsam-platit-nalogi-v-rossii-do-9-aprelya-2025-goda/