Research by Nobel Prize-winning economist Richard Thaler found that you’re more likely to reach your goals if you take decision-making out of it and automate your savings. By tucking away, say, 10% of your income in a high-yield savings account automatically, you’ll prime yourself to live within your means using the rest of your income. This is the belief that you should contribute to your own savings before you commit yourself to anything else.

Building savings into your monthly spending plan can help you make progress toward this important goal. To put into perspective how long it might take to accumulate that much money, an old financial saw says you should be able to save up for a down payment on a home over two to three years.

(You want the money in a savings account to make it easier and cheaper to access quickly.) This is a particularly difficult task to accomplish: In a 2018 Wells Fargo/Gallup Investor and Retirement Optimism Index survey, less than 40% of investors said they had enough savings to replace three or more months of income in an emergency. Spending less than you earn can also help you ratchet up your emergency fund-a pool of money, equal to three to six months’ worth of essential expenses, that sits in a savings account in case some unforeseen cost arises. After all, money is fungible: What difference does it make if you spend, say, $500 on groceries and $500 on dining out, as long as you arrive at the end of the month having shelled out less than you earned? Still, some may find categorizing expenses a helpful guardrail to stay on track and increase their savings. It is a little strange, though, when you take a step back. You divide your spending into different buckets and draw down on those buckets for the month until you get to zero. This is the hallmark of both Mvelopes and YNAB. Keeping tabs on what you actually spend will help you not only stay within the current month’s budget but also adjust your assumptions for next month’s. This was the service Mint so uniquely supplied when it launched back in 2006. As Olen points out, this can be tricky for some, but less so if you earn an income via a regular W-2.

You need to have a guess as to how much you’ll earn to know how much you can spend.

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