How to Save $5000 in a Year – 7 Proven Ways
Although saving money is a goal that most people want to achieve, it takes discipline. To increase your chances of reaching financial goals, it can help to have a plan. Although $5,000 sounds like a lot to save, it works out to be less than $100 per day over 12 months. This makes it sound a lot more real when you think about it. The plan in this article will help you reach $5,000 in a year. You’ll also save $130 every week.
What Would You Do with $5,000?
It’s a large sum of money, $5,000. You can do a lot with it.
- Save for retirement
- Enjoy a relaxing vacation
- You can use it to make a downpayment on a house
- You can either buy a used car at a bargain price or use it to finance the purchase of a newer car.
- Make sure you have an emergency fund.
[Read more: How to Live Below Your Means Successfully?]
Why a Savings Challenge?
Saving money is not always fun. Let’s face the facts. It’s exciting to see the results, but it takes effort and sacrifice to save money. A savings challenge can make boring topics more interesting and fun. Saving fun will make it easier to stick with the plan.
You could also challenge a friend to a savings challenge. A friend can help you be more accountable and give you extra motivation due to the competition. The competition is not about saving the most money if you follow the plan exactly. It’s about sticking to the challenge and completing the task. It’s unlikely that we would want our friend to fail to complete a challenge. It gives us extra motivation to keep going.
Even if you are only accountable to yourself, the savings challenge provides some accountability. Hopefully, once you have started the challenge, you will feel the urge to keep going and complete it. While you can set a general goal to save money, the money challenge will give you specific goals each week.
- The math is done for You
The best thing about the challenge is the way it handles the math. You need to deposit the weekly amount on the printable, and you will reach $5,000 by the end of 52 weeks.
[Read more: How Much is 4 Figures in Money?]
7 Proven Ways to Save $5,000
1. Reduce Unnecessarily Expenses
Christine Sager, Sager Financial Coaching, said that to save $5000 over six months, you must have a budget. Divide $5,000 by six months to get $833/month. It must be taken out of the budget or added to income. Remarkably, no one has to do the same thing the same way. For inspiration, many people start with subscriptions that can be canceled for half a year. Then, move on to other income categories such as eating out, clothes shopping, and entertainment. It would be much easier to reduce expenses in smaller numbers across multiple categories than to eliminate one expense, such as shopping.
2. Freelance or Get a Side Hustle
Steffa Mantilla (CFEI), a Certified Financial Education Instructor (CFEI) who founded the personal finance website Money Tamer, said freelancing is the best way to save money. You can use many skills in the freelance market, where individuals or small businesses seek temporary contracts. You can do these jobs in your spare time to continue your day job.
- Cashback Apps
Cashback apps are one of my favorite ways of saving money. Also, you can earn cash back on many purchases through various websites and apps. Here are three of my favorites.
- Rakuten ($10 Signup Bonus)
A free Rakuten account will allow you to save money on your in-store purchases and online purchases. Rakuten partners with thousands of websites and stores. You get cash back on things you already own.
- Ibotta ($20 signup bonus)
Ibotta provides money back for purchases at grocery stores, department stores, home-improvement stores, etc. You can get offers on a variety of products and stores.
TopCashback is very similar to Rakuten. You can save money on thousands of partner sites by opening a free account. You should sign up for TopCashback and Rakuten because there are times when the offer is better at TopCashback, and other times it will be at Rakuten (or cashback might be only available through one).
4. Get Cheaper Insurance
Did you shop around for lower insurance rates? Many of us have multiple cars, insurance policies, life, renters, and health. You might be able to save money by switching to another company or making changes to existing policies to lower your costs.
We saved more than a hundred dollars a year on property insurance by cutting back our personal insurance coverage. The coverage offered by our policy was smaller than that which was the default. You can also reduce your premiums by raising the deductible.
5. Save Money on Food
There are many ways to cut down on food expenses. You can manage the amount that you spend on food if you stop eating out or buy lunch at work every day.
Restaurants don’t have to be avoided. However, you can limit how many meals you order from restaurants and be mindful of the money you spend. You can also find my article on how to save money at restaurants.
Your grocery bill can be cut without much effort. Aldi is my favorite place to get groceries at a discount price. Our family of four saves a few thousand dollars each year by shopping at Aldi for generic brands and low prices. For many other ideas, see my article Saving Money on Groceries.
[Read more: How Much Is 6 Figures in Money?]
6. Save Money on Entertainment
The act of entertainment is the most costly adventure that a person can experience. Thus it’s the most crucial justification for not spending lavishly. It’s easy to spend a lot of money on entertainment, such as going to the movies, sports events, concerts, trips to the bar, or eating out with friends.
However, that doesn’t mean entertainment shouldn’t be a priority. Spending time with family and friends is a beautiful use of your time. However, there are ways you can cut down on entertainment costs without losing the fun. You can find free or inexpensive entertainment or set a budget for your entertainment.
7. Sell Stuff You Don’t Need
Another great option is to look around your home to find something that you do not need anymore. Facebook Marketplace, Kijiji, and eBay are all options. You should upload high-quality photos and describe the item and pricing information. You’re not only clearing out your home but also passing the thing on to someone who will enjoy it. It is a great way of increasing your savings.
$5,000 is not a small pack of money. You can do many more things for the $5,000. In the article, we have discussed many aspects of the $5,000. If you have this pack of money, then you can invest anywhere you want. You have many options to save $5,000, and you can choose any way that is best suitable for you.