What would you do with an extra $5,000?
It’s fun to think about, but I want to do something a little bit different with this article. I want to show you how to actually do it.
Yes. How to actually save $5,000. In under a year.
“But I can barely save any money right now as it is!”
“Money is so tight! I can barely keep my head above water!”
“Woe is me! Blah blah blah.”
Stop with the excuses. So many of you make excuses before even making an honest attempt to save. The truth is, there is no reason why 98% of the people reading this article can’t save at least $5,000 over the next year.
I don’t care if you only make $9 an hour or $107k per year. You can learn how to save money – and faster than you think.
It’s all about shifting your habits and your mindset towards money. Anyone who can make improvements in both areas will have more money in their pocket a year from now. It’s as simple as that. Some of you will be able to save substantially more than others, but at a minimum, I believe that nearly all of you will be able to save $5,000 over the next 365 days.
In this article, I’m going to share 6 tactics you can begin implementing today to start saving money.
Tactic 1: Pay Yourself First
This is a combination of both a mindset shift and a habit shift.
If you want to make saving $5,000 over the next year more than just a pipe dream, you need to start setting money aside now.
What’s the best way to accomplish that?
Instead of passively “saving” money, you need to create a separate bucket, per se, where your new savings will go. Something you won’t be tempted to touch.
If you keep everything lumped together in your checking account, that is the perfect setup to not stick to your plan.
And that’s what we want to avoid.
So, if you don’t already have one, you need to open up a savings account.
With your new savings account (or your existing one), the next thing to do is to set up an automatic draft to the account with each new paycheck.
Even if you start with just $10 a paycheck, you need to set this up.
It has to be automatic. Otherwise, it won’t get done every pay period– and consistency is what you need in order to accomplish your $5,000 savings goal.
You need to get in the habit of “paying yourself first.” Whenever you get a paycheck, always tuck some of it away. Always.
This very simple habit (a habit that can be automated, mind you), that will pay dividends for you down the road.
While you’re at it, I also recommend re-evaluating your current bank. There are several online banks today that offer interest rates that are substantially higher than the national average. You want to put you money into one of these higher paying banks so you can earn more interest on your money.
Recommendation: One of the best banks out there I’ve found for savings accounts is CIT Bank. You may want to check them out if you have time- it’s essentially free money to you for moving your cash to a better, higher paying bank.
Tactic 2: Refinance Your Student Loans and Mortgage
Most adults have some sort of debt, whether it’s student loan debt (*raises hand*), a mortgage, car loan, etc.
How to save money every month: Student Loan Refinancing
When I graduated from Virginia Tech, I had well over $10k in student loans. I was fortunate enough to have support from my family for most of my tuition, but I still had to absorb much of the cost myself.
Those loans accumulated interest every day, the same way that credit cards rack up interest (and cost you money).
The good news is, there’s actually way to pay less interest on your student loans.
Something that young professionals often overlook is the option of refinancing their student loans. This means replacing your current loan (at say, 7% interest), with a lower interest loan (perhaps 3%).
What does that mean for you?
A lot of extra money in your pocket each month.
Money you can save.
The best part is, refinancing does not cost you anything.
One company you may want to look into that specializes in student loan refinancing is SoFi. They’ve quickly become an industry leader in the student loan refinancing space, and for good reason.
According to their website, the average member who refinances their students with them saves an average of $22,359 over the life of their loan. Their refinancing program also includes other perks, such as unemployment protection (so you have some leniency on payments if you become unemployed).
They have the ability to refinance both private and federal loans, which is somewhat rare among lenders.
Definitely check them out if you want to save money on your student loan payments and get rid of your debt faster!
How to save money at home: Mortgage Refinancing
This is another area where you can save huge money.
Since your mortgage is likely your biggest monthly expense, any small percentage savings you can trim off will go a long way towards your bottom line each month.
The same story applies as with student loan refinancing, but on a much bigger scale.
If you’re curious about how much money you can save by refinancing your mortgage, take a minute to play with the calculator below:
Tactic 3: The “Shock and Awe” Approach
Noooow we’re talkin’.
Fair warning: this isn’t for the faint of heart.
This tactic is really hard. But also really important if you are actually serious about building up $5,000 in your bank account 365 days from now.
I want you to cut out all unnecessary spending.
Am I crazy?
But in order to build up some measurable savings, you’re going to need to stop the all out cash hemorrhage that has become the norm for you.
You may think your little Starbucks habit is innocent. Or that ordering a soda when you eat out is harmless. Or that you really need that “one pair of shoes”. Even something as simple as leaving lights on is costing you money.
The truth is, these are the exact things that make the different between actually having money left over at the end of each month and not.
Cutting out all unnecessary spending forever isn’t practical, so my challenge to you is this:
Cut out all nonessential spending every other week.
Spend time on activities that don’t require money. Have some discipline.
If you can stick with this, you will be much better positioned for achieving $5,000.
Related Article on How to Save Money: Trying a No Spend Month
Tactic 4: Never Pay Full Price When Shopping Online
Americans do a lot of online shopping.
According to Statista, the average U.S. online shopper spent $1,630 in 2016. This number is expected to grow to $2,109 by 2021.
I feel like a parent of a teenager when I say this: I know you’re going to shop online, and I know I can’t stop you from doing it…but if/when you do it, please be sure to use a cash back website to at least get some savings.
From my experience, the three best cash back sites are that offer cashback on your online purchases are Ebates ($10 free signup bonus), Swagbucks ($5 free signup bonus), and MyPoints ($10 free signup bonus).
By using any/all of these sites, you can save upwards of 30% on your online purchases.
Since signing up for each site is free, I recommend signing up for all 3. That way you know you will always be getting the best possible deal on the internet for whatever you’re buying.
Tactic 5: How to Save Money on Food
I shouldn’t have to tell you this, but I see so many people making this mistake at the store so I feel like I need to.
Stop buying name brand food!
By choosing store brand over name brand, I’m able to save up to $50 a week on my groceries. That comes out to about $200 per month saved, or $2,400 per year.
Don’t make life harder than it has to be. When there are savings opportunities out there like buying store brand food, you need to jump on them.
To save even more money at the grocery store, consider joining a service like $5 Meal Plan.
$5 Meal Plan is a weekly meal plan service that can make your meal planning as simple as possible.
Each week, you get a meal plan and a shopping list.
The menu will include:
- Five dinner entrees with sides – Each week includes one freezer friendly, one slow cooker, and one 20-minute meal.
- Also included is one lunch and one breakfast, plus,
- A random goodie each week – sometimes it’ll be a dessert, sometimes a beverage, and sometimes it’ll be a snack
As the name suggests, each meal is designed to cost under $5. That goes a long way towards helping you stay inside of your budget!
Try Using this App at the Grocery Store
Ibotta is one of the best money saving apps out there for grocery shoppers, and is always being talked about by money saving experts. The app gives you a rebate for virtually any brand of items you buy, including food brands.
To get your cash back, all you have to do is scan the items’ bar code, take a photo of your receipt, and the money gets into your account within 48 hours.
You even get $10 just for signing up, and they’ll also pay you $5 more for each friend you refer.
Your earnings potential is unlimited. Not bad considering you’re helping your friends save money and handing them an extra ten bucks at the same time!
Tactic 6: Add Extra Income (and Don’t Spend it!)
If you can find a way to make extra money, that will go a looooong way towards accumulating $5,000 within the next year.
So, it’s on you to find a way to get it done. But don’t fret, I’ve got some solid leads for you:
Ideas to Make More Money to Put Towards $5,000:
Even if you start out with something that only makes you a few hundred dollars per month, that’s better than nothing!
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