This post originally appeared in the Financially Independent Millennial.
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Do you want to save $5,000 this year? If so, look no further. In this article, I go over my 52-week money challenge that you can start today. Then, at the end of each tip, I’ll give you the potential savings (a year) where applicable.
No one likes to throw money away, and you and I know that saving isn’t an easy task! You might know when your paycheck will hit your bank account. And that’s a great start! But, if you don’t know where your money gets spent, there are likely places you can save. Indeed, you’re more than likely to have spent on unnecessary items. And sometimes, you may not even realize you’re spending so much. For example, when buying “stuff” cheap items and paying for subscriptions, the costs add up.
Related Read: How to Avoid Emotional Spending
2021 is another year, and it’s time to start a new challenge. Take the 52-week money challenge, and I bet you can save $5,000 before the end of the year. What would saving $5,000 mean to you? Would you use it to pay off a credit card, your car, or how about a vacation?
There are many things you can do with $5,000. Saving is not an easy task, but with these tips, it’s possible. So, let’s dig in and explore how to save $5,000 this year with my 52-week money challenge:
Planning to Save $5,000 In A Year
In this section, we’ll look at all the ways you can plan your $5,000 savings this year. Further, there’ll be ways you can save on your monthly expenses.
Create a Budget
If you’re going to save any money this year, the first thing you’ll need is a budget. If you have one, that’s great. But if not, you need it now! A budget helps you spend your money and live within your means. It allows you to create a monthly income surplus and deposit them in your savings account.
Let’s face it, saving $5,000 in 52 weeks isn’t easy. But, a budget will help separate your cash flow into categories. Then, you’ll build a monthly income surplus. And in no time, you’ll achieve your goal. Creating a budget is a simple task. But it’s essential to stick to your budget.
I recommend starting by going back three months and recording those daily expenses. When you look at your spending, you can locate the areas you spend too much. If you identify such areas you spend much, you can adjust your spending. That’s one way to achieve your $5,000 savings goal.
Additionally, tracking your spending is beneficial. It helps you be more careful about the amount you spend, knowing that you have to record all the details.
Related Read: How to Make a Budget
Increase Your Insurance Deductible
One way to save money is to lower your spending. An easy way to save $5000 this year is to increase your insurance deductibles. For example, consider your home and auto insurance deductibles.
A recent study reported that homeowner’s insurance premiums hover around $1,200 a year. If you bump up your deductible, for example, from $500 to $1,000, you could save as much as 25% on your premiums. Remember, a higher deductible means the insurer will have a lower risk, and as a result, offer you a lower premium.
If you consider this strategy, speak with your insurance agent. They will tell you how much you’ll save after increasing the deductible.
Indeed, you can also use this option for auto insurance. A study reported that you could save up to $30 per month after increasing the deductibles, from $250 to $1,000.
Potential Savings: $600 a year.
Cancel Your Unused Gym Membership
A gym is one place that you have to pay for membership. But, after you’ve committed yourself for some time, you now realize your visits are slowing. If so, it’s time to cancel the membership. Why pay membership fees for something you don’t use. So, canceling an unused membership is a useful option to add more money to your savings basket.
For example, depending on your location, a gym membership’s monthly cost could be as high as $50/mo. Various studies report that as much as 70% of the members don’t use their membership. Indeed, paying for unused memberships drains your budget.
Now, you might feel that canceling the gym membership means that you are giving up on your body. If so, consider various other ways to get fit: you can run, walk or ride a bicycle. Besides, there are many YouTube Exercise Videos that you can follow along. Additionally, if you prefer strengthening training, free fitness apps like Fitbod can help.
Potential savings: $500 a year
Cancel Unnecessary Subscription Services
A study reported that you might spend $200+ on monthly subscriptions. Think video streaming, photo editing apps, and more.
The money you pay for these subscriptions may seem minimal, but it adds up. $20/mo for one, $50/mo for a subscription box, and so on. Spend the time and review all your subscriptions and identify those you will cut.
Some subscriptions have alternatives, which are free or low cost. For example, you may subscribe to Audible for $20/mo, an audiobook service. Audible may be popular, but there are free alternatives.
Potential Savings: $2400 a year.
Reduce Your Food Waste
Food waste costs money and negatively impacts the environment. On average, US households throw away as much as $1,800 a year worth of food. Indeed, food waste is terrible for your budget.
Related Read: Grocery Shopping On a Budget
Reducing food waste isn’t something that will happen overnight. There are a few proven tricks that may help you with your journey. If you need to reduce food waste, consider using a shopping list, and start planning your weekly meals.
Potential savings: $1,800 a year.
Cut Commuting Costs
Another easy way to save $5000 this year is to cut commuting costs. If you go to work for five days a week, commuting by car adds up.
A recent study by Citi suggested daily commuting can cost you $10/day and over $2,600 in a year. For example, you can carpool with one person, which helps you split the cost in half.
It may be a hassle to find a person you can carpool with. You can start by asking your neighbors traveling to a similar route or co-workers. But using this method could help get you to your $5,000 savings goal.
Potential Savings: $1,300 a year.
Related Read: 14 Frugal Living Tips You Can Implement Today
Save on Bank Account Fees
A recent study by the CFPB indicated that Americans spend, on average, $250 a year on banking fees. And 75% of it is NSF charges! Indeed, this is a completely unnecessary waste of money.
Switch to a free checking account, and keep at least 2-3 months of your monthly expenses to void NSF fees.
Potential Savings: $250 a year.
Signup for Credit Card Bonuses and Rewards
Finding extra money helps you save. One creative way to save $5,000 this year is to consider credit card offers. There are many options for credit cards with the best rewards programs. You could earn rewards like cash back on certain purchases, airline miles, hotel and loyalty points, etc. Browse through these offers to find which one works best for you.
Lastly, remember to never carry a high balance on a credit card and pay it off in full each month
Potential Savings: $1,000 a year.
Sell Items You No Longer Use
No doubt, you have stuff you don’t need to use at home or the office anymore. So, such things might seem like junk, but I bet some will have value among them.
The quickest way you can make extra money is to gather up all the items you no longer need and sell them. And, if you have enough stuff, you can host a yard sale and get rid of them fast.
A yard sale is an excellent way to get rid of your items within a day or two. If you have more valuable items, they will likely fetch more money online. For example, you might consider Facebook marketplace or Craigslist. I like Craigslist due to its wider audience.
Potential savings: $1,000
Save Money on Entertainment
If there’s one thing many people spend a lot of money on, it’s entertainment. That said, cutting back on entertainment expenses is an excellent option to save $5,000 this year.
Look at your budget and see the amount you spend on entertainment. It includes sporting events, movies, concerts, meals with friends, and trips to the bar. All these expenses can add up fast.
But that doesn’t mean you shouldn’t spend on entertainment. Doing the things you love helps you live a balanced lifestyle. There are easy ways to cut back on entertainment expenses without sacrificing your fun.
Look for cheap or free things to do. Another option is looking for a new hobby that you know will not cost you much money. Give yourself a fair limit on the amount you can use for entertainment.
Potential Savings: $2,000 a year.
Start a Side Hustle
As you reduce expenses, it’s also essential to look at other ways to make money. Consider one of many side-hustles out there, and I’m sure you’ll find a good fit.
Here are a few side-hustles you can choose from to get to your $5,000 savings goal.
- Taking online surveys – This is among the best options to make extra money across the world. It isn’t a lucrative option, but the best thing is that it is flexible. You don’t sacrifice most of your time because even while watching TV, you can take surveys. Many survey sites offer you signup bonuses. These include Survey Junkie, Inbox Dollars, Swagbucks, MyPoints, among others.
- Flea Market Flipping – Selling things you don’t like may become your side hustle. It can help to earn money through buying and reselling. The best place to purchase items is at thrift stores, flea markets, and yard sales and resell them at higher prices. Some of the things you can buy include wood furniture and paint them to get a new look. Such furniture you can sell at a nice profit on Craigslist.
- Freelancing – There are various professional services you can offer. For example, you could become someone’s virtual assistant. Or, even write content for websites and blogs like The Financially Independent Millennial! Other freelancing options include web development, web design, graphic design, social media marketing, photography, and more.
- Dog Walking And Pet Sitting – Dog walking or pet sitting are among the easiest side hustles you can do. And you’ll earn extra income, and make a lot of money. Indeed, pet owners do love their pets and spend a lot of money on them. And, this side hustle does not need you to have special skills.
- Drive for DoorDash – Doordash offers an excellent way to make good money. Offering delivery services is a great chance to earn extra money with flexibility. This option allows you to set your free hours and make money fast.
Related Read: Best Side Hustles To Start in 2021
Final Thoughts on How to Save $5,000 This Year
In this article, we covered some different ways to boost your savings. Ask yourself, “is today the right time to start your 52-week money challenge?” Indeed, if you were to follow each of these tips, you could save yourself over $10,000 a year. Go ahead and reduce spending with these tips. And at the end of the challenge, I have no doubt you’ll save $5,000 this year. But remember, you don’t have to deprive yourself! Cut your spending from various activities, and your savings will add up with time.