Ever make progress toward your savings goal and then drain the account for something else? You’re not alone. Emergencies happen, life happens, and frankly, it’s really hard to break bad spending habits. That’s why it may feel a little aggressive and challenging to save $5000 in 6 months.
Over the past few months, I’ve found dozens of simple ways to boost my savings progress by managing my money in a smarter way and making use of all the great tools and resources available on a money coaching app.
By following these tips, you’ll find yourself saving thousands of dollars and meeting your financial goals in no time. Here’s how I saved $5000 in 6 months:
1) Start Saving Immediately
The sooner you start your savings plan, the better off you’ll be. Whether you’re saving for retirement, a down payment on a house, or money for a rainy day fund, starting now can be the difference between having enough money in the future and scrambling to make ends meet.
Plus, if you start early, you can take advantage of compounding interest. That means your money grows faster as it earns money for you. So, why not get started with saving today? It’s never too late to start! Just think of the money you could have saved if you had started earlier!
How much you decide to set aside will depend on your financial situation. As a rule, though, it’s better to start small if you’re new to the savings habit.
Starting small could mean focusing on saving $1000 before moving on to larger goals. It could also mean saving smaller amounts at first. For example, set aside $10 per week for your first six weeks. Once you’ve saved that much, you’ll feel motivated to continue.
So don’t wait any longer. You won’t regret it. Plus, it’s kind of fun watching your money grow. Who doesn’t love money? Let’s start saving!
2) Set Up Automatic Savings Plans
A high-yield savings account is your money’s best friend. It provides a safe place to store money and also earns you more money in the form of interest. Automating money into a high-yield savings account makes saving money effortless, so you can focus on other important things like treating yourself or planning for retirement. Plus, money stored in a high-yield savings account will grow faster than money stored in something less ideal like your mattress (which doesn’t pay interest!). So why not give your money the royal treatment it deserves and let it get to work for you?
If you already have a budget or plan for your money, you can use that as a place to start when setting up plans for automatic savings.
Many different kinds of savings accounts save money on their own. Some have minimum balances, while others let you put in any amount whenever you want. Here is an example:
Open a money market fund
Money market funds are similar to bank accounts, except they invest in short-term bonds instead of cash. The advantage of investing in money market funds is that you can earn interest on your money without risking your principal.
Money market funds come in two varieties: taxable and tax-free. Taxable money market funds pay taxes on interest earnings, so they aren’t ideal for long-term savings. On the other hand, tax-free money market funds don’t pay taxes on interest earnings.
High-Yield Savings Accounts
High-yield savings accounts typically offer more money market yield than the average checking account. That means your money will work harder while it’s in the savings account and earn more money over time.
Finally, automating your money allows you to put a plan into action without relying on willpower or discipline alone. You’ll have already taken the first step, and the money will be transferred automatically, meaning you won’t have to worry about forgetting or not having the money when you need it for something else.
3) If you want to save $5,000 in 6 months, pay yourself first
It’s tempting to spend all of your extra dollars before you have any leftover. However, to reach your savings goals, you need to separate your monthly income to make sure you save regularly.
Paying yourself first means that you put money toward your goals before you start spending it.
When you receive a paycheck, instead of putting the cash straight into your wallet or checking account, take a few minutes to write down the total amount of your salary before depositing it. Then, add the percentage you aim to put aside straight to your savings.
4) Automate Your Budgeting
It’s a lot harder to save $5000 in 6 months if you don’t account for where your money is going. By categorizing your expenses, you can manage your money better and avoid shortfalls where you’d wind up having to pull from your savings.
Overwhelmed by spreadsheets? Instead of manually tracking your income and expenses, use software programs that can help you keep track of everything.
If you want to automate your budgeting process, you can use an app such as Nav.it
5) Track Your Spending
Tracking your spending helps you identify areas in your monthly expenses where you could cut back. Tracking your spending can be tricky at first, but once you learn how to do it, it becomes second nature.
One good way to track your spending is through a spreadsheet program such as Microsoft Excel. Simply enter your monthly expenditures into columns A, B, C, D, etc., and then create rows for each category (e.g., groceries, utilities, entertainment).
6) Get a Side Gig to Increase Your Income
If you are looking for some extra income, then you should consider getting a side gig. This can be anything from driving for Uber or Lyft to tutoring students online.
Even if you start small and only make $5-$10 an hour, this could still add up to hundreds of dollars each month, leading to you saving $5000 in 6 months.
Here are three great side gigs to earn extra money:
Teach languages online
If learning and teaching languages are your things, or you speak an unusual or in-demand language, consider joining an online teaching platform that will allow you to recruit your own students, gain reviews and raise your rates as you up your experience level.
Becoming a Community Tutor typically requires no formal teaching qualifications, just a passion for helping others master the language you’re fluent in. Italki and Preply are some options that allow you to do this, but dozens more are out there.
Become a part-time virtual assistant
Alternatively, you could consider becoming a part-time virtual assistant. There are many companies that hire people like me to help them with their administrative tasks, data entry, bookkeeping, customer service, etc.
While they don’t necessarily provide a regular salary, most charge per task, allowing you to pick up additional clients along the way.
Start your own online store
Another option is to open your own eCommerce store. Some sites let you set up a simple storefront, while others offer more complex tools for those who want to get serious about their store.
Automating bill paying can save you time and stress when it comes to managing your finances. If you don’t already use an app that allows you to track your monthly payments, check out apps Nav.it.
They’ll help you keep tabs on all of your accounts, automate recurring payments, and even help you invest your money so you can reach financial freedom faster. Best of all, you’ll avoid wasting money on late fees that you can put toward your savings goal of $5000 in 6 months.
Final thoughts when you’re trying to save a lot of money – like $5000 in 6 months
The tools available online today mean that anyone can meet their savings goals. With these top tips, you’ll soon be stacking cash and well on your way to meeting your money goals.
Got a top tip for saving money regularly every month or making additional or passive income? Share your ideas in the comments below! Or get more tips today by reading more blogs about managing your finances.