7 Fastest Ways To Save $20K, According to Experts
Written by
Cynthia Measom
Edited by
Emily Gadd
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When it comes to saving $20,000, it’s unlikely that any single financial move will help you achieve that goal in a short amount of time. For instance, you could finally work up the courage to ask your boss for that raise you deserve, but even if your raise equaled an extra $500 each month, it would take you more than three years to get to $20,000.
In other words, you have to do various things to reach your goal faster and the quicker you reach that savings balance, the more action you’ll need to take. Here are some personal finance expert-approved ways you can save $20,000.
Start With Your Goal
Jay Zigmont, Ph.D., founder of Childfree Wealth, said to ask yourself why you want to save $20,000.
“If it’s for a specific goal (such as a down payment on a house or a car), make sure you both literally and figuratively have a picture of that goal,” he said. “You need to keep that goal at the forefront. It sounds corny, but hang photos of it in your house, make it your phone wallpaper and know what you are working toward.” Zigmont said.
Zigmont also advised setting a SMART goal, which stands for Specific, Measurable, Attainable, Related and Timed.
“If you decide you are going to get to your goal in the next 10 months, then break it down by month and week (e.g., saving $20,000 in 10 months is $2,000 per month or $500 per week),” he said.
Create a Budget and See What You Can Save
“As with any savings goal, the best way to save $20,000 is to create a monthly budget based on existing income and expenses,” said David Frederick, the senior manager of private client tax services at LBMC.
Frederick said once you’ve created your budget, you should determine how much surplus you have to save.
Open a Savings Account and Set Up Automatic Contributions
“Have the savings contribution drafted electronically into your savings account before you can spend it,” said Gene McManus, certified public accountant (CPA) and partner at AP Wealth Management.
McManus said that it may seem like painful deprivation at first, but it gets easier as you get used to not having those funds to spend.
Find Ways To Cut Back
If you can’t save enough from your budget to get to your $20,000 savings goal in the timeframe you’ve set, you’ll need to find ways to cut back on discretionary expenses in your budget. Look at areas of your budget where you spend the most on things you don’t need.
Steve Sexton, founder and president of Sexton Advisory Group, recommended cutting back on dining out. “This doesn’t mean you’re not allowed to enjoy a nice meal at a restaurant from time to time — it means doing some meal planning ahead of time or committing to bringing a packed lunch to work every day,” he said.
He gave an example of a client spending $1,200 monthly dining out for every weekday meal and weekend dinner. By cutting back to dining out only twice a week, the client saved almost $900 a month or $10,800 a year.
Sell Your Unwanted Stuff
“Do you have some things you need to get rid of?” asked Kasey Ring, president of Upward Personal Finance.
“Are there items in your home you haven’t used in over 180 days? Do you have luxury items you’re willing to part with to reach your goal? Sites like eBay, thredUP, or Facebook Marketplace are easy to set up.”
For example, if you have 20 designer items that you’re willing to part with (and that people are eager to buy), and you can sell them for a minimum of $50 each, that’s $1,000 you can put toward your savings goal.
Evaluate Your Insurance
“Review current policies to ensure you are getting discounts for safe driving records, home security systems and joint policies,” said debt and consumer finance expert Tanya Peterson, vice president of brand with Achieve.
“Take a look at your car insurance deductible. Depending on your car’s age and value, it may be time to raise the deductible. Visit online sites to compare rates on home and auto insurance. If you find better pricing, talk with your current insurer and ask if they can match the price.”
Apps like Jerry and The Zebra can help you compare your rate to others on the market. You could save a couple of hundred dollars per month by doing this, which would add up to $2,400 extra per year you could put in savings.
Generate Additional Income
“For larger goals, sometimes the reality is that you just have to bring in more money,” Peterson said. “Aside from taking on a part-time retail job (which can pay very well), depending on your skills, you could consider several options.
“There’s tutoring, teaching a language and teaching (or assisting) in a learning pod or school. You also could look into teaching ESL online; some programs require certification, but this could be the time to do it.”
She continued, “If you are computer-savvy, offer to help with website maintenance and updates, virus removal or cleaning up a hard drive. More people working at home means these skills are in greater demand, and many can be done remotely. Pet-sitting, dog-walking and yard care (or snow removal) are all in demand.”
Generating an extra $1,000 per month after you set aside what you need for taxes could help you reach half of your $20,000 goal in less than a year.
Brooke Barley contributed to the reporting for this article.
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