1. Split Your Tax Refund 40/40/20
If you haven’t already spent your tax refund, this will play a key role in helping build up an additional $5,000 in savings. Take your tax refund and split it 40/40/20. Put 40% of that refund toward paying down debt or bills. Then, put another 40% into your high yield savings account, which you opened specifically for this $5,000 savings goal. Use the remaining 20% for something fun but not too expensive, like a nice dinner out or tickets to a basketball game.
2. Split Your Direct Deposit
If you receive a direct deposit paycheck from your employer, split that deposit into two payments. Set it up so that $100 from each paycheck goes directly into your dedicated $5,000 savings account. The rest can go into your normal checking account to use for paying your regular monthly bills and expenses. That $100 from each paycheck will add up fast over the course of a year.
3. Increase Raise Savings
If you receive a raise at work, avoid letting lifestyle inflation eat up that extra income. Commit to saving at least half of any additional net income from a raise by depositing it directly into your $5,000 savings account. For example, if your raise results in an extra $150 in take home pay each month, have $75 of that added to your recurring $100 savings deposit.
4. Bring In Extra Income
Around mid-year, assess your savings progress. If you are lagging behind, look for ways to make extra income to get back on track. Take on a side hustle like dog walking, rideshare driving, tutoring, freelance writing or selling homemade goods. Be creative and take advantage of your skills. All earnings from side jobs should go straight to savings.
5. Have a Garage Sale
Take a Saturday to have a big garage sale. Go through your basement, attic, closets and storage to dig up any items you no longer use. Clothing, furniture, books, toys, games, kitchenware and electronics can earn you quick cash. Price items to sell and be willing to negotiate on the day of the sale. Any leftovers can be donated for a tax deduction.
6. Cancel Unused Subscriptions
Audit all of your monthly subscriptions and cancel anything you don’t really use or need. Eliminate extra cable channels, downgrade internet plans, cancel streaming services or gym memberships. Those small unused subscriptions can add up to big savings. Call each company to negotiate better rates or threaten to cancel unless they give you a discount.
7. Stop Convenience Spending
Packing your lunch rather than eating out can save $10-$15 per day. Meal prep healthy leftovers on Sundays so you aren’t tempted by takeout during the workweek. Also, cut out convenience purchases like coffees, snacks, drinks and desserts when out and about. Make it at home for a fraction of the cost. Resist those little daily splurges.
8. Have a No-Spend Week
Designate the last week of each month as a “no-spend week.” Avoid non-essential purchases like dining out, entertainment, shopping, etc. during that time. Stick to absolute necessities like groceries and gas. Challenge yourself to not spend a single dollar that week. At the end, move any money you would have spent to savings.
9. Use Cash Only
Use cash for necessities like groceries and gas. The physical act of handing over cash makes you more aware of what you’re spending. Set a strict cash budget for each week and when it’s gone, it’s gone. No cheating by pulling out a credit card when the cash envelope is empty.
10. Track Your Progress
Bookmark your savings account page and check it daily. Seeing that number steadily rise can keep you motivated. You can also use Excel or budgeting apps to track your weekly and monthly contributions. Stay focused on your $5,000 goal — be relentless. If you fall behind, increase your efforts. The sense of accomplishment when you hit $5,000 will make it all worthwhile.
Saving $5,000 in a year takes effort, commitment and discipline. But it is achievable if you stick to these saving tips and make smart trade-offs. Imagine how proud you’ll feel 12 months from now when your account hits that $5,000 target! You’ve got this.
Amen Oyiboke contributed to the reporting for this article.
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