Looking for ways to save $5k in a year and need a plan to get you started?
If you want to save $5,000 in just 12 months then it’s a good idea to set out with a plan – this will increase your chances of success.
How can you manage to hit that goal? Use these tips!
How much do you need to save per month to get $5,000
In order to save $5,000 in one year you’ll need to put away $416.67 per month for 12 months.
That’s $96.16 a week
Or $13.70 a day that you need to save.
Need to save more? Check out my tips for saving 10k in a year.
Ways to save $5k in one year
Once you’ve set your goal it’s time to make a plan. Here’s how you can hit that target!
Review your budget
The best place to start is reviewing your budget to see if you can afford to put aside the $416.67 required every month.
Take into account all of your monthly spending commitments – including what you typically spend on fun and extras such as going out – as well as annual bills that will come up.
Now look at your income and see if there’s any wriggle room.
If there isn’t this is where you move on to see if you can trim anything out of your spending.
Can you axe any subscriptions that you don’t use very much? This could save you anything up to $50 a month so it’s worth doing.
Some areas of your budget where you could make savings today:
- Subscriptions – cut back TV, music, reading and any other subscriptions you don’t use much. You could set a two subscriptions rule, where you only have two subscriptions at any one time. You can rotate through the different streaming services, so you can access different shows, on a month by month basis.
- Review bills – could you switch your insurance, broadband and smartphone providers to save money?
- Food – Set a goal to cut your grocery spending by and commit to meal planning.
Change your spending habits
Once you know how much you need to trim your budget by it’s a good idea to review your spending habits and see where you can make changes.
These don’t have to be seismic shifts where you stop having fun altogether.
I found it useful to decide on a set amount I am allowed to spend on “other” stuff beyond my essential bills and stick with it. For example, this money would go on nights out and buying new things like clothing.
Some simple spending habits you can try to change in order to save include:
- Switch supermarkets – try one of the budget shops
- Ditch branded goods for supermarket own
- Set a weekly food budget and stick with it – this may encourage you to cut back on takeaways or meal plan more efficiently
- Set a 7-day rule on impulse shopping for thing such as clothes – remind yourself there’s a difference between something you want and something you need
- Hunt down discounts – if there is something you need to buy then chances are there’s a deal to be had somewhere. Look for the best prices, take advantage of coupons, vouchers and loyalty schemes and aim to never pay full price.
- Shop secondhand – there are some amazing bargains to be found on apps like Vinted for clothes and you can find free furniture and other items on Facebook Marketplace
Sign up to cashback apps
If you are not using cashback for your online and in store shopping then you are missing out on money in your pocket.
You can get cashback on big purchases – like new white goods – as well as your supermarket shopping.
When you have accounts multiple cashback companies I do recommend always checking the percentage return they are offering, as you can sometimes get a better deal with another one.
Commit to saving
It can help to have a regular weekly or monthly commitment to how much you will put away rather than just winging it with how much you have leftover each month.
Set up a direct debit to your savings account so that you are paying into your savings after payday before anything else.
Gamify your savings
Make saving money fun.
Many people find doing a savings challenge – where they tick off their savings contributions as they go on a printable – really helps them to stick with it.
There are also budgeting apps that will help you along the way by setting aside money by rounding up all of your transactions and setting the difference aside in a savings pot, or do things like save money every time it rains.
Declutter and sell your stuff
There’s money sitting in your loft right now! Take an afternoon to go through unwanted stuff in your wardrobes, drawers and any other storage space.
Unwanted furniture, clothes in good condition and toys can be sold for cash online within a week, releasing some much-needed money towards your savings goal.
Check out this list of stuff you can sell online here.
Haggle with suppliers
Finding ways to cut back on your monthly spending can free up some cash to put into your savings pot.
The days of being able to switch energy companies to get a much better deal are gone, for now at least. However there are other bills that you could get a deal on.
Speak to your suppliers and see if you can get a better deal. Get quotes on your car and home insurance when those are up for renewal to see if you can get the service cheaper elsewhere.
If you are signed up to a TV streaming subscription, you will often be offered a discount if you click to cancel. This usually leads to a prompt where you are invited to stay for a reduced fee.
Try a savings challenge
A savings challenge can keep you motivated so that you hit your goal on time.
The 100 Envelope Challenge is a great one if you want to save $5k because the final total you’ll save is $5,050.
You label 100 envelopes 1-100 and then fill those envelopes with the correct amount of cash corresponding to the amount in cash.
Start a side hustle
If you’ve trimmed your budget as best as you can then it’s time to try and boost your income.
You can do this with simple money-making methods, or by starting up your own business or freelancing with your skillset.
Some simple ways to make extra cash now including:
- Survey sites – see my list of the best survey sites to make extra cash here
- Market research and mystery shopping. There are agencies you can sign up to that will give you little challenges or tasks involving shops and services and ask for your feedback.
- Delivery driver – many companies like Amazon and Uber Eats offer shift work that fits around your own life.
- You can also check out my ultimate list of over 70 side hustle ideas.
Invest your money
Cash savings may appeal because you can see the pile of money grow right in front of you. But it’s not going to give you any rate of return.
When trying to hit a savings target its wise to put the money in a decent savings account where you are getting a good interest rate to add some pennies to your pot every month.
The best place will very much depend on your circumstances and what products are available right now. Shop around and do your research before you commit.
If you do not need access to the money you are saving in the short-term, then investing can be a really great option that potentially has higher rewards than a normal cash savings account.
How long does it take to save $5k
The amount of time it will take you to save $5,000 depends on your earnings vs spending.
If you can afford to put away double the amount a month – $833 – then you’ll hit the target in just six months instead of 12.
It’s important you tailor your £5k goal timeline to your individual situation, because while there are things you can do to boost your income, you need to be realistic about what you can afford to put away.
Why you may need $5k
There are all sorts of reasons why you may need £5k in the bank.
It could be for something fun, or maybe for something practical.
Fun could be a trip of a lifetime or some brand new furniture for the house.
Practical reasons could be to create an emergency fund – which should be around three months worth of expenses to tide you over should you ever lose your income.
It could also be put towards a new house, or maybe you are expecting a baby and need the cash to cover the expenses associated with getting all of the gear.
Having a goal in mind can really help to motivate you.
