Wondering how to approach saving money? Most people want to save money for one reason or another – whether they want to save up money in order to afford a large purchase or holiday, build up an emergency fund to help protect against medical bills, or save a deposit for a house to start living the life they want.
However, saving money can be daunting, especially if it feels like you are living paycheck to paycheck. That’s why we have this guide on how to save up $4000 in 2 months. Of course, your savings goal might be different.
Even if you have a different savings goal, you can still use the tips in this guide to work towards your own savings goals – whether that’s saving up more or less money, or saving money over a longer-term. However, you should always pick a realistic and sensible savings goal in order to make give yourself the best chance of reaching your goal.
How do I pick realistic savings goals?
Is it realistic for you to save $4000 in two months? There are a few ways for you to figure out how much you should try to save. The first thing to consider is what you want to save up for. If you want to save for a specific item or a specific expense then this gives you a handy starting point for you to use to figure out your goals.
The next thing to consider is your income – specifically your income level vs the total outgoings you have. You obviously can not save up more money than you have coming in. In fact, it is very unlikely that you will be able to save most of your money every month. For most people, their outgoings or expenses use up the vast majority of their income. Being aware of how much money you spend each month, as well as how much money you have coming in each month, can help you get a rough idea of how much you can save.
If you find that your income and expenses could potentially let you save enough, then it might be possible to save $4000 in two months. Once you have this as your goal for savings, then you can start to look into more details about how you can go about saving this amount.
The basics of savings accounts
If you have not been very focused on saving money before, you might need to look into how to get a bank account specifically for your savings. Having a savings pot can help a lot when you are trying to save money. If your savings are in a separate savings account, it makes it less tempting to spend any of your savings without really considering it. This can also help you keep track of how much you have managed to save up. Being able to see the dollars pile up can be really motivating, and this can also help make sure that you don’t give up before you have reached your goal.
Another important factor in savings accounts is that these accounts often have higher interest rates than you will get with standard bank accounts, such as a checking account. This is important, as having a good interest rate on your account can help you save money fast.
What type of savings accounts are there?
You’ll find multiple different types of savings accounts to pick from. The primary difference between savings types is where your money goes once you have put it into the bank. The standard type of savings account lets you simply put the money away, while you get a small interest rate. Some savings accounts instead let the financial institute invest your money on your behalf. This can be a riskier type of saving, but it can also lead to higher returns – of course, any investments can drop in value.
How do I pick a savings account?
When you pick a savings account, you should read the terms carefully. Generally, savings accounts with the fewest restrictive terms will offer the lower interest rates. To get higher interest rates, you may have to agree to lock your money away for a number of years. You should decide how soon you might need to access the money. For example, if you want to save up money for an emergency fund, you may want to make sure that you can easily access the money in the account should you ever need it in a hurry.
Should I have multiple savings accounts?
You can absolutely have multiple savings accounts. There are multiple reasons to do this. If you want to save up money for an emergency fund while also saving money for a mortgage deposit, you might want these two amounts in different accounts. This means that you can keep both types of savings separate, which can help with your organisation. You can also look at getting better interest rates for any money that you can safely lock away for several years.
How much should I save for an emergency fund?
It is generally suggested that you should save at least a few months worth of bills and expenses. Most financial advisors suggest having at least three months worth of expenses on hand in case of emergencies. However, you may decide that three months worth is not enough. You can always change how much you have in your emergency fund to suit your needs. Generally, you should consider how long you think it will take you to regain financial security in case you lose your job. This means saving up more than 3 months worth of expenses – maybe even five or six months worth of your monthly bills, especially if you work in a specialist field where it would be hard to find a job within 3 months of redundancy. Having emergency funds is also a great way to remove a lot of stress from your life.
Should I save money or pay off debts?
If you are thinking of saving up money but you also have debts, you might wonder which to approach first. The most common way of handling savings and debt is to think about what is a priority for you.
Often, your first priority will be to have a rainy day fund saved up to cover at least 3 months worth of bills. This is important because if you have unexpected bills coming up while you do not have any emergency finances in place, you could end up going into debt or going into an overdraft in order to cover them. This will almost always come with high costs that will make it harder to get out of debt, such as a high interest rate or overdraft fees.
If you want to save money you should also think about paying down any loans or overdrafts you have. It is hard to find savings accounts with high interest rates, while loans often have high interest. This could mean that if you have money in both savings and have debts to pay down, you might actually end up losing money over all. If you get 1% interest on your savings but get charged 10% interest on your debts, you might lose that whole 9%. This is why, when you are saving money, it is often good to look at lowering the debts you have. Of course, these tips are not ideal for everyone. Your exact debt circumstances might be different.
Which debts are ‘good debts’?
Some debts are considered ‘good debts’ and are not always worth paying down quickly. This is for debts such as a mortgage loan. This is a ‘good debt’ because it helps you build equity. At the same time, you are unlikely to pay it off with the money you save over 2 or 3 months, so many people will keep paying off a mortgage loan steadily rather than focusing on paying it off quickly. On the other hand, debt to credit card companies is often not ‘good debt’ because it does not earn you equity.
How to save money fast
There are a few ways to save money quickly, though you might find that not all of them work well for you. For some people, saving money fast is a great way to save cash for something in particular. For other people, it’s important to start good saving habits that will last a lifetime, letting them save money consistently, and helping them afford a house or a new car, using incremental budgeting or another method.
If you do need to save money quickly, the best way to approach this is to look at what bills you can cut down on, and where you can cut down on purchases, but we have other tips for saving money as well.
How do I cut down on bills to save money?
Cutting down bills in order to save money is a big help. Lots of us spend most of our paycheck on bills – rent, car payments, utilities, insurance, and more. There are two things to try to cut down on bills.
Check what you need
The first way to lower your monthly fees is to check whether or not you actually need all the things you pay for. For example, if you have expensive mobile phone services with a lot of excess data, you might be able to switch to a lower-cost tariff where you pay for fewer aspects that you don’t need. While cutting down your bills might not save you a lot of money per bill – for example, you might only save $10 a month on your phone bill – this all adds up and lets you put a little bit more into savings. You could even look at more drastic ways to lower your bills – if you live in a larger home than you need, you could move to a smaller property with lower rent, which would have a massive impact on your outgoings.
Switch to new providers
One of the most common ways to save money on your bills is to switch to a new company. If you have been with your cable company for a long time, you may no longer be on a good rate. You might find that another company can offer you a better introductory rate. Alternatively, you can contact your current company and ask if they can put you back on an introductory rate. A lot of companies are willing to do this to keep their customers, so it is always worth asking. This goes for almost any monthly expense – one simple phone call could save you $10 to $20 per month on one of your bills. This typically works with large companies rather than local businesses, but it is always worth trying.
Where else can I work on saving money?
Cutting down your monthly outgoings can help you save, but there are other ways to save up.
Track your spending and make a budget
While this is one of the most over-used pieces of advice for how to save money, it is still an important one to look at. Tracking your spending and trying to figure out a budget is a huge help when trying to save up. Many of us unknowingly spend more than we intend to on things such as food, clothes, and hobby items. Sticking to a budget with these outgoings can be important. This might mean that you choose to only eat out once a week, or it might be that you buy second-hand clothes – second-hand items can be less than half the cost of new items.
Budgeting is vital, and making a week-by-week budget can help make sure that you are on the right track to saving.
Try to get items for free
Some items you can’t get for free, like food, but other items can be found either for free or very cheaply if you know where to look. One of the most common items you can get for free is furniture for your home. If you search local groups, you can often find people giving away items, provided you are willing to go and collect them. This is a very budget-friendly method of getting items that you need.
Improve your credit rating to get better deals
If you are anticipating having to take out a loan, one good way to get a better deal is to make sure your credit rating is good. A good credit rating often means that you will get lower interest rates on any borrowing. You can make sure that your credit rating is good by checking your credit report. To improve your credit rating, you should look at how to pay down any debts you have, and be sure not to miss any payments.
Sell items you don’t need
If you need to save up quickly, you could also consider selling items you no longer need. While this is not a long-term solution, it can help you get money within a week or two weeks, and it can provide a valuable kick-start to your savings.
Can I save $4000 on any salary?
Saving $4000 in 2 months could be a challenging task, especially for people on a low salary. As mentioned, you cannot save more money than you have coming in. However, if you want to try to save up more, you can look at how to get more income.
How can I increase my salary?
If you already work a full time job, one of the best ways to look at increasing your income is to try to aim for a higher salary. This is not always easy, of course. You could ask your current manager or HR department about a raise if you feel one is due, but be warned that they could say no. Another way to increase your salary is by looking at changing jobs. A lot of jobs offer higher salaries to poach workers away from their competitors, and this can often be more effective than staying at the business you are with.
What other ways can I make money?
It’s very common these days for people to have a side hustle in their spare time to help them make money. You can easily start doing online surveys for extra money, or you could look at side hustles such as being a freelance writer, a freelance podcast editor, a hairdresser, a website maker, or even an entertainer for birthday parties. Whatever skills you have, you can offer these as services to get you a bit more cash. You could also consider a part-time gig, such as waitressing, where you can potentially make a lot of money through tips, though of course this means working more hours per week – so try not to overdo it.
What should I save for?
There are many different things that people might want to save for. As mentioned previously, having 3 months’ worth of outgoings saved up. Once you have 3 months’ of costs saved, what now? That’s something only you can answer. Savings can help you with whatever you want in the future, whether that’s a better car, a nice break on a foreign holiday, a home, or anything else. You could also just save up for smaller purchases, meaning that you can pay for items in cash rather than having use a credit card and incurring interest.
Use money mantras to help you save
Money mantras or money affirmations can help you get into the right mindset for saving up money. You can set mantras to help with spending less money, or try to think of ways to count the dollars you are spending more carefully. Any ideas you have for saving can be ideas turned into mantras, giving you the advantage over old habits.
Saving up money is rarely fun or easy, but it can help make life so much better. Stick to a budget every week and consider the cost of items carefully before you buy anything. If you can gain more income through offering services to your local area, this can also help. It’s worth noting however that these tips are not going to work the same for everyone. You need to look at which of these tips are going to help you the most.