Saving money should be easy, but between rising costs of living expenses, growing financial inequality, and a consumer-driven culture, this is infinitely harder than it seems.
That said, there are many ways to save money. You do not need to pay for an expensive financial coach or some other service, nor do you need to stay stuck living from paycheck to paycheck or drowning in debt.
This article contains tips and tricks to help you realise how to save $5000 in 3 months, instead of sitting and wondering where your money went.
In order to save $5000 in 3 months, your savings goal is about $590 each week, no small feat. So, how can you do this?
Kick Start your Savings
So, you’ve just decided to build your savings account. This is the time when you have the most motivation, when not having your morning coffee will make you feel proud instead of cranky. Therefore, this is the perfect time for a no-spend week.
Now, obviously, bills will need to be paid, but everything else? You can last a while without new clothes, you have food at home already, and your friends won’t mind if you don’t go down to the bar just this once. You will be surprised how much extra cash you can save in one week alone. Also, after this week, the three months that follow will seem easy!
Prepare for Success
As with any project, preparation is key. You cannot just hope to save without putting thought into it. You need to have a plan, and a way to track your progress.
Work out where your money goes
The first step in saving money is working out where you spend it. How much goes on bills? How much goes on your grocery bill? How much seems to just disappear bit by bit on things you barely remember buying?
You can use bank statements, credit card statements, and receipts to work this out. Try to divide your spending into necessary and non-necessary spending.
Necessary spending will include your phone bill, electricity bill and transport to and from work, along with the money you spend on food.
Reduce your bills
Now you know what you spend, you can look at ways to save money on this. Look at your necessary spending. A lot of this will be monthly bills. You might be able to reduce your existing rates by shopping around for companies that have deals for new customers. Comparison websites might be able to help you. Failing that, the cancellations department at companies is often empowered to reduce your monthly bill if they think you are about to leave, or you may be able to get a discount for being a loyal client. Long term contracts also tend to have lower rates than shorter ones, so keep an eye out for contracts that lock in a price for a service.
Consider switching to cheaper options – can you cancel your contract with the cable company and switch to a streaming service, or find a cheaper cell phone company? If you already have multiple streaming services, perhaps reduce the number to just the one you use the most, or cancel them all together! You can spend the time you would spend watching TV making extra money instead.
Subscription boxes for food, clothing or make up may be convenient, but they are also expensive and completely unnecessary. You can cancel these temporarily until you reach your savings goals. Even with food-related subscription services, it is much cheaper to go to the store yourself. If you are a big subscriber, this could be the majority of your goal to save $5,000 in 3 months.
How to spend less on food
There are many ways to spend less on food. Try to take lunch to work instead of buying lunch there and avoid grabbing coffee – or anything else – on your way to work.
When it comes to groceries, try cutting back on meat as this tends to be much more expensive than vegetarian options. Meal planning will allow you to know exactly how much you need to spend on each meal and cutting back on processed snacks will save you money as well.
Meal planning will also allow you to reduce food waste, thereby cutting back on the amount of food you need to buy and so save you cash. There are many tips on line to make use of everything from left overs to vegetable scraps.
If you have a freezer, bulk cooking can also help, and allow you to make the most of offers on groceries.
You might be able to save on transport.
Can you save money on your commute? How far is it to walk or cycle? Both these options are much cheaper, as well as better for the environment. Not having to pay for fuel or public transport can save a lot of cash every week, especially as fuel prices skyrocket. A lot of companies even have cycle schemes where they will fund part of the cost of a bicycle.
If you cannot feasibly commute for free, can you save money by getting a weekly, or monthly, travel pass? Perhaps you can carpool with coworkers who live nearby and it’s always worth checking if your company has any benefits related to commuting.
If you have a clean driving record and good credit rating, you can often get money off of your car insurance as well. You can be re-rated every year and it is often worth doing so.
Create a Budget
Now you know what you have to spend, you can create a budget. To create a budget, list your set monthly expenses and your income sources. The excess of income should be divided between a weekly amount for food and transport or fuel costs, and your savings. To increase your net worth faster, you should maximise the amount going to your savings, and try to minimise your weekly spend.
How to manage your bank accounts
In this modern world, it is virtually impossible to function in society without a bank account, but just one is not enough is you are intending to save $5,000 in 3 months. Keeping all the money in one account can very easily lead to overspending and so at the very least you should have a separate savings account; this will not only make it easier to track progress towards your financial goals but will also prevent you from using money you don’t intend to, or don’t need to – if you have a spare five dollars you can easily deposit it in the savings account. The chances are you won’t even miss it, but if you kept it in your current account, you would spend it and not even notice. A dollar saved here or there may not seem like a big deal but if you do this enough over three months, your net worth will greatly increase.
When you are setting up a savings account, shop around. Ensure that you
On top of a main account and a savings account, many people keep a separate emergency fund. This will allow you to not dig into your savings if the worst should happen. This in turn allows you to look at a savings account that are not instant access, which tend to have better interest rates and can make your money work for you.
Some people prefer to have two current accounts, although be wary of an additional cost. If this is free, you can use a direct deposit to send your weekly budget for food or transport. This again assists with overspending. Other people prefer to take their weekly budget out in cash, or use credit cards, although you must be careful to pay these off regularly to avoid having to pay interest.
Dealing with Debt
Being in debt is expensive. Minimum payments may not even cover interest, meaning the debt goes up and up even as you strugle to pay it off. The best way to get out of debt is to ensure you have enough to cover the interest on all of your loans, then to focus all of your energy into paying off the one with the highest interest, as this is the one charging you the most money. After this is paid off, focus on the one with next highest interest and so on, until you are debt free.
Some debts, such as some mortgages or other fixed term loans, may charge you for early repayment and it is worth bearing this in mind before you make a decision.
If you have a large number of small debts, it may be worth looking at consolidating your loans. If you find a fixed term loan with a low rate you can save a lot of money on repayments. This may even allow you to pay off your loans at a greater rate with a lower monthly cost.
Other debt, such as credit cards or arranged overdrafts, may be interest free for a period of time. While you should ensure that they are paid off before the interest starts, they should not be a priority. That said, if credit card interest does kick in it tends to be incredibly high. This often kicks in after a month, so make sure these are paid off monthly.
Also avoid buying items on finance wherever possible as this costs more money over all. Often that big purchase can wait a few months for you to save the money for it.
Do not use payday loans, or any short term loans with high interest rates.
Obviously to maximise your savings, you need to minimise what you spend. That said, while no-spend weeks can be great, and having one of these every two to three weeks can be very helpful for building your savings, this is not feasible for a full three months. But, it is possible to cut the amount you spend to a minimum. To save $5000 in 3 months, some luxuries may have to be temporarily cut from your usual habits. The fewer outgoings you have, the faster you can save and the quicker you can make your money work for you.
Look for offers
When you need to buy something, shop around for where it is cheapest, or on offer. This is especially useful when grocery shopping and if you are efficient with your meal plan and keep an eye out for deals, you can maximise your savings.
However, do watch out that you don’t end up wasting more money on multi-buy offers that you don’t need. While this may help you save in the long run if it is something you will eventually require, it could also mean cluttering up your house with something you don’t need, or just lead to buying food that goes in the garbage.
The larger the purchase, the more time you should take to find the best deal.
Saving money while spending
As long as you are careful, and ensure you clear them before interest kicks in, credit cards can offer reward points for shopping at certain stores, which can often be exchanged for money off or vouchers. Point-based loyalty schemes can also offer money off.
Do not let these points convince you to spend extra money, however. It is not saving money if you end up out of pocket.
Increase your income
Sometimes, no matter how much you save, it isn’t possible to save $5,000 in 3 months on your current income. This means it is time to find alternate sources of money to increase your cash flow. With modern work practices such as remote working and flexible hours this has become easier than ever.
One good way to increase your income is a side hustle. This can be a second part-time job, one with flexible working hours to fit around your main employment, or it can be freelance work or making money from a hobby. Being a freelance writer could earn you extra money just by typing out one article each evening in front of the TV. during your spare time. This money can greatly improve your financial situation and potentially give you $300 extra cash each week that can go directly into savings. This is over half of your weekly financial goal and can quickly build up over a few months.
Other options are things such as drive for Uber, tutor online or become a virtual assistant. Companies will pay a virtual assistant between $15 and $20 an hour, while tutors can pull in much more than this, depending on exactly what they tutor.
If you do not have time for a full side hustle, you can still make money by selling items you don’t need. For large ticket items such as unloved furniture, something like facebook market place or gumtree will allow you to reach people in the local area who could pick it up and, potentially, pay cash. For smaller items, you can use these options or ebay or, if you have a large number of low ticket items you could even hold a yard sale. Spend a free day going through your home and finding everything you don’t want, while some things may only sell for a dollar, this quickly adds up. If you’re selling online make sure that you account for other expenses such as postage in the price.
Renting out rooms
If you’ve been through your house, you’re probably wondering what you can do with all of the extra space you now have. Well, good news! Extra space can easily be turned into extra cash. If you have a spare room you can rent this out. Depending on where you live, this can be very lucrative.
While short term lets such as air bnb may return more money, this also comes with more expenses such as laundry and cleaning. A longer term paying tenant can still yield high returns in three months, and will reduce the number of strangers in your home. However if you live somewhere that is more popular with tourists, shorter holiday rentals may be your best bet.
Methods of saving money
There are various methods that can be used for saving, so how to save $5000 in 3 months using these methods? How can you tell which is best for you?
Cent by Cent
Saving a few cents each day may not seem like the ideal way to save 5,000 dollars, but even something as simply as cutting your Amazon music subscription will save you nearly ten dollars a month. If you take the money you would have spent on this and put it in your savings, and then repeat this every time you don’t buy yourself a coffee, or you go for a cheaper brand, it will quickly build up. There are apps designed to help you with this.
Another option is to round up the money you spend and put the extra into your savings. So, for example, if you bought a coffee for $4.79, you would put $0.21 in your savings. This method works even better if you are the type of person who uses cash. Simply pay in bills and put all of your change into a jar to deposit into your savings every few days.
Another method to save $5,000 is to use Direct Debits. Saving money is easiest right after you have been paid. If you wait until the end of the month the chances are you will have spent it, whether or not the money was in your budget. Instead, set up a direct debit to deposit a certain amount into your savings directly after you receive your paycheck, whether this is weekly or monthly.
This method works best if your paycheck is consistent. If there is a lot of variation, this could mean you have to either dip into your savings, or fall afoul of overdraft fees.