With the cost of living always rising, it can feel impossible to start saving money – let alone to save $5000 in four months. Let’s look at all the things to consider when you are trying to save money fast.
Success in anything means coming up with a good plan. Planning ahead can make all the difference between managing to save up and reach your savings goal, or struggling and giving up. Let’s look at the first things to consider before you start saving up money.
Why are you saving?
Saving up money is great, but you should stop to think about why you are saving money. Do you want to have an emergency fund in case of a rainy day? Do you want to save up for a down payment on a house? Or are you saving for a nice holiday? It’s okay not to know why you are saving, but if you have an aim it might help to make sure that you stick to your budget and work hard to save up.
Consider your income
One of the main things to consider when looking at what to save up is your income minus your expenses. While there are ways to increase your income and ways to decrease your outgoings, there are limits. If you want to save $5000 in four months but your income is only $1000 per month, you would probably struggle to meet your goal. You can, of course, set a savings goal that is a bit of a stretch, but setting an unobtainable goal will only hamper your efforts to save money, by making it disheartening to even try. Any unachievable goal is likely to be failed, so focus on something that you can achieve.
Pick your savings goals
Once you know why you are saving money, and once you know what is achievable, you can then start to set your goal. While this article is about how to save $5000 in four months, you might find that this would be easy for you. Maybe you want to save $5,000 in 3 months – though of course trying to save $5,000 in 3 months will be harder than it would be to save up that much in 4 months, and you might think that it is better to stick to a slower and steadier pace to make sure you do not have to sacrifice too many luxuries while you are trying to save money.
Set your money mantras
Another tip that some people swear by is setting money mantras or money affirmations. These are reminder phrases to help you say focused and dedicated towards trying to save money. These mantras can help make sure that you make the right financial decisions that will lead to you successfully meeting your savings goals.
When you want to boost your savings, it is time to think about getting a savings account. There are various different types of account you can pick from, so it’s important to make sure you get the right one.
Types of savings account
A savings account is going to be one of the ideal places to put your money while you are trying to save up. However, there are different types to choose from. The most common types of accounts have different amounts of interest. The interest rate is usually based on how long you agree to lock your money away for, or how long it takes to access your money when you need to withdraw it. Some high-interest savings account types might also only let you access your money a certain number of times each year. Generally, the more restrictions on your account, the higher the interest rate that you will achieve.
Is a savings account different from a regular bank account?
A bank acount for savings will usually have higher rates of interest than a regular checking account or normal bank account. In fact, many checking accounts do not have interest You can compare any existing rates on your current accounts against the rates offered for a savings-focused account.
Can I have multiple savings accounts?
Yes, you can absolutely have multiple accounts. It can be a really helpful idea to have a separate savings account for your emergency fund, another account for your mortgage deposit, and another for any other amounts of money you are trying to save up. There are various reasons for this. For one, having separate accounts lets you see all the money build up in different areas, meaning you can keep track of them all. You can also use multiple accounts to make sure that you do not accidentally spend money that you were trying to save for a specific purpose. You can even set automatic transfers to put money into these accounts, making sure that you cannot spend it before you have a chance to transfer it.
It is important to find the right accounts for each of your savings pots. If you are making a long-term goal such as trying to save up for a house deposit, you can lock this money away in a 3-year or 5-year account in order to get higher interest rates. On the other hand, you can keep your emergency fund in an account where you can access it more easily in case of an emergency.
What about investments?
Investments can be another great way to increase the amount of cash you have saved up. A lot of people turn to investments for their financial goals because it is possible to get much higher interest rates with investments compared to using regular accounts. However, it is always important to remember that investments can go down as well as up. This means that you could end up with less money than you put in.
Ways to save money
Of course, knowing about accounts and having a financial goal does not help with actually finding money to save up. Let’s look at some of the ways to save money fast.
Cut down on bills
One of the biggest expenses that we all have is our monthly bills – rent, utilities, a cell phone plan, car insurance or car payments – our monthly expenses tend to eat up a lot of our income. However, you can always assess these and try to save money. If, for example, you are paying for excess mobile phone data that you do not use, you could look at lowering your data allowance to try to shave a few dollars off your phone bill for these services. A few dollars might not seem like a lot, but if you can cut down on all your bills, this could lead to a significant monthly decrease in your bills. Of course, this means that you might have to contact your cell phone company, cable company and other service providers, but this can be worth it.
You can also find some ways to lower expenses by making sure to be the type of person that a company wants to deal with. For example, having a clean driving record can get you lower car insurance, and having a good credit rating can help you get lower interest rates on loans – though, of course, these are longer-term ways to help you save more money.
Change service provider for lower bills
Another way to lower your monthly outgoings is to change the companies that you get services from. Unfortunately, it does not always pay to be a loyal client for a company, and you’ll instead find that new customers get all the best offers – especially for services with long-term contracts. However, you can sometimes get a better deal with your current service provider. Usually, the cancellations department of any big company is able to offer a better deal to people who say that they will leave otherwise. However, be sure not to be aggressive or rude to these people, as that will make them less likely to help you.
Cancel subscription services
Subscription services have changed how so many of us pay for things, but do you know how many subscription payments you are paying? Between Netflix, Hulu, Amazon Prime, or Amazon music, as well as subscription boxes and other monthly items, it can be shocking to realize how much you have paid per month without having any say over it. If you are a big subscriber this could add up to hundreds of dollars a month. Cutting out any services that you do not really use could be very beneficial for your monthly budget.
Lower your living expenses
Another huge way you can save more money is to work on lowering your living expenses. At the barest, this means cutting down on your outgoings. There are some ways to make sure that you spend less, but the first step is to track your monthly spending so that you can figure out how much you spend, and then work on making a budget. Preparing a budget is a super important part of sorting out your finances, so you should look into the four steps of budgeting.
Cut down on luxuries
While it can be nice to enjoy the finer things in life, if you want to increase your savings, you might need to cut back. One of the biggest ways that people can free up some cash is to cook your own meals instead of eating takeaways – grocery shopping is cheaper than buying premade food. Of course, you do not have to entirely cut out the luxuries you enjoy. You can find a happy middle ground between building additional savings and still getting to enjoy nice things.
Other areas where you can cut down on luxuries include on toiletries, where you can often find cheaper alternatives to brand-name items. You could also try to buy fewer expensive items such as clothes, jewelry, video games, or high-cost alcohol.
Buy second-hand items
Buying second-hand items is another great way to cut your spending – plus, second-hand items are great for the environment too. There are so many different areas where you can find second-hand items, and you’ll find that buying an item second-hand can be less than half the price of buying something new – in fact, you can sometimes find some items such as clothes and furniture for free as long as you are willing to pick it up from whoever is getting rid of it. The chance to cut your spending is huge here. Just look at the difference in cost between buying a new car versus buying a second-hand car. On top of this, you can also often buy second-hand items outright due to their lower cost, meaning that you can avoid having to make monthly payments, which will be an additional cost in the long run. In fact, the fewer items you can purchase on finance, the better off you will be.
Sell things you no longer need
While it is not a suitable long-term solution, if you need some additional cash flow immediately, you can always look at clearing out and selling items that you no longer need. You can often sell items easily and quickly whether you use eBay, Facebook marketplace, or local selling groups. It’s always worth carefully researching the value of any items you are planning to sell. It’s very common for people to find they have an item that is worth more than they expect, and the best way to boost your funds is to make sure that you get as much cash as possible for your items. Though if you need to sell items in a hurry, you might have to accept a lower price, or you might find it easiest to take items to a pawn shop or trade-in shop.
Increase your income to put more into savings
One of the main ways to help is to get extra income. There are a few ways to do this, and none of them are particularly easy, but for long-term savings, they can be essential.
Aim for a higher salary
If you are working for a business already, especially in a professional role, it can be worth trying to get a higher salary. You might be able to achieve this by asking your current boss for a pay raise. You should typically broach this matter with your line manager, area manager, or the Human Resources Department of the business. However, it is very common for people to face difficulties getting a higher salary from their current employer, which leads us on to part two of this tip.
The other way to get a higher salary is to change employer. This can be hard if you like your current employer, but it is very common for a new employer to offer a higher starting salary than you are already getting. Companies do this in order to get the best talent away from their competitors. Changing employer to get a higher salary used to be seen as disloyalty, but now it is seen as the best way to climb up the career ladder and reach higher incomes. Of course, if you like the job you are in currently, you might want to see what other offers you get and then ask if your current employer can match it. Some employers can do this, but be warned – some employers will take this as a sign that you are thinking of leaving, which could mean that your remaining time in that job is less pleasant.
Earn extra money with a side hustle
Another way to boost your income is to look at side hustles that can help you get paid for work in your spare time. There are plenty of new ways that people can make some extra cash, especially now that more jobs allow people to work flexible hours. You could work as a virtual assistant, a freelance writer on the evenings during the week, a hairdresser on the weekends, or a landscaper in the summer – there are so many ways to start a new line of employment or self-employment to help bolster your savings towards where you can save $5000 in 4 months.
There are also more traditional ways to earn a second paycheck. Plenty of people work as a waitress or a retain assistant during their free time, alongside a full time job. However, you might find that a part time job that allows flexible working is the easiest to fit in with your other work requirements and commitments.
While it can be exciting to start up a side hustle in order to increase your funds, you should be careful. Firstly, you should make sure that you are not working too many hours per week and being unable to look after yourself or fulfil any other requirements on your time. If you are working long hours and do not have time to cook dinner from scratch, you might find that all your additional funds are going on takeaway food. Alternatively, you might find that working all week long removes your social time, which could have a huge negative impact on your mental health.
The second warning is to be careful about what kind of side gig you start. If a job or side hustle opportunity asks you to pay for anything up front, you need to consider carefully whether or not it is a legitimate way to make more cash. It can be nuanced though – If you want to cut hair on the side of your normal job, you will of course need to buy hairdressing scissors. However, if you need to buy a sales kit for a job, it might not be a legitimate way to earn more cash.
Consider talking to a professional
If you are unsure where to start with your own savings, you could talk to a professional financial coach or a certified financial education instructor. Getting help from a financial coach could help you understand how any purchase affects your budget, or how to fine-tune your outgoings to give the best chance of savings.
How to save $5000 in 4 Months…
Every person will have a different set of outgoings and a different lifestyle, but once you make a budget and form a plan, it is possible to start really boosting your savings. Follow these tips, and check out our other articles on budgeting in order to give yourself the best chance of reaching your financial goals.