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Saving money is an important goal for most people, but it requires discipline. Sometimes it helps to have a plan or a program to follow to increase the chances of reaching your financial goals.
$5,000 may sound like a lot of money to save, and it is, but over the course of 12 months it comes out to less than $100 per week. It sounds a lot more realistic when you look at it that way.
With the plan presented in this article, you’ll reach $5,000 one year from no.
What Would You Do with $5,000?
$5,000 is a nice chunk of money. There are a lot of different things you could do with it.
- Build up your retirement savings
- Take a nice vacation
- Use it for a down payment on a house
- Buy a cheap used car or put it towards the purchase of a more expensive car
- Build up an emergency fund
I’m sure you’ll be able to come up with a few ideas pretty easily. In fact, you may already have something specific in mind.
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Why a Savings Challenge?
While you don’t need a money-saving challenge in order to save, a challenge can help in several specific ways.
Let’s face it, saving money isn’t always exciting. Sure, it’s fun to see the results, but saving money takes commitment and sacrifice.
A savings challenge can help a boring topic become more fun and enjoyable. Making saving fun means that you’ll also be more likely to stick with it.
The savings challenge adds some accountability, even if it’s just accountability to yourself. Once you start the challenge, hopefully, you’ll feel the need to stick with it and complete the challenge.
You can have a generic goal of saving money, but the money challenge gives you specific savings goals for each week, and you can easily check on your progress at any time.
Why not take a savings challenge along with a friend? Taking the challenge with a friend gives you even more accountability, and also provides some extra motivation because of the competition.
If you’re following along exactly with the plan and the specific amounts to save, the competition may not be about who saves the most money. Instead, it’s more about simply sticking with the challenge and completing it. Most of us wouldn’t want to see our friend complete a challenge that we quit, so it gives some extra motivation to stick with it.
Creating a New Savings Account for the Challenge
While it’s not completely necessary, I recommend using a separate savings account for the challenge. The two main reasons are:
- You’ll be able to see exactly how much you have saved at any point in time
- It makes it easy to keep the money separate from your other accounts so you don’t accidentally withdraw the money that you’re saving through the challenge.
Of course, you can use any bank, but I personally use and recommend CIT Bank. They offer high-yield savings accounts and money market accounts that would work well for this challenge. They also have a really nice user interface and mobile apps that make it easy to manage your account. Of course, there are many other online banks you could use as well.
Ways to Save $5,000
If you’re living paycheck-to-paycheck you may be wondering how you’re going to come up with the money you need to save each week. With that in mind, let’s take a look at some of the specific things you can do to free up the money to put in your savings account.
1. Create a Budget
If you’re not currently using a budget, this is one of the first things you should consider. A budget will help you make the most of every dollar and live well within your means. Your budget will give you a plan for how to use your money, including money you want to save or invest.
If you’ve never created a budget before, don’t worry. You can enter your email address below to get a budget template (spreadsheet and PDF) that you can use to create your own.
Another option that some people like is cash envelope budgeting. This system doesn’t work if you use credit cards (which is why I don’t use it), but some people find that it provides extra discipline.
2. Track Your Spending
Having a budget is good, but you won’t know if you’re really sticking to the budget unless you’re also tracking expenses. I recommend recording your expenses every day so you don’t lose track, and at the end of the month, you’ll be able to see exactly how much you’re spending, and what you’re spending it on.
Tracking your spending helps you to see some areas where you may be spending too much. You can identify the problem areas where you’re wasting money. Once you know that, you can adjust your spending to correct those issues, leaving you with more money saved.
I’ve always found that tracking your spending forces you to scrutinize every expense, and you’ll be a lot more careful about how you spend your money if you know you’re going to be recording the details. It’s one of the best things you can do related to personal finance.
3. Reduce Your Cell Phone Bill
How much money do you spend each month on your cell phone or wireless service? If you’re with one of the major carriers, you could probably save hundreds of dollars per year by switching to a discounted pre-paid carrier.
About 8 years ago, my wife and I switched from one of the leading carriers to a discounted carrier (Boost Mobile) and it instantly cut our bill in half. Instead of paying $140 per month for the two of us, it dropped down to just $70 per month. That’s a savings of $840 per year!
About 4 years ago, we switched from Boost to Cricket Wireless. We’re still paying $70 per month, but our coverage in our area is much better. Cricket uses the AT&T network, but you can get coverage with very cheap cell phone plans. I’ve been very happy with Cricket, and I definitely recommend them.
If you sign up for Cricket Wireless through my referral link, you’ll get a $25 account credit.
Going to a discounted carrier has been one of the easiest ways I’ve ever saved money, and best of all, it saves money each and every month. I was initially concerned about the quality of the service, but that hasn’t been an issue at all.
4. Get Rid of Cable or Satellite TV
Another easy way that my wife and I have saved money is by canceling cable TV. We canceled about 8 years ago and I’ve never missed it. Now, we use an HD antenna that I purchased for less than $50, and we watch a lot of shows and movies on Netflix. During football season, I also get a Sling subscription to watch the ESPN channels.
We save a good bit of money each month, even when we have the Sling membership. During most of the year, Netflix is the only TV-related expense, so we save a lot each month/year.
For a more detailed look at your options and the costs, see my article on the best cable alternatives.
5. Save Money on Food
Food is a big line item in most budgets, and there are plenty of ways to reduce your monthly spending in this area. If you eat a lot of meals at restaurants or buy your lunch at work every day, you can save a huge amount of money by adjusting to making all (or almost all) of your meals at home.
You don’t need to avoid restaurants entirely, but limit the number of meals you eat out, and be careful with the amount of money that you spend when you do go out. My article on ways to save money at restaurants can help.
Most likely, your grocery bill could also be reduced without too much effort. My favorite way to save on groceries is to shop at discount grocery stores, like Aldi. The combination of low Aldi prices and generic brands saves our family of four a few thousand dollars per year. See my article on ways to save money on groceries for plenty of other ideas.
Meal planning is another great way to save money. It takes a small amount of effort, but you can buy only the groceries that you need, and plan your meals to get rid of the food you already have in your refrigerator, freezer, and pantry.
6. Use Cash Back Apps to Save Money Easily
One of my favorite ways to save money is to take advantage of cashback apps. There are many different websites and apps that allow you to earn cashback on many of your purchases, but here is a look at 3 of my personal favorites.
Rakuten ($10 signup bonus) – With a free Rakuten account you can save money on most of your online purchases, and some in-store purchases. There are thousands of stores and websites that partner with Rakuten, and you benefit by getting cash back for things you need to buy anyway.
Rakuten has a browser extension that makes it really easy to save. With the help of the extension, you’ll get a notification whenever you’re on a website that offers cashback through Rakuten. All you need to do is click on a button to activate your shopping trip and you’ll be ready to save money. Rakuten will even find and automatically apply coupon codes to save you more money.
Ibotta ($20 in signup bonuses) – Ibotta is a great cashback app that will help you to save money at grocery stores, department stores, home improvement stores, other types of stores, and even online. There are offers for a wide variety of products and stores and you can claim the offers that you want.
TopCashback – TopCashback is pretty similar to Rakuten. With a free account, you can save money at thousands of their partner websites. I recommend signing up for both Rakuten and TopCashback because sometimes the offer will be better at Rakuten, and sometimes it will be better at TopCashback (or cashback may be available only through one of them).
See our list of the best cashback apps for even more possibilities.
7. Credit Card Signup Bonuses and Rewards
Another easy way to find extra money to save is by taking advantage of credit card offers. You can earn anywhere from $100 – $1,000 as a one-time bonus for signing up for a new credit card. You can also earn cashback or travel rewards on all of your purchases (see our list of the best credit card signup bonuses here).
I use a few different credit cards to get anywhere from 2% – 5% cashback on every purchase. Over the course of a year, this easily adds up (with no change in your lifestyle) if you make all of your purchases with a credit card.
8. Get Cheaper Insurance
Have you shopped around for cheaper insurance? Most of us have several different insurance policies (car, life, homeowner’s/renters, health). It’s possible you could save money by moving to a different company or by making some adjustments to your existing policies to reduce the costs.
You can check your existing policies to make sure that you’re not overinsured. We saved more than $100 per year on homeowner’s insurance by reducing the coverage for the stuff in our house. We didn’t need as much coverage as we had by default. You can also save on your premiums by increasing the deductible.
Getting quotes from multiple insurance companies is pretty easy, so with just a few minutes, you can see what’s out there. You may be able to save money every month or every year by making a change.
9. Sell Stuff You Don’t Need
Most of us have a lot of things laying around the house that we don’t use or need. That stuff may seem like junk, but a lot of it has value. One of the quickest ways to make some extra cash is to go through your house and pick out some things to sell.
If you have enough stuff, you could host a yard sale to get rid of a lot quickly. My wife and I made over $400 last year with a weekend yard sale and this year we’re planning to have more for sale.
Although yard sales are great for getting rid of a lot in a day or two, your valuable items are likely to bring more money if you sell them in other places. The Facebook Marketplace and Craigslist are both excellent resources that allow you to reach a lot of people easily.
If you feel like you don’t have anything to sell, see the article What Can I Sell? for plenty of ideas.
10. Save Money on Entertainment
Entertainment is one of the budget categories where many people can cut back and see significant savings. How much money are you currently spending on entertainment? Things like going to the movies, sporting events, concerts, as well as trips to the bar or meals out with friends can really add up fast.
That’s not to say that you shouldn’t spend any money on entertainment. Doing things you enjoy with friends and family is a great use of your time, but there are ways to cut back on entertainment expenses without sacrificing fun. Find free or cheap things to do, start a cheap hobby, or simply give yourself a hard limit on how much you can spend for entertainment.
11. Start a Side Hustle
While reducing expenses is great, you can speed up your savings by increasing your income. There are so many different side hustle ideas, you’re sure to find something that’s a good fit for you. Here are a few of my favorite options for making extra money quickly.
Flea Market Flipping – I just talked about the possibility of selling things you don’t need. You can actually turn this into a side hustle that brings in money on a regular basis by buying and re-selling. You can buy items at yard sales, thrift stores, and flea markets and sell them for higher prices.
A while back, I interviewed Virginia, who makes money flipping furniture for profit. She and her sister buy wood furniture, give it a fresh look with some new paint, and sell it for a nice profit.
If you want to learn all about flipping and how to make a great side income with it, be sure to check out Flipper University. The couple that created this course makes a six-figure income working 20-30 hours per week flipping, and they’ll teach you everything you need to know.
Pet Sitting and Dog Walking – You may be surprised at how much money you can make with a pet sitting or dog walking side hustle. When I interviewed Lily about how to become a pet sitter I was shocked to hear that she’s making $40,000+ per year with her home-based doggy daycare. You can create a profile on Rover and allow clients to find you (Lily gets all of her clients from Rover). One of the great things about this side hustle is that you don’t need any special skills to make extra cash.
Freelancing – There are many different types of services you can offer as a freelancer for extra income. My favorite is freelance writing because there are so many blogs and websites looking for content on a regular basis. Other options include graphic design, web design, web development, photography, social media marketing, and more.
Drive for DoorDash – Regardless of your current work schedule, it’s possible to make some extra money by working as a delivery driver. Driving for DoorDash is an extremely flexible way to make money.
Take Online Surveys – One of the most popular side hustles is to take paid online surveys. It’s not the most lucrative option, but it’s very flexible and you can take surveys when you’re watching TV or whenever you have some downtime. Some of the most popular survey sites are: