Saving $20,000 a year may seem like a daunting task, but it can be done. It will take a consistent effort and a multilevel approach.
Break it down by month and week to make the goal more manageable. It would be roughly $1,667 a month or about $385 a week.
Here are some tips from personal finance experts.
- Negotiate a raise
As companies face a significant challenge during the pandemic of retaining talent, it might be a good time to ask your boss for a raise. If your raise amounted to an extra $500 monthly, that would give you $6,000 to go toward your $20,000 goal.
- Get a new credit card
If your credit card doesn’t offer cash back, you could be missing out on $1,000 worth of cashback each year, according to a survey from Gigapoints.
- Plug monthly budget leaks
She suggests comparing homeowners or auto insurance rates by using a comparison engine likeTheZebra.com to see if there are cheaper providers. The site claimed to save users $922 on average.
Review your cell phone plan to see if you’re using all the data you’re paying for and consider switching to an online-only wireless carrier like MintMobile.com, says Woroch. MintMobile sells wireless services in bulk, offering talk, text, and data for just $15 per month. This could be a massive area of potential savings for a family.
“Review your subscriptions and cancel some of those extra video streaming services or other subscriptions you took on during the pandemic you no longer use. This isn’t a huge saving, but it adds up,” says Woroch.
- Try the 50/20/30 budget rule
It is a general guideline of what percentage of your income should be used for specific budget categories. The categories are “essential” spending, entertainment, and saving.
“Under the 50/20/30 rule of thumb, you spend 50 percent on essentials (rent, mortgage, food), 20 pecent on entertainment (shopping, travel), and 30 percent on savings,” explains Jonathan Svensson, co-founder of Almvest, a financial education website focused on investing, banking, credit cards, and more.
- Sell stuff
“One way to make money quickly is by selling some of the things you no longer use,” offers Svensson. You can sell items on sites like Craigslist, Facebook groups, eBay, or even at garage sales.
- Increase your cash flow
“A $50,000 salary will give you roughly $1,041 gross earnings per week,” says Krisztian Riez of Condo Control, a cloud-based system that helps property managers and others. In this case, the only way to save $20,000 faster would be to bring in more money. A side hustle may be the way to go.
“Make a plan of what you need to do to increase cash flow. Research the details, and take the necessary steps to execute your plan,” suggests Riez.
- $1,000 cut, $1,000 add
Reduce your expenses by $1,000 per month. At the same time, increase your income by earning an extra $1,000 per month.
Cut a $1,000 by cutting unnecessary expenses, such as eating out. Restaurant bills and UrberEats can really add up.
Bring in a $1,000 with a second job or by doing freelance work on sites like Upwork or Fiverr.