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For most of us, saving $5,000 in a year seems like a fairytale, especially for those who live paycheck-to-paycheck. Unfortunately, not having a backup financial plan in place could spell disaster if you find yourself in a situation where you need extra cash ASAP.
Over the years, I’ve become a savvy saver, but I wasn’t always. I’ve learned a lot over the years through trial-and-error and needing to scrimp and save when I had no other choice.
One of the most helpful lessons I learned along the way was to set smaller goals and take baby steps toward my ultimate savings goal.
To save $5k or more a year (most experts agree that at least 20% of your income should go toward savings!), you should focus on small tweaks you can make to get you to that goal. I’m going to break 26 ideas down for you into five strategies that can help anyone learn to save money.
Strategy #1: Re-Think Your Finances
1. Start a Weekly Savings Challenge
Many savings challenges can get you closer to your $5k a year goal, and they can be as easy or complicated as you want them to be. I prefer the easy ones that don’t make me feel like I’m saving yet give me a good chunk of money saved by the end of the year.
My two favorites are the “Penny a Day” challenge and the “Weekly $1” challenge. With Penny a Day, you’d save one more penny each day than you did before.
By day 30, you’d put away 30 pennies (or $0.30, however you want to add it up), and on the last day of the year, you’ll save $3.65. It seems like such an insignificant amount each day, but by the end of the year, you’ll have saved almost $668.
If you want to boost your savings quicker, opt for the Weekly $1 challenge, where you’ll save an extra $1 every week (the last week of the year, you’ll have to put away $52).
This gives you $1378 toward your savings goal while not putting a big hole in your pocket, especially during the first part of the year!
2. Set Up an Automatic Savings Plan
For no-thinking-about-it savings, an automatic savings plan is the way to go. They let you set up a savings program to have your bank automatically transfer funds from your bank account to savings account as often as you want (weekly helps me remember it’s happening and set my larger savings goal into smaller, more doable actions).
Most financial institutions that offer online banking have this feature, so look for an internet-friendly bank if yours doesn’t currently offer it.
To reach your goal of $5k a year with only this method, you’d need to save $96 a week (or around $400 a month!). That can be a tough goal.
Instead, think about what you can realistically afford to save every month and split that into four to save weekly. If you can only manage $25 a week, you’ll still have $1300 saved at the end of the year.
3. Let Apps Invest for You
I’ll admit that investing is not my thing. I find it confusing and have no idea where even to get started, and I’m not one to gamble with my money. When I learned about auto-investing and how easy it’s becoming for complete newbies like myself to invest their cash, I looked into it.
With apps like Acorns, it’s never been easier to get started with investing. The best thing is that both apps let you invest small amounts, so you don’t have to worry about losing huge chunks of money.
Acorns rounds up your purchases to the next dollar and invests the spare change, while Stash lets you invest in EFTs and stocks with as little as $5 to start and explains everything to you along the way.
4. Reexamine Your Tax Withholding
Do you get a hefty tax refund back each year? If so, then you’re probably having an unnecessary amount of taxes withheld from your paychecks. That money could be put to much better use by transferring it directly into savings each time you get paid.
If you think you might have too much withheld, you can use the IRS withholding calculator to double check. Remember to re-calculate whenever you have a significant change in your life like you gain a new family member, or your income goes up or down.
5. Lower Your Tax Bill
You might also be able to reduce how much you owe the tax man by taking advantage of credits, deductions, and tax-reducing contributions every year.
The best way to make sure you’re getting everything you deserve is to consult with a tax professional or use an automated system like TurboTax to file your taxes. Either option costs money, but the amount you save in taxes by getting every penny you’re entitled to should be worth it.
Remember that contributions you make toward your retirement with an IRA are tax-deductible, so there’s one more reason why it pays to save cash!
6. Use Reward and Survey Sites
A fun way to make extra money in your spare time is by using reward and survey sites. Pick your favorite online tasks – playing games, watching videos, and searching the web are all options on these sites – and make money doing it.
Here’s a quick list of some of our favorite survey sites:
Choose your top three to five sites, use them regularly, and you could end up with a lot more cash at the end of the year. Here are some helpful articles to find the best sites:
- Make $300 or more each month with these survey sites
- 13 paid survey sites
- 20 best survey sites in 2018
- Passive income websites
- Get paid to search the web
7. Pay Off High-Interest Cards First
Known as the debt avalanche, the method of paying off any loans or credit cards with the highest interest rates first can help you start putting your monthly payments toward principal balances instead of interest.
The less interest you have to pay off, the quicker you can get your balances paid off, reducing your bills and letting you save more money each month.
Check out this debt payoff calculator to see how long it should take you to pay off your loans and credit cards with this method.
8. Save Your Extra Paychecks
Whether you get paid weekly or bi-weekly, there are going to be months when you get an extra paycheck. Instead of treating it like extra cash, pop it directly into your savings account.
9. Open Accounts and Save the Bonuses
Most banks have occasional bonuses they’ll give you for opening a new checking or savings account with them. If you’re in the market for an account switch, look for the best current bonus deals on Bankrate and apply for your favorite.
These accounts will have some requirements, like making a specific number of purchases with a checking account or depositing a minimum amount for a savings account, so be sure to read the fine print. Once you’ve become eligible for the bonus, put it right into savings.
These bonuses can range anywhere from $100 to $1,000!
Strategy #2: Cut Costs
10. Cut the Cable Cord
Suppose you have an average cable bill of about $100 a month. What if I told you that you could pay about half that and probably have more stuff to watch? That’s saving $600 in a year and giving you more options.
I did exactly that a couple of years ago when my cable bill went up to about $120. I now pay $50 for Netflix, Hulu, and Sling TV, plus I have Amazon Prime TV shows and movies included with my Amazon Prime subscription for free. I have more to watch than I did before and I even get live TV through Sling.
Seriously, cut the cord!
11. Shop for a Better Phone Bill
If you’ve had your cell phone service for a while, you probably don’t think much about the cost. When you got it, it could’ve been the best deal, but it may not be now.
Spend a couple of hours looking into other cell phone companies to see who’s offering the best prices for your family. Some companies give discounts for multiple lines, while others may have a discount for your workplace.
Hint: Call the company instead of relying only on the information you find online. You might be able to catch a better deal by explaining that you’re willing to bail on your current company, but only if another company sweetens the pot somehow.
12. Plan Meals
Meal planning can cut your grocery bill in half each month once you learn the ropes. Creating an organized list that matches up with planned-out meals helps eliminate food waste and prevents you from going to the store and spending money aimlessly on things you don’t need.
The average 4-person family with kids up to age 5 spends about $883 a month on a moderate-cost food plan, according to the USDA. If meal planning even cuts off $100 a month (a very conservative estimate!), you’ll save $1200 a year on food alone.
13. See If You’re Eligible for Healthcare Assistance
The cost of healthcare is so unpredictable with the various changes in the law over the years, but one thing is for sure: It’s expensive to cover an individual, let alone a family, even with a low-cost plan.
Shop around for health insurance just like you would a TV, computer, or a car. Healthcare.gov makes it easy to see if you qualify for some help with your health insurance costs by filling out an application about you, your family, and your income.
eHealth might also be able to help you find a low-cost plan during open enrollment periods.
14. Be Savvy with Utility Usage
You know that you should conserve water and electricity/gas to help your bills go down, but you may not know how much a few small tweaks can save:
- Switching to a low-flow toilet (or skipping some flushes) can save $200 or more a year
- Reduce how much you and your family showers by a couple of minutes and save $100 or more a year
- Moving your thermostat up or down one degree can save $50 or more a year, depending on how efficient your home is
- Adding wool balls to your dryer dries clothing faster to save energy
15. Cancel Unnecessary Subscriptions
All those subscription services you have for magazines, music, games, productivity, etc., can be convenient and fun, but their costs add up quickly. Just three $30 subscriptions a month equals $360 a year you could be saving.
Write down how much each subscription costs and re-evaluate what you need versus what you want and drop the unnecessary ones to get closer to your $5k goal.
16. Lower Your Car Insurance
Car insurance can be a big bill every year, especially if you don’t have the best driving record. Before switching to another company, you might want to call your current one.
Your insurance company might have some discounts for you that it hasn’t yet added to your account and you can gently nudge them to do so. Sometimes, just saying that you’re thinking of switching to another company will be enough to get them to lower your bill.
Some insurance companies also lower premiums for people with good credit or those who take driving courses, so be sure to ask what you can do to get a better figure. If nothing’s working with your current company, then it might be time to shop around.
17. Opt for Urgent Care Instead of the Emergency Room
Many of the ailments or injuries people visit the emergency room for can be taken care of in an urgent care facility, and the visit there can save a lot of money. While most urgent care visits are in the hundreds, you’ll likely pay in the thousands for an emergency room encounter.
If you’re not sure if urgent care will be able to help, you can call them first and ask for advice about where to go to avoid paying two places.
18. Trade in Your Car for a Lease
In some cases, a leased car can save you a lot of money monthly over a financed one. Leases are best for people who won’t go over the yearly mileage allotment (usually, anywhere from 10k to 15k) and take excellent care of their cars (large dents, mismatched tires, and an unkempt interior can all raise your costs at the end of the lease).
Check out some local dealers and see if trading your car in for a lease might lower your hefty car bill each month.
Strategy #4: Shop Smart
19. Buy in Bulk
I’m not saying always to buy things in bulk, because it won’t always make sense. If you’re not going to use a 64-ounce jar of mayo before it expires, then you’ll just be wasting money.
Buying things you use a lot in bulk can save a lot of money every month and over the course of the year.
I buy most meat in bulk, like chicken breasts and ground beef, split the package into smaller portions I’ll need for meals, and freeze the packages I don’t need right away. I can usually find bulk chicken breasts for $1.89 a pound, while smaller packs are $2.50 and up per pound.
20. Get Cash Back When You Shop
Use apps like Ibotta to make money from your shopping trips.
I can continuously rack up at least $50 every month on Ibotta alone just from redeeming rebates through the app. That’s $600 a year! The best part is that this app gives you a $10 bonus when you sign-up using and claim your first offer.
If you shop at Walmart, consider using the Walmart app, which has the Walmart Savings Catcher included. Scan your receipts, send it to the Savings Catcher, and the app will see if Walmart gave you the best deal on your items by price-checking it against competitors. If not, you get the difference back.
21. Never Shop Without a Deal
Whether you prefer to shop online or offline, there’s probably a coupon or promotion you could use to save money. Browse coupon sites or grab coupons from the paper before you visit the store. When shopping online, use Honey, an app that connects to your browser and finds deals automatically for you based on where you’re shopping.
Strategy #5: Make Money
22. Get a Side Gig
Now you know ways to save cash but making extra cash in addition to what you pull in from your job can bulk up your savings even faster. Starting a side is one of the best ways to do that because it puts you in control, working as much or as little as you want to earn what you need.
Think of things you can do in your neighborhood, like:
- Mow lawns
- Paint homes
- Help people move
- Deliver stuff to people (food, coffee, prescriptions, etc.)
- Drive people to stores, doctors, etc.
- Walk dogs
- House sit
- Tutor kids
- Teach classes (music, painting, etc.)
- Photograph families or events
23. Freelance on the Weekends
Use your days off to start an online gig using some freelancing skill, like web design, programming, or video editing. Check out Upwork, a freelance marketplace where you can find clients looking for your skills.
24. Get Bonuses for Signing Up on Websites
A lot of websites pay you just for signing up! Fill out a quick registration form and get paid to become a member without having to pay for anything yourself. This list of apps and websites that give bonuses can get you started on the right track!
25. Consolidate or Refinance Loans
Loans and credit cards make it easy for you to make big purchases by paying in smaller chunks, but their interest rates make you pay more over time. Loans and cards with high interest rates may even cause more of your monthly payments to go toward interest than paying off the principal.
Pay off loans faster by consolidating several into one or refinancing them using a different lender.
Credit unions are excellent for refinancing loans and consolidating credit card debt because, if you’re a member, you can get access to better interest rates (usually) than you would with a traditional bank or lender.
Most credit unions are also much more willing to finance people with bad or fair credit than other banks are.
26. Declutter Your Home
Start selling things you don’t need. You’ll not only declutter your home, but you’ll make extra money from things you already have, so it won’t take much effort. Some of the things you can sell include:
- Video games and systems
- Cell phones
- Home décor
Join a buying/selling Facebook group for your local area and start creating posts for each item. Make sure you change your settings to get notified when someone responds to a post!
By using just a few of these money-saving and making methods, you should find it easy to have an extra $5k in savings at the end of the year. The key is to make easy tweaks to your lifestyle that help you cut your expenses while also bringing in some extra cash in creative ways.
Let us know in a comment what your favorite ways are to save and make money. What’s the most you’ve saved in a year and what are your savings goals?