10 Easy Ways to Save $20K in a Year
We all know how important it is to stow away money for a new home, retirement, and emergencies. But actually making headway? It's a tall order. Financial experts share the no-brainer ways to save $20,000 in a year.
Get nitty gritty with your spending and make a plan
First things first: Before you can save, you have to understand how much you’re currently spending, according to Marcy Keckler, the vice president of financial advice strategy at Ameriprise Financial. By having a clear picture of your finances, your time frame, your current savings, and your expenses, you can start to make adjustments. “A financial plan can guide you through good times and bad, and in expected and unexpected situations,” she explains.
Set up automatic transfers
Are you one of those folks who can’t hold onto cash because you’ll blow right through it? A bi-weekly or monthly paycheck showing up in your bank account might be difficult to resist, then. That’s why Keckler suggests protecting yourself from temptation by setting up automatic transfers to your savings. “Putting away a set amount of money automatically and at regular intervals ensures a portion of your income is saved each month,” she says. In addition to removing the guesswork from savings, she notes that you won’t miss the extra dough because it will feel as if you never had it to begin with. Don’t miss these financial terms everyone should have memorized.
Be brutal about online subscriptions
Take a look at your most recent credit card statement to figure out how many subscriptions you’re currently giving cash to each month. You might be surprised at how much those inexpensive $5 to $10 recurring payments actually add up to, according to Gretchen Caldwell, wealth advisor at EP Wealth Advisors. From Netflix and Spotify to online fitness classes and meal services, you might be shelling out more money than you realize. To manage these, Caldwell suggests the Clarity Money app, which automates the process of both finding your subscriptions and canceling them.
Avoid your spending traps
Depending on your interests and lifestyle, there’s a money trap you’re sensitive to—without even knowing. For Caldwell, it is Target; she goes in for toothpaste and comes out spending $150. Other folks might get mesmerized surfing Amazon or strolling through a craft store. Whatever you give the most money to, do your best to avoid it until you can gain a bit of self-control by practicing resistance. Use these other tips for making a budget you can actually stick to.
Replace a costly habit
We all have rituals we don’t think twice about: ordering a morning brew from Starbucks, picking up a newspaper, grabbing one-too-many cocktails with pals. Caldwell says to save money in a year’s time, challenge yourself to cut out your most expensive habit for a year. And with the money you would have used, stow it away in savings. (Just don’t forget to pick your jaw up off the ground when you see in black-and-white how much money your coffee has cost you in 365 days.) You should also avoid these tips that actually don’t save you money.
Don’t buy new clothes for a year
Take a gander at your wardrobe. Truth be told, don’t you have everything you need to get dressed each day? As a fun pastime for many women—and men—Caldwell says a mindless shopping habit can add up over 12 months. Take a hint from the many folks who have vowed not to buy clothes, accessories, or shoes for a full year and watch those numbers in your bank account keep going up.
Reconsider tasks you have outsourced
Sure, it is easier to throw money at a chore you don’t want to do. Yet if you can do it yourself, even for 12 months, you’ll watch those dollars add up. As Caldwell explains, “If you have someone cleaning your house, washing your car, or doing your yard work, consider doing those things for yourself for a year. It will not only save you money, but it will also take up time you might have been tempted to go out and spend even more money.”
Be strategic about your meals
For a full year, it might be nearly impossible to eat all meals at home. But David Rosen, financial expert and licensed real estate agent, says creating an eating-out budget can result in tremendous savings. Start by vowing to only eat breakfast at home and bringing your lunch to work as often as possible. This will automatically put upwards of $15 in your pocket a day. If you eat dinner out frequently, Rosen estimates cutting out three restaurant visits a week will put $6,000 straight toward your savings account. You’ll also want to read these money-saving tips from self-made millionaires.
Change your insurance plan
While plenty of variables impact your insurance plan, Rosen says to spend some time looking into your specific rates and see where you might save money. As an example, if you increase deductibles on your health or automobile insurance, you might save around $100 to $200 a month, or $2,000 a year. “While a lower payment/higher deductible strategy can be risky, if you are using this strategy, avoiding activities that tax your health or driving recklessly should make it so that you don’t need to make any major claims,” he says. (Note that if you have a preexisting condition or are older, this may not be the best route for you.) “Claims are not very common in general for most types of insurance, and the anxiety of catastrophe can be disproportionately accounted for when choosing coverage.”
Think differently about celebrations
Sure, you might not be able to convince your kiddos to completely give up on Santa Claus, but you can make birthdays, holidays, and other pricey celebrations more affordable by tapping into your inner elf. As Rosen explains, “Instead of going all out, consider more practical and smaller gifts this year.” Consider this logic when approaching weddings, baby gifts, birthdays, and more. Given that people tend to spend around $3,000—or more—on gift giving, it’s a smart strategy to test out. Don’t miss these 17 other money-saving tips from people who are great at saving.
Set up an Acorn account
How does saving $2,500 in a year without thinking about it sound? Pretty cool, right? Rosen suggests creating an Acorn account, which rounds up your loose change from all of your purchases and deposited it into your savings. So if you spend $50.24 on groceries? This app will send .76 to your rainy-day fund.
Next, read on for 15 smart ideas that will save you $1,000 every month.