by Kevin Sun
Want to save $5,000 in a year? That extra money in the bank could go towards your next big purchase, boost your savings or investments, or help you get rid of debt stress. However, actually saving $5k in 52 weeks can be a huge challenge if you’re not prepared. Here’s how to make it work with a practical plan:
Set Monthly, Biweekly, Weekly, or Even Daily Goals
Trying to save $5,000 in one year is near impossible if you wait until the last few of the 52 weeks to actually start saving. If you take advantage of the whole 52 weeks, however, you can do it by just saving $416.67 a month, $192.31 biweekly, $96.16 a week, or $13.70 a day. Less than $14 a day doesn’t sound so bad, does it? The trick is simply to make use of all the time you give yourself. Even if you just stuffed $100 into envelopes every week, you’d reach your goal in 12 months with an extra $200 on top!
Breaking your big goal into smaller checkpoints accomplishes two things. First, you’ll feel more motivated and less likely to put off the work; second, you’ll know sooner if the plan isn’t working out and adjustments need to be made. Even setting a checkpoint every 6 months or 3 months will have these benefits. That said, there’s no need to force yourself into meeting a daily savings target. It may be more convenient to align your checkpoints with how often your paydays come. For example, if you’re paid biweekly, then transfer $200 from every pay cheque into your savings. If you’re paid monthly, then transfer $420 per payday. Doing this before using your pay cheque for anything else will also help you stay on track to reaching that $5,000 savings goal. That’s how paying yourself first is done!
Save $5,000 Every Year with a Budget Plan
One popular method to save $5,000 in a year is to find a printable chart online that gives you differing amounts to save each week; these are often designed to let you start small and gradually build up your savings efforts. However, this strategy can cause confusion because you have to constantly rebalance it with your spending – after all, it’s unlikely that your income is going to change every week too. There’s also no guarantee that you’ll want to spend less in a week where the chart tells you to save more, and vice versa. For these reasons, it might be better to consistently save the same amount throughout the year. You could even set up automatic bank transfers to make the process almost painless.
Whether you print out a chart to follow or not, make the challenge of saving $5k a year easier for yourself by using a budget. A budget is just a plan for your money that balances what comes in with what goes out. For example, if you choose to save $200 biweekly, then the money you earn every 2 weeks needs to be at least $200 higher than the money you spend in that time. If it isn’t, then you need to either increase your income or lower your expenses. Your budget is the guide that helps you figure this all out. It doesn’t need to be fancy either – you can write yours out with a pencil and calculator or use a free budgeting spreadsheet. Just be sure you don’t miss this step, or the $5,000 you save will go straight to paying off the credit card debt you took on during the 52 week savings challenge.
How to Get Help with Saving $5,000 in a Year (Or Any Other Financial Goal)
Even if we know how to save $5,000 in a year, actually doing it can be easier said than done. If you’re having trouble reaching your financial goals, consider contacting a local non-profit credit counselling organization that offers free and confidential help. A non-profit credit counsellor would be happy to assist you with reviewing your situation and gaining the skills you need to make a budget that works for you – skills that won’t just last one year, but for a lifetime.