A new year can often mean a new start to financial independence. While we are a few weeks into 2017, the year already seems like it’s going to fly by. If you’ve already set financial goals for the year and saving was one of them, you’ll know that it can be difficult to reach that first $1,000 savings account balance.
Life is unexpected and the last thing you want to do is be unprepared in the event that a financial emergency arises. Saving your first $1,000 can seem like a daunting task, but with a few tips and strategies like the ones I’ll share below, you will be saving like a pro in no time.
Join a Savings Challenge
I don’t know about you, but challenges prompt me to get competitive with myself and strive for the best. Doing a challenge with a group of people also motivates me to succeed and hold myself accountable.
The 52-Week Savings Challenge has garnered popularity as a good way to reach your $1,000 savings target in 12 months or less. By following that method, you start off with saving $1 the first week, then $2 the second week, then $3 the third week, and so on. Eventually, you will have saved $1,378 by the time you reach the 52nd week.
There are other 52-week savings challenges to try as well and you can always modify your contributions like if you wanted to start saving $20 on week 1 for example.
With these types of challenges, it’s easy to start off, but the immediate results can be discouraging especially if you try the basic 52-week savings challenge as you would only have $10 saved after four weeks, $36 after eight weeks, and $78 after twelve weeks.
In order to see results quicker, you can always flip the starting amount and start by saving $52 the first week, $51 the second week, and so on. By the time the twelfth week rolls around, your savings account will be $558 richer and more than half-way towards that thousand-dollar goal.
Once you reach the twelfth week mark, you can continue to decrease each amount by a dollar, or you can reset and start with $52 yet again, and have another $558 in three months’ time.
The key with these challenges is just to get into the habit of saving consistently. Each week you’ll get closer and closer to your goal and by the end of the challenge, saving money will be a regular habit for you.
To help boost your savings, you can sign up for Digit for free to automate more contributions and save more effortlessly.
Add Up Your Side Hustle Income
While your current earnings can add up once you start implementing savings goals and methods, establishing a side hustle can generate extra income that can help you reach your goal faster.
Finding a part-time job and saving all of the earnings can quickly add up. You can also pick up flexible gigs like babysitting, walking dogs, selling items on Amazon or eBay, freelancing, tutoring etc. However, you need to be disciplined with the extra income as it can be tempting to splurge or spend it. This is why you should set up a direct deposit, or deposit your check, directly into your savings account. Once it is out of sight, it is out of mind.
I recommend storing your savings in a high-yield online savings account which will pay out interest on your balance each month. I’ve been using CapitalOne 360 for a few years now and I love it along with the fact that I can set up a maximum of 25 different targeted savings accounts to house my emergency fund, travel fund, auto maintenance fund, etc. Right now, Capital One 360 will give you a $25 cash bonus if you open a checking or savings account.
Save Lump Sum Payments
The beginning of the year also provides an excellent chance to save from all of your previous hard work. Tax season is upon us and what better way to chip away at your goal than to use a portion of your tax refund if you receive one? Getting a large refund could indicate that you’re overpaying a bit on your taxes so first make sure you’re not. If you do get a refund, use it wisely and to improve your financial situation instead of fund a shopping spree.
You can also use income from bonuses and tips at work or even gift money to boost your emergency fund. If you received a raise last year, dedicate the extra earnings to savings until you reach your goal. Sometimes, adding a larger amount to your savings account could motivate you to keep going
Cut Current Spending
Earning extra income is always a great way to save, but another to help you reach your goal is to analyze your current expenses and determine where you can save some of your hard-earned money. I’ll never get tired of recommending that people cut their expenses. Even when you think you’ve cut your expenses down, they can easily rise back up again every few months so you must consistently audit your spending.
Today, as long as you pay for internet you can find many affordable ways to cut your expenses right online especially when it comes to entertainment and watching TV. I’m a big advocate for using Groupon for entertainment and online services like Netflix and Hulu provide top-tier programming and original series, as well as network and cable series, providing an alternative to cable and satellite services.
Netflix currently offers a free month trial, with their basic service starting at $7.99 per month, while their premium services, which allows for up to four different viewing profiles, costs $11.99 per month.
Similarly, Hulu offers a free month trial and charge $7.99 per month after that. However, if you don’t want commercial interruptions, you can opt for the $11.99 package. Make the most of your internet service by replacing cable and satellite for a fraction of the cost.
We actually have both Netflix and Hulu and still pay less than we would if we had cable TV.
You can also save on costs including other utility bills and your grocery bill. By being conscious of energy consumption and shutting off unnecessary lights and other electronics you can save on your monthly electric bills.
Your grocery bill can shrink by buying generic brands where possible. Canned goods, frozen veggies, and breakfast items are typically carried by different brands which allow for you to choose and save.
By implementing simple changes to your life you can reap the benefits of being financially savvy.
I even made sacrifices like avoiding any travel and skipped a vacation during the year in which I saved up $2,000 for my emergency fund. Once you start building your savings account up, you’ll start to feel that peace-of-mind that comes with knowing that you and your family will be financially prepared fo rthe unexpected.
You’ll be able to keep a roof over your head, have food in your fridge, handle unexpected medical bills, fix your car when you need to, and so much more without having to stress out about money. It all starts by saving up that initial $1,000 balance.
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