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You’re probably looking for a secret money-saving plan for saving fast.
I hate to break it to you, but no such strategy exists. The good news is that the faster you accept this, the faster you’ll create a money-saving plan to save your first $5,000.
I won’t share a generic list of 100+ ways to save money because that won’t help you. You’re a busy individual who’s only looking for the best of the best strategies.
That’s why I’ve narrowed this list to 15 strategies. If you’re ready to save your first $5,000, keep reading.
1. Get Clear on What’s Necessary
When was the last time you reviewed your subscriptions?
If it’s been over a few weeks, you may be paying for services you don’t need. Review your bank statement from the past 3–6 months and note recurring payments. Then on a separate document, list your expenses and their amount.
Once you have this list, note which ones want vs. need. For example, Netflix, Hulu, and Amazon Prime are “wants.” Your cell phone and car insurance are “needs.” As you’re starting, cancel one or two subscriptions from your “wants” section.
Because if you cancel too many subscriptions at once, you’ll likely resubscribe. Building new habits take time, so it’s better to be patient.
2. Avoid Fancy Food as Much as Possible
It may not seem like a lot at the moment, but spending $10+ each time you eat is taking a toll on your savings.
Data shows that the average American spends anywhere from $3,000-$6,000 dining out yearly.
But you still need to eat. The best way to avoid eating out too often is by cooking your meals.
You don’t need to be a top chef. Learn how to cook new recipes from online tutorials. If you currently eat out more than two times per week, slowly start eating home-cooked meals.
3. Be a Pro Negotiator
Use a list that contains all your expenses and categorize them from largest to smallest. Call your service providers to negotiate a lower price. If you fail at negotiating, hang up and call again.
Repeat this process until you’ve negotiated your most significant expenses. Companies like BillCutterz negotiate on your behalf but take a part of your savings. That’s why you should negotiate your bills.
Leverage the relationship you’ve had with your provider. I’d negotiated my cell phone leveraging I was a customer for years.
I’d received a $10 monthly discount, and all it took was a 5-minute phone call.
4. Learn to Be a Bad Spender
You can trim your expenses to the bone, have a high salary and still be a financial mess with bad spending habits.
To avoid overspending, make it inconvenient for yourself to do so. For example, only store your debit card if you have an Amazon Prime account. This will at least prevent you from getting into further debt.
This works because you’re forced to think about the items you’ll buy since you’d use disposable money. To take this a step further, ask yourself if you’d feel happy about this buy 30 days after buying an item.
Using these methods will cut most irrational purchases.
Also, be diligent with what you read in your email box. Every day your inbox gets flooded with promotional emails. Unsubscribe from these emails to remove the temptation to buy things.
5. Be Laser-Focused on Crushing Debt
Wouldn’t it be nice to keep more of the money you earn?
Unfortunately, car loans and credit card debt is normal for most Americans. The average household credit card debt is $6,000. Having debt can impact the amount you’d be able to save.
An important factor in eliminating debt is stopping digging into it. Since you’re human, you’re prone to make mistakes. That’s why you should automate the debt-paying process as much.
For example, schedule your recurring payments automatically each month. Then, use as much of this extra money to make principal payments towards your debt.
6. Stop Trusting Yourself to Save
Have an automatic budget in place.
You can’t trust yourself to save money because you’ll always have reasons to spend it. Automating my savings has been the key driver for saving thousands each year. But you can’t just guess the amount you’d automatically save.
You need to be precise–that’s why you need to understand your spending patterns and cash flow. The perfect tool to help you do this is Personal Capital. Input your information and navigate to the Cashflow tab to view your income and expenses.
Decide how much you want to save and work backward from this.
7. Leverage Powerful Tools to Track Your Expenses
If you’re using tools like Personal Capital or Mint, most of your financial data is being tracked.
But you still need to review this data to make sense of this information. How else would you be if you were on track to reaching your financial goals?
Set a recurring monthly reminder to review your budget and note areas where you need to improve. Aside from reviewing your expenses, get into the habit of login into your bank account once per day.
This doesn’t need to be thorough and should last within 2–5 minutes. Your goal for logging into your bank account is to ensure that your finances are in good standing. You’ll catch destructive spending patterns quicker if you review your finances daily.
8. Create Your Money-Saving Plan Using a Budget
You need to limit how much you spend and save.
Otherwise, you’re blindly using your money. To get intentional, you need to have a budget to help you reach your goals. Here’s what a good budget will help you achieve:
- Saving money
- Pay off debt
- Control your spending
More importantly, a value budget will help you use money in a fulfilling way. It’s easy to get caught up with work, family, etc., and spend your money unintentionally. A budget with a proper money-saving plan can help you spend your money on things you value while not going further into debt.
9. Focus on How You’ll Spend Your Money
Without goals, you’ll never achieve anything.
At best, you leave it to chance to reach what you desire. That’s why you need to set clear financial goals.
Don’t believe me? Leave $20 in your wallet for a week and see what happens. You’ll probably spend this money on something you didn’t plan.
To avoid this, you need to consider how you’ll want to spend your money. You already have the goal to save thousands of dollars, so use this as your north star. Take it a step further, making this goal SMART.
For example, “I’d like to save $5,000 within 12 months to prepare for an emergency.” Now you’re specific and know why you’re saving this money. When obstacles come your way, you’ll be ready to overcome them.
10. Grow Your Money With Banking
Not all saving options are equal.
Save in the stock market, and you’ll have a higher ROI (return on investment). Save in a regular savings account and earn anywhere from .01–2% interest.
So how do you choose your best option?
If you’re reading this article, you’re looking to save your first $5,000. And, if you’re looking to save this money within a year or two, investing this in the stock market won’t do you any good.
Your best bet is to save this money in a savings account with the highest interest. Googling “top savings accounts” will show accounts paying the highest interest. Use Personal Capital to view your progress to stay motivated along the way.
11. Choose to Grow Your Income
Most people spend their time and energy saving money and not growing their income.
Saving and managing your money is essential. After all, without nailing this down, you’ll never reach financial independence. The problem is that there’s a limit to how much you can save money.
Once you have a good budget and are saving money, it’s time to start earning more. Most people skip this step because it’s hard. But, because it’s hard, it’ll be much more rewarding once you build new revenue streams.
Starting a business is how many entrepreneurs achieve financial freedom. It’s not easy to work extra hours after a long day at work, but it’s possible when doing something you love.
If you enjoy garage sales, wake up early on Saturdays to buy items you can flip for a higher price. If you enjoy building websites, build websites for small businesses on the weekends. Use any extra money you earn to pay off debt and save faster.
12. Track Your Progress to Motivate Yourself
Saving thousands of dollars will be one of the hardest things you’ll do if you’ve never saved this amount. The good news is that once you save this much money, you’ll be able to save more. To prepare yourself, expect setbacks.
The truth is you’ll lose motivation along the way. At times you’ll want to quit and spend this money instead. Avoid quitting by reviewing your progress daily.
Write down your progress in a journal or use Personal Capital. Surround yourself with success stories. Find out what works for you.
If you know, you’ll get discouraged watching your money grow slowly–review your balance once every 3–5 weeks. But, if you get motivated watching your progress daily, do this instead.
13. Hone Your Mindset to Be a Money-Saving Machine
Saving thousands of dollars happens before you save your first dollar.
Listen to Podcasts about others who’ve reached financial success and overcame financial setbacks. Read books about people overcoming obstacles. Learn more about how your mind works to gain more control over yourself.
Be obsessed with becoming the best version of yourself.
When you do, nothing will hold you back. Saving $5,000 isn’t only about saving money, it’s about the person you’ll become through the process.
Be Someone Who Can Save Thousands
Imagine saving $5,000, then $10,000 and more.
Most people never save this much because they blindly start saving without a proper money-saving plan. Saving $5,000 takes effort, sacrifice, and discipline. And if I was able to achieve this, so can you.
Save as much as possible, then focus on growing your income. Listen to motivational podcasts, read books, and surround yourself with like-minded people. Eventually, you’ll save thousands of dollars and earn a higher income.
Currently, you’re not the person who can save $5,000. But, little by little, as you work on becoming better, you’ll grow into this person. Someone who can save thousands of dollars earning a high income.
Are you going to be like the rest and settle for average?
This article originally appeared on Financially Well Off.