New year, new you, new finances? Kick start your financial goals with this $1000 Savings Challenge! I’ve suggested several different savings goals if you want to up the ante. This $1000 savings challenge is a great way to establish an emergency fund if you don’t have one. Or maybe you’re looking to start a sinking fund for a future trip or addition to the family. Whatever the case, let’s get started saving money!
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How to Stash Away Savings
First things first, if you’re going to start this $1000 savings challenge, you need to have a plan on where you are going to keep these savings. Because if you don’t have a plan you’ll probably end up going “Oh yay! Extra money!” and spend it (I know I would)!
You have several options when it comes to stashing cash away. It just depends on which one is easiest for you to manage.
- Open a separate online savings account (harder for you to withdraw funds – my preferred method)
- Use cash envelopes (if you use a cash based budget)
- Open or use a separate savings account at your local financial institution
$1,000 Savings Challenge
I personally find savings challenges that change dollar amounts each week to be confusing, hard to keep track of and hard to budget for. So for this $1000 savings challenge, let’s keep things consistent. Consistency is key to building any new habit, right?
To understand how to save $1000 a year, you need to do some math.
$1000 divided by 12 months = saving $84 a month
$1,000 divided by 52 weeks = saving $20 each week (rounded up)
$1000 divided by 365 days = saving $3 a day (rounded up)
Due to rounding (because who needs a jug full of change at the end of the year) you would actually save $1095 by the end of the year. That also gives you a little flexibility in getting to $1000 if you take this approach.
The seasons of life approach to saving $1000
Say you’ve made a list of your annual expenses or expenses that only occur once a year. You notice that you’re spending more over the summer, back to school, and at Christmas time.
So instead of sticking to a rigid $84 a month, you can load up on savings during the financially lighter months and ease off during the more financially pressing months. It could look like this:
- January $150
- February $125
- March $100
- April $100
- May $75
- June $75
- July $75
- August $50
- September $100
- October $75
- November $50
- December $25
Whichever way you choose to do the $1000 savings challenge, just remember that you’re accomplishing a lot by saving money!
$5,000 Savings Challenge
Think of this $5000 savings challenge as option #1 for upping your savings game. Maybe you have fewer expenses, you have more disposable income, or maybe you’re ready for a bigger savings challenge. Let’s break it down!
$5,000 divided by 12 months = saving $417 each month (rounded up)
$5 000 divided by 52 weeks = saving $96 each week (rounded down)
$5,000 divided by 7 days = saving $14 each day (rounded up)
This seems like a lot of money to save each month. BUT let’s think of how you can hack this to be easier!
- Set up your payroll to automatically put $209 each paycheck into a savings account so you don’t even see the funds (assuming you’re paid bi-weekly or twice a month)
- Increase your retirement contributions (usually done by an employer) to $209 each paycheck
- If you don’t want to adjust your payroll, set up an automatic transfer with your bank to move money from your checking to savings account
$10,000 Savings Challenge
The biggest savings challenge that we’ll look at is the $10,000 savings challenge! This savings challenge is great for those who want to seriously beef up their emergency funds or save for a specific, large dollar purchase like a vehicle or home (although any of these challenge would be a great way to get started).
Let’s crunch some numbers.
$10,000 divided by 12 months = $834 saved each month (rounded up)
$10 000 divided by 52 weeks = $193 saved each week (rounded up)
$10,000 divided by 365 days = $28 saved each day (rounded up)
The $834 that you’d need to save each month is a whole paycheck for some and that is not lost on me. It is quite a privilege to be able save this much cash in a year. When we lived on one income, saving that much each month would have meant reducing our spending to an extreme low.
However, if you find yourself frivolously spending $834 or MORE each month, consider this the best challenge for you! Could you stash away that money instead of spending it on things you don’t really need?
Where do you find extra money in your budget?
The hardest road block when it comes to saving money is figuring out where it will come from. Something’s got to give and you’ll usually find it after a thorough spending audit.
Live below your means.
The trick to saving money is spending less than you earn – much less than you earn.
63% of Americans are living paycheck to paycheck. That’s a frightening statistic! While some of those families likely live paycheck to paycheck due to low wages and increased inflation, others are due to an inflated lifestyle. Meaning, the more they earn the more they spend. So to save money you need to live below your means. This looks like:
- Consuming less
- Using up what you already have
- Making do without buying new
- Mending and repairing what you can
- Living a simpler life
- Using a list when you shop for everything
- Meal plan and make simpler meals
Briefly mentioned above in the $5,000 savings challenge, automating your savings can be a huge help. When you don’t see the money, it’s like it doesn’t exist at all so you don’t spend it!
This trick might take some getting used to when you budget. Savings automation can occur at any stage in your monthly budget: direct deposit into your savings account, automatic payroll deductions to your retirement account, or a transfer via online banking from your checking to your savings.
Find frugal swaps.
This is the most satisfying way to save money – frugal swaps! It’s an almost fun way to game-ify your savings challenge. How much money can you save by finding a frugal way to do something? Ideas include:
- Have a no-spend month
- Eating through your pantry before you grocery shop – how long can you go?
- Brew your own coffee – hot or cold brewed
- Make and take your own lunch to work (maybe using our ultra frugal lunch recipe!)
- Cook in bulk and freeze leftovers for a quick meal later
- DIY cleaning supplies – vinegar and drop of dish soap in a reused spray bottle works wonders on most cleaning jobs
- Shop secondhand – you can probably find everything you want used and much cheaper than buying new!
- Do at-home haircuts (watch some YouTube first!) with clippers and scissors
Once you find ways to save money, it can snowball into find cheaper ways to do so many other things!
Build a Budget
Creating a budget to help you with your $1000 savings challenge doesn’t have to be super complicated.
- List all essential expenses
- Add in your savings goals
- Calculate all your debt payments
- Total your income
- Question all non-essential expenses and make cuts if your expenses are more than your income
Budgeting is just watching where your money is going – it’s telling your money where to go! Savings is just paying yourself first and should be considered an essential expense.
What savings challenge will you start this year? What do you think the hardest/easiest parts will be? Let me know in the comments! Happy savings!