The Small Business Times

How To Save $5,000 In 6 Months

Many people believe that to save $50,00 in 6 months is impossible. However, it’s not as much of a challenge as it may appear at first glance.

A savings goal of $5,000 is achievable if you go at it right. Whether you need the money to pay off an unexpected bill or take a long overdue vacation, it’ll require a plan. You’ll also need to build a habit of saving and hone your discipline. There are some lifestyle changes to make and new money-management techniques to learn.

Suggestions to Save $5,000 in 6 Months

Follow the seven steps we’ve outlined in this post, and you’ll meet your savings goal in no time. 

  1. Create an Action Plan

The easiest way to save money quickly is by making a plan. It’ll be your north star as you work towards your savings goal. A plan will also help you reset if you go off track.

Decide how you’re going to save money. Either boost your income or decrease your costs. There’s also the option of doing both if possible for you.

We’ll discuss strategies to increase your income in an upcoming step. In addition, we’ll explore ways to cut down on your spending.

Your action plan should also include the source of your savings. Decide if you’ll save a portion of your salary immediately when you receive it. Or if you’ll save any money that remains after your expenses are paid.

Ensure you see your action plan every day. Make a written note and place it on your desk or stick it on a wall. That way, you’ll have a constant reminder of the actions you need to take to reach your savings goal.

  1. Set Clear Goals to Reward Yourself

Goals paired with an action plan are a surefire way to save $5,000 in 6 months. While you can plan how you’re going to save, setting clear goals will make saving time-sensitive. 

A goal should not be vague. Otherwise, it’ll feel daunting and unachievable. It should follow the SMART framework:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-based

You’ll clearly understand what you’re working towards by setting SMART goals, and you can track your progress.

While saving $5,000 in 6 months is a goal, it’s too broad. Looking at such a significant number is also daunting. Therefore, decide how much you’ll save per month or week within 6 months to meet your savings goal.

This can be a percentage of your income or a fixed amount. A good goal might be to save $210 per week by working overtime for the next six months. Or: I will save 15% of my salary every month for 6 months.

Ensure the goal you set is achievable. In other words, don’t set an unrealistic or out-of-reach goal for yourself.

You could also consider setting goals to lower your spending. For example, you could spend $50 less per week by eating dinner at home. Or go as far as implementing a zero-spend challenge.

As you meet your goals, you’ll be rewarded with a sense of achievement. 

  1. Draw Up a New Budget

Whether or not you’re new to budgeting, having one will help you save money faster.

Perhaps you already have a budget to work from. In that case, evaluate your current expenses. Is there any spending you can forgo for the next six months? Are there irregular expenses that will show up in the next six months, such as insurance premiums?

Starting a budget from scratch will also require an assessment of your current expenses. Refer to your bank statements to determine your spending over the past six months. From there, create a monthly spending plan with necessary expenses only. 

Ensure you’re spending within your means and with your savings goal taken into account. Eliminate any needless expenditure from your budget and focus on essentials.

  1. Make Some Lifestyle Changes

The most significant hurdle keeping you from reaching your savings goal could be your lifestyle. Especially if you live beyond your means, all the goals, plans, and budgets you create will go to waste.

Find ways to cut costs by reducing nonessential spending. This comprises entertainment, subscriptions, shopping, eating out, and hairstyling or nail appointments.

Cut small amounts from these categories rather than one category altogether. Alternatively, rank these categories by priority and eliminate the lowest.

You can also cut costs with essential expenses. For instance, you can shop for groceries at a different supermarket that provides cheaper alternatives. Or, instead of taking a rideshare, opt for public transport.

You might also be in a position to discuss a reduction in your rental payments with your landlord. If that doesn’t go your way, you might consider canceling your food delivery service. Or limit impulse buying by waiting 24 hours before making a purchase.

While these changes to your day-to-day may be uncomfortable, it’s the best way to save $5,000 fast.

  1. Increase Your Income

Now that we’ve looked at ways to reduce your expenses let’s explore strategies to increase your income. There are a myriad of options  when it comes to making more money. You can start working overtime or work towards a promotion.

If these opportunities aren’t at your disposal, think about one of the following additional income sources.

  1. Freelancing

Almost anyone can start a freelancing career these days. All that’s required is a skill and a positive attitude. 

The best part is you won’t have to leave your current job. You can find short-term jobs through platforms like Fiverr, People Per Hour, Upwork, and Work For Impact.

These marketplaces have jobs for almost every field, from bookkeeping to graphic design. And you can usually earn a decent amount of money. 

While it can take time to build a reputation and get clients, it’s a flexible income source. Freelancing allows you to use your existing skills to earn money without learning something new.

  1. Passive Income

Passive income is money you receive without actively working to earn it. For instance, you can do affiliate marketing, which involves advertising other people’s products to earn a commission. 

Affiliate marketing doesn’t require much effort. By creating a social media post or writing a product review, you can earn money months after the publishing date.

A blog can also be a passive income source. You can earn money from advertising. If that isn’t something you’re up for, you can start a faceless YouTube channel or invest in real estate.

The list of passive income sources is exhaustive. There are several ways to earn money today without putting in the hours. It’s the ideal choice for someone with a full-time job that doesn’t have enough time for freelancing.

  1. Side Gigs

With the gig economy, almost anyone can earn extra money. You can do many jobs that don’t require expert knowledge or technical knowhow.

This includes small jobs, like running errands for someone or repairing leaky faucets. You can find gigs on platforms like Thumbtack or TaskRabbit. You can also earn money by reading books.

  1. Start a Small Business

If none of the above options work out for you, you can start your own small business. It doesn’t need to be anything elaborate. Even selling handmade candles or gift baskets can be a lucrative venture.

Although it’s also a considerable time commitment, it can be a good income source. And it’ll help you meet your savings goal faster.

  1. Create a Separate Account for Your Savings

With a savings goal of $5,000, it’s vital to keep your finances separate. The money you’re saving, using for expenses, and/or holding for your business shouldn’t be in one place.

If you’re saving your money in an envelope or a case, the same goes. Keep it separate from what you’re using for household expenses or day-to-day spending.

You’ll be less inclined to spend your savings if you store your money separately. You’ll stay on track with your savings objective. In addition, if you aren’t tracking your progress, it’ll be difficult to determine how far you’ve come with a savings account.

  1. Set up Automatic Transfers to Your Savings Account

Set up automatic transfers instead of manually transferring money to your savings account when you’re paid. If money is automatically transferred to your account, you won’t have to worry about falling behind on your savings goal.

Ensure you set this up before you begin with your savings goal. If you prefer not to, create a habit of transferring to your savings account every week or month.

Bottom Line

Saving money isn’t as difficult as you think. Although it takes discipline and creating a habit of putting money away, almost anyone can do it.

You can do several things today to save $5,000 in 6 months. First, ensure you have a solid action plan and realistic goals to accompany it. Also, create a budget and cut unnecessary expenses out of it.

Making some changes to your lifestyle will help you save money faster. In addition, avoid mixing your finances in one account.

By implementing the steps in this guide, you’ll reach your goal in no time.