You’re here reading this because you want to save $1000. Let me just start with telling you that I’ve been there — I distinctly remember the day I went and cashed in a few bonds I had because I had nothing to my name and wanted a little something for a down payment on a car. It was there, sitting in a car dealership, that I had that “AHA” moment (it was actually more of a ‘AHH’ I’m panicking moment, but nonetheless) and I sat there mulling things over – “how am I going to pay for something when I really need it? What happens when something really goes wrong? Are my kidneys even good enough to be worth something on the black market?”
Once I settled down from that, I made a plan — here’s a few real steps that I took (and that you can also take) that led me to save my first $1000 without having a six figure income or my parents paying my way.
- Make a high yield savings account
This is the quickest, most simple way I have ever made my money work for me. It doesn’t matter if you have $25 or $25,000, everyone can and should have a high yield savings account.
Many online banks are offering competitive rates somewhere around 1.85% interest with no minimum balance required. That’s right, all you have to do is put your money in there, and it makes you 1.85% annually. Just for reference – as of today, many brick and mortar banks have interest rates somewhere around 0.03%. If you have $1000 dollars in your high yield savings, you’ll see a return of around $18.50 per year vs. $0.30 CENTS for the entire year at a typical brick and mortar bank.
The biggest downsides to this type of account – you can expect that it will take a few days to have your money transferred since this is an online only bank, so have some money readily accessible for the day to day in your checking account.
- Don’t touch your savings account
I know this may seem obvious, but we’re saying it anyway – only touch your savings when it’s either for an emergency or something you’ve been saving for. Easier said than done, but with learning to budget with what you have readily accessible, you won’t need to touch your savings account, which leads us to the next point…
- What you can’t see, you can’t spend
Set up automatic deduction with your employer. Just get it done – go right into work tomorrow and set it up. Not having the money in your hands and just setting up that $25 dollars a pay check to automatically go into your high yield savings account is going to change the way you save money. If you don’t see it you don’t miss it, if you don’t miss it you don’t spend it. I know for some that are living paycheck to paycheck this may seem impossible, but once you’ve adjusted to this deduction, you’ll be thanking yourself because you’ll have a nice little nest egg to show for it.
- Save your tax return
I cannot stress this enough – do not, I repeat, DO NOT, make plans for your tax return money ahead of when you get it. Plan to save it. Just pretend it doesn’t exist and put it in your savings account. I can’t believe how many people I see who don’t have anything set aside, but have a weekend worth of partying planned for their income tax return. This will be your quickest way to saving $1000.
- When you put in the extra time – save the extra money
If you’re putting the OT or you’ve got your side hustle making you some extra money – save it. Take the extra and put that right in your savings account; it’s a surefire way to make sure that extra cash is going to good use for your future.
- Cut the coffee
I know – we can’t function either without that chemically induced happiness, but forming that habit of making it at home and taking it on the go will save you loads of money. Lets take an example: let’s say you spend $2.00 on a coffee 3 days a week, $6 x 52 weeks = $312 per year. That combined with your tax return and guess what? You just saved $1000.
- Pay in cash
Something I recently added into my lifestyle that has made a huge change in the way I spend money is taking out a certain amount in cash and allotting that to anything extra I want to buy for the week. So lets say you take out $100 dollars per week in cash, use that cash to pay for all your “fun” spending for the week (i.e. coffee, lunch date, shopping at the mall, etc). You’ll be shocked how much more you pay attention to it when you aren’t just swiping that plastic.
- Cut down the credit card
Speaking of plastic – put down the credit card. It’s so easy for credit card spending to get out of control in a hurry. If you’re spending more on your credit card in a month than you can pay off, then you should try going a few months without the credit card so you can gauge how much you really have available to spend per month. It will also give you an opportunity to pay down some of the credit card debt without adding anything to it.
- Cut the cord
Get rid of cable. We love our TV shows but with streaming platforms so readily available in the forms of things such as Hulu, Netflix, Amazon Primevideo, etc. there’s really no need to keep spending those hefty cable bills. Heck, some of the streaming services are even offering cable packages for somewhere around $35 a month so you can really have the best of all worlds.
- Bag it – don’t buy it
Make your own lunch for work. At one point or another I was spending $10 a day on food from my job’s cafeteria. At $10 a day x 52 weeks in a year = $2600 a year spent on lunches. Now I make my own and it costs approximately $3.00 a day for lunch, saving me about $1820 a year. Well, that’s a quick way to save $1000. The same logic can apply to going out to eat for any meal of the day — when you’re trying to save money, make meals at home.
With any new goal you are trying to achieve, you have to start somewhere. You can take some or all of these pieces and work them into your life in some capacity, but at the end of the day the key to saving money is changing the way you are currently doing things. Plant the seed — it starts small but with time and dedication you’ll watch your money grow.
What are some things that you guys have done to successfully save your first $1000?
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