How to Save $5,000 in 6 Months
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Saving $5,000 in 6 months is a pretty aggressive savings goal for most people.
Maybe you need $5,000 to pay off your credit card debt. Perhaps you have a big bill coming due in six months or you need to establish your emergency fund. Or perhaps your goal is more interesting, like saving for a trip, a new car, or a down payment on a house.
Regardless of your reason, if you want to aggressively save money, you need an aggressive money saving plan.
Is It Possible to Save $5,000 in 6 Months?
It is possible to save $5,000 in 6 months, but you’ll need a budget and a strong commitment to saving. To save $5,000 in six months, you’ll need to put aside $833 per month. That money has to come from reducing expenses in your budget, earning it in extra income, or a combination of the two.
How to Save $5,000 in Six Months
Here’s how you get started:
Review Your Budget
Expecting to save $5,000 in six months without budgeting for it isn’t realistic. A budget serves as your monthly spending plan and your guide for funneling more money into your savings. Start with a thorough review of your income and current expenses.
Determine your projected monthly income from all sources for the next six months. Will you bolster your income with overtime or are you expecting any major cash infusions, like a tax refund or annual bonus? If you get paid biweekly, is there a three paycheck month coming up soon?
Grab your bank statement and analyze your monthly spending for the last six months. Project out your expenses for the next six months. Don’t forget to account for any upcoming irregular expenses, like your annual car registration or insurance payments.
Once you know what you have coming in and going out over the next six months, you can figure out how to save $5,000 in 6 months.
Identify Expenses to Reduce or Eliminate
We all spend money we don’t technically have to from time to time. If you’re motivated to save $5,000 fast, you can almost certainly find ways to reduce your expenses. Start by taking a look at your discretionary spending.
You might decide you can live without some of your subscriptions or memberships for six months or you might decide to eliminate them for good. Other unnecessary spending you could cut includes things like entertainment, eating out, hobbies, and clothes shopping. You might find it easier to cut lower amounts from multiple budget categories instead of eliminating one or two entirely.
Once you’ve taken a hard look at all the discretionary expenses you can survive without, consider ways to lower costs on the things you can’t avoid spending money on in the next six months. Things like housing, transportation, utilities, insurance, and food costs. These tend to be your largest expenses, so it’s worthwhile to see if you can come up with ways to save or cheaper alternatives.
Maybe you can rework your food budget to save money on groceries, reduce your commuting expenses, find lower cost insurance plans, and switch carriers to save on your mobile phone bill. You might even be able to lower your housing costs by renting out a spare room or negotiating a rent reduction.
You could also consider doing a no spend challenge, where you commit to not spending any money you don’t have to. You pay your bills, take care of your basic living expenses, but that’s it. You spend zero on your discretionary income categories.
A no spend challenge is rather extreme and continuing like that for six months may be unbearable for you and your family. You can definitely save a lot of money relatively quickly if you lower your cost of living by cutting out all unnecessary expenses as long as you can, though.
After going over everything you spend money on, what if you cut expenses down to the bone and it doesn’t add up to the $833 in monthly savings you need in order to come up with $5,000 in half a year? If your money saving plan isn’t enough, then it’s time to look for ways to generate extra cash.
Sell Stuff You No Longer Need
If you go through your house room by room, you’re bound to notice things you don’t need or don’t use anymore. You might spot unneeded furniture, clothes, kid’s toys, sporting goods, electronics, appliances, exercise equipment, books, or something else that may appeal to a potential buyer for the right price.
You could have enough stuff to hold a garage sale or you could list your items for sale online. If having a yard sale sounds like a good way to make some fast money, check out these 12 yard sale hacks to maximize your profits.
If you’d rather sell your stuff online, you could sell your clothes on Poshmark, use one of several popular apps for selling used furniture, or sell on established platforms like eBay, Craigslist, or Facebook Marketplace. When you sell online, make sure you post high quality photos and accurate descriptions of your items to avoid any customer service hassles.
Selling stuff you no longer need generates some quick extra cash for savings and declutters your house. Watching thousands of dollars worth of things you bought end up in someone else’s possession might also open your eyes. Maybe you’ll think twice before you buy another questionable kitchen gadget, an outfit you’ll probably only wear once, or some other item you don’t really need.
Increase Your Income
There are countless ways to make money. Having only a 6 month time period rules out longer term strategies like investing in the stock market or generating passive income through real estate. You need something that is viable and quick.
You could ask for a raise at your current job. There are a lot of factors that go into getting a pay increase like job performance, company health, and office politics so it might not be an option. You could also try picking up extra hours or overtime if it’s available.
If a raise or making extra money through your current job isn’t possible, you could get a part-time second job. A second job might not offer the sort of flexibility you need, however. You don’t want to jeopardize your primary job, alienate your family, or work yourself to the point of exhaustion and other health problems.
If going the employment route won’t help you save money fast, there are ways to increase your income without relying on a traditional full-time or part-time job. They involve work and the pay is unpredictable, but they could potentially help you reach your money goals.
Start Freelancing
One of the best ways to earn extra cash is to use your existing skills for freelancing. Small businesses and individuals hire freelancers for all kinds of one off jobs and ongoing work that can be done in your spare time.
Web design, graphic design, video editing, search engine optimization, and coding are always in demand. The freelance market is strong for those with excellent technical or computer skills, but being tech savvy isn’t the only way to earn extra income through freelancing.
Copywriting, translation, and bookkeeping are services you could sell and deliver online. People also offer all kinds of lessons and coaching from home, including music lessons, personal training, and language lessons.
The pay for freelance work varies widely depending on the type and scope of work. You might make a bit of pocket money or you could make the kind of money that rivals your day job salary once you get some experience under your belt.
Get started as a freelancer by doing a personal inventory of your skills and interests. Check out freelancing sites like Fiverr and Upwork for potential opportunities. Also pay attention to pay rates, which will help you price your services.
If you’re new to freelancing, check out these articles:
When you need money in a hurry, using the skills you already have is a much faster path to earning extra dollars than learning something new.
Pick Up a Side Hustle
Maybe you don’t want to have to find clients or compete with other freelancers for work. Or maybe you just want to do something different. For example, if you stare at a computer screen all day, you might not want to do more of that during your off hours.
Fortunately, the gig economy makes it possible to earn extra cash, even if you don’t have tech skills. There are all kinds of jobs people are willing to pay you for that don’t require professional experience or using a computer to do the work.
People post simple jobs you can do locally, like yard work and assembling furniture, on sites like TaskRabbit and Nextdoor. You can walk dogs via Rover.com or drive for DoorDash delivering food. If you like to read, you could get paid to read books.
Automate Your Savings
The best way to ensure you save $5K in six months is to periodically transfer money to a separate savings account. You can set up automatic transfers that coincide with your paydays or designate a certain day every month to move money to your savings.
Saving automatically is a good money habit to establish, it removes the temptation to spend, and it helps you stay on track toward your goals. After a while, you won’t even notice it.
Save $5,000 in 6 Months with Envelopes
If you’ve never heard of the 100 envelope challenge or 100 day envelope challenge, it’s a money hack popular on social media. It’s supposed to help you save $5,050 in 100 days. The challenge works like this:
- Number 100 envelopes 1 through 100
- Each day, draw an envelope randomly
- Put the amount of money equal to the number on the envelope inside the envelope
- In 100 days, you’ll have $5,050
While it does technically work if you follow it exactly, it’s difficult. 100 days isn’t a lot of time to come up with enough money to complete the challenge.
If you’re trying to save $5,000 in six months, you can use the principles of a 100 day money challenge, but extend the timeline out to six months. Rather than picking out one envelope every day, pick 4 per week for 25 weeks.
If you think you might have trouble sticking to your saving plan, adding an element of fun might help. For an additional money saving challenge idea or two, see: 12 Fun Money Saving Challenges.
Saving $5,000 Fast
You can save $5,000 in six months. It might require some lifestyle changes and it will require determination. You might have to reduce expenses or increase income or both, but you can do it.
Good luck!
More From Kinda Frugal
How to Create SMART Financial Goals
Saving Money With a Low Income
Image Credit: Unsplash
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