In recent times, the Covid-19 pandemic has put a significant strain on many family finances. According to a survey from the personal finance website Banknote, more than half of Americans have less than 3 months’ worth of savings.
This means that any emergency or otherwise unplanned expense could lead to significant issues for many such people. Financial experts typically recommend having set aside three to six months’ worth of emergency funds.
As such, it’s always a good idea to be able to set some money aside. Whether it is to max out your 401(k) savings plan or just to set some money aside for tough times, this is true. Growing such an emergency fund is essential.
In this guide, we will go over how you can do so and how to save $5,000 in 3 months. This will set you up to be able to keep your finances in check. Let’s look at some essential steps you will need to follow if you want to save $5,000 in 3 months!
Track Your Expenses
First things first, if you are looking to take saving seriously, you need to take account of your finances as they are. This is imperative for you to see what your current state is and plan your savings drive correctly.
The first step that you will need to take is to track your expenses correctly. Keeping an eye on your monthly payments will give you an accurate picture of what your income sources are and where your money is going. So what should you be doing to track your expenses?
Review your Statements
The first thing you’ll want to do is to review your past statements. Nowadays, doing so is simple enough with many services that let you do so on your phone or computer. Make sure to check your bank statements and track your spending habits daily.
When we’re talking about checking your statements and expenses, this includes your utility bills, subscriptions, eating out, and transportation costs. Anything that is an expenditure should be tracked and categorized, and this will let you know and identify what you are spending too much on and where you can cut down.
Set A Budget
Once you have your expenses looked at and know where you stand, you can move to set a budget. Here, you set your goals for how much you can reasonably save and your spending limits.
What these goals are should be ambitious but not unrealistic. Ambitious in the sense that you want to be able to make an effort towards saving. You want to feel that you are making a significant impact at the end of the month.
Your budget should also be realistic in the way you want to set goals that you can feasibly achieve. Setting goals that you can in no way reach dissuade you from even trying. You also want to keep your well-being in mind in this matter.
Setting a budget that allocates no cash towards friends or your wants will make the experience horrible. You want to still be able to enjoy your free time while still setting money aside. In this case, check for alternatives for what you can do for enjoyment.
If you frequently eat with friends at restaurants, you can cut that down a bit by finding other options. These can be things like having a dinner party at home or a picnic in the park.
If you are looking to save up $5,000 in 3 months, you will be looking to set aside 1,700 every month. This should bring you just above your goal.
However, you may want to increase that amount a bit. Setting the amount to $1,800 will give you that margin when you feel like treating yourself a bit. While this may seem ambitious, this can be quite feasible.
Use A Budgeting App
One way to keep an eye on what you’re spending is with budgeting apps. These are designed to help you track your spendable income and ensure that you are keeping on track of your expenses. Examples of these are the likes of Mint, and You Need a Budget (YNAB).
These will work as long as you are willing to log all your day-to-day spending. Having them on your phone should make that easy enough, though. That being said, sticking to your budget is still a question of self-control and dedication, but it is definitely worth it.
Identify Options For Change
As you track your expenses, you will discover what is setting you back economically. While you may think that some payments are costing you a lot, others that you haven’t thought of could be more critical.
Eating out may seem insignificant when you do it once. However, at the end of the month, going out frequently will accumulate. Keeping track of these expenses will help you identify where you are spending more than you should be.
What are you paying for that you really should not be?
What old subscription do you still have that you’ve not accessed in months? All these are things that you want to be making decisions on at this point. If you see that you are spending too much eating out, take advantage of the opportunity to improve your cooking skills.
What exactly are some examples of changing your habits? Let’s take a look.
Cancel Your Subscriptions
The problem with subscriptions is that we all sign up for them and then forget that we had them running. As we sign up for more and more, these accumulate to put a significant dent in our budget.
Decide on what subscriptions you want to keep and which subscriptions you can do without. After that, you can have those go to a savings account directly, and this way, you don’t even have the temptation of spending it.
Change Your Grocery Habits
Another easy way to save is at the grocery itself. The first thing to do is to move from shopping at the more expensive to discount supermarkets. You’ll see that the cost of your shopping will go down without you even realizing it.
These discount stores like Aldi or Lidl have products usually as high quality as your name brands but at much-discounted prices. There’s a reason that they have become so popular around the world.
Another step is to keep track of coupons and special offers. You will be able to get the same products at a significant discount.
If you have the storage and can transport it, buying your non-perishable foods at a wholesaler may be worthwhile. Even though wholesale clients are usually businesses, many do provide the option to buy for personal use.
Buying wholesale will get you the same products that you usually buy at retail but with discounted prices. Buying in bulk will also generally mean that you have to go shopping less frequently, saving you the time and effort you can now spend on other activities.
Plan your Groceries
Buying in bulk and taking advantage of special offers only works if you have your week and month planned out.
Planning what you are going to eat for the week can make keeping your budget much more manageable. You can do this by meal prepping, this is essentially cooking the meals that you will be eating for the week all at once and freezing them.
Planning will help you keep on track with your grocery budget. If you buy and prepare something in the moment, you are more likely to deviate from your budget goals.
Review your Bills and Plans
Lastly, take a look at what your cell phone, internet, and cable plans look like. Do these adjust to your needs? Are you paying for services that you don’t use? If that is true, it’s time to change your plan. Find the cheapest plan that covers your use cases.
If you have separate cable and internet bills, ask if these can be bundled. Depending on your carrier, you can see some savings in this as bundle plans tend to be cheaper than individual ones.
You can also talk to the cable companies directly. If you tell them that you have difficulties keeping up with the payments, they may offer you a discount.
Keeping an existing customer is beneficial to these companies, so you may find yourself paying less. If they don’t, you can move to the less expensive competitor or cancel the service entirely. With the proliferation of streaming services, cable services have started looking like outdated and costly products.
Find A Side Gig
When learning how to save $5,000 in 3 months, you’ll find different ways to do so. While creating savings aims to reduce what is going out, the other option is to increase the amount flowing in, and you can do so by growing and finding new revenue streams.
If you have skills that you are not taking advantage of, try putting them to use. With the current gig economy, there is always a way for you to make more money. If you go online, you will find dozens of freelance websites, including Fiverr and Freelancer, that will connect you with people willing to pay for your skills.
Freelance writing, coding, and design are practical options that can get you another source of income right from your home.
Find Something You Enjoy
You can even make your hobbies work for you. If you like doing sports, you can teach them to other people; this will let you enjoy your hobby while still adding to your income.
Another option for you is to open an online store to sell things that you make in your free time. Nowadays it’s easy enough to open such a store even without having any prior experience.
Making an additional income has become easier than ever. On top of that, all these income sources are bonus revenue streams. As they are not accounted for in your regular budget, they can go directly to your budget. If you need ideas, take a look at our side hustles section!
Get Outside Help
While checking out our article on saving money may be a good step forward, you may still need some additional help. In that case, it may be a good idea to ask for help from a trusted third party or a financial coach.
What is a financial coach?
Just like a fitness coach will help you get into shape, a financial coach will help you get your finances into shape. They will help you improve how you handle money and meet your financial goals. As they provide a personalized service, they will help you set reachable goals and stay on top of those specified.
Even if not a financial coach, having a trusted person look at your spending habits may be a good idea. Having an unbiased person look at how you are spending your cash could put things into perspective for you.
How to save $5,000 in 3 months is a question that has different answers depending on your case. For some, this may be a simple case of reducing what you are spending now, and you’ll find yourself saving those $1,800 monthly.
Others may find this process a little more complex and will have to find means to find other sources of income to make sure that they have enough to meet those goals.
That being said, meeting that saving goal can be a stretch for some, and these suggestions in this article are equally valid in those cases as well. Keeping realistic goals in mind is essential when planning your savings, and this also includes keeping yourself in mind!
There’s no reason not to treat yourself to small rewards for reaching goals and milestones. Doing so will even make saving more fun.
You will see your savings account grow as you frequently keep track of your expenses and keep good financial habits. Having savings will make you feel more comfortable and confident on top of leading towards a better financial future.
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