How can I save $20k in a year?

You can save $20k in a year by removing any non-essential items from your budget, selling things like clothes and jewelry you don’t need, and increasing your income to have more money to save. You can also use a high-yield savings account to grow your money faster and comparison shop for everything to get better deals.

Saving $20,000 in a year equates to saving $1,667 a month. Saving that amount of money in a year probably won’t be easy to do for most people, but there are ways to reach this goal if you’re determined and diligent.

How to Save $20,000 in a Year

1. Cook at Home

The average household spends around $270 a month eating meals at restaurants, according to the U.S. Bureau of Labor Statistics. A meal at a restaurant can be much more expensive than one you make yourself, especially when you factor in the tip and the gas you will spend to get you to the restaurant. You can save some of that money by deciding to cook at home rather than dine out.

2. Use Coupons Wherever You Can

Coupons can save you an average of $5 to $10 a week, according to Experian. That’s $5 to $10 more a week you can put toward your savings goal. You can get coupons for things like groceries, clothes, activities and electronics directly from retailers by mail, via email, or on their website. You may also be able to get coupons through third-party sites like coupons.com.

3. Cancel Subscriptions You Don’t Need

Self Financial, Inc reports that the average consumer spends nearly $400 a year on unused subscriptions. Getting rid of subscriptions that you don’t use or want frees up more money that you can contribute to savings.

4. Compare Prices for Everything

You should compare prices for different products and services to ensure you are always getting the best deal and are not spending more than you need to. You can put the money you save on these expenses toward your overall goal.

5. Cut Out Bad Habits That Cost You Money

Avoiding spending money on alcohol, smoking products, sweets, soda, or any other unhealthy habits can save you a lot of money. For instance, WalletHub found that people can save thousands of dollars every year if they didn’t buy cigarettes.

6. Negotiate Your Bill With Service Providers

Negotiate with companies like your phone, cable, or internet provider to see if they are willing to offer you a lower price or match the price of a cheaper competitor to keep you as a customer. The more you can save on your bills, the more money you will have for your savings goal. 

7. Try to Get Fees or Interest Waived on Your Credit Card

Try contacting your credit card company to see if there are ways to improve your credit card terms, such as lowering your interest rate, waving certain fees, or settling debt you have with them for a lower amount than you owe, for instance. A WalletHub survey found that 77% of people have been successful in getting their credit card company to improve their terms in order to keep them as a customer.

8. Sell Items You No Longer Need

You can turn your unwanted stuff, such as clothes, accessories or electronics, into cash by selling them on platforms such as Facebook Marketplace, eBay, and Poshmark. The money you get from selling these items can bring you closer to accomplishing your savings goal. 

9. Transfer Money to Your Savings Every Time You Get Paid

Set up automatic recurring transfers from your checking account to your savings account every time you get paid. This is referred to as pay-yourself-first budgeting, and it allows you to set aside money for savings before you get the chance to spend it.

10. Have Your Employer Deposit a Portion of Your Paycheck Into Savings

Depending on your employer, you may be able to set up a split deposit. A split deposit lets your employer deposit a portion of your paycheck directly into your savings account and the rest into your checking. This can help ensure you are contributing to your savings goal.

11. Use a Budget App to Find More Ways to Save Money

Budget apps, like the WalletHub app, can make it easy to analyze your expenses since you can sync your financial accounts to have your transactions automatically tracked and see all your expenses in one place. This makes it more efficient to find areas where you can cut back on spending instead of searching through multiple bank and credit card statements. You can also use the budget app to track your progress toward the savings goal.

12. Do a No-Buy Year

Committing to a no-buy year can help you reach your $20,000 savings goal. A no-buy year is a variation of the no-spend challenge, and it is when you pledge not to spend money on anything that is not an essential expense for a whole year.

13. Use a High-Yield Savings Account

Instead of putting your savings in a checking account or a traditional savings account, put your money in a high-yield savings account to grow your money faster since high-yield savings accounts tend to earn higher interest rates. The best high-yield savings accounts can offer interest rates up to 5% or higher.

14. Open a Bank Account or Credit Card to Earn a Bonus

Some banks may offer you a bonus when you open a bank account with them and deposit a certain amount of money. Similarly, some credit cards offer bonus rewards for spending a certain amount of money within a specific timeframe after opening an account. For example, you could get $200 cash rewards for spending $500 in the first three months, or $600 for spending $3,000 in 3 months. Taking advantage of these deals can help you make quick progress toward your overall savings goal.

15. Reduce How Much You Pay in Interest

If you have a lot of debt, especially high-interest debt, it can be difficult to optimize your savings since you are spending a lot of money on interest. When you come up with a plan to pay off your debts faster, you can reduce how much you pay in interest overall, which could potentially save you hundreds or thousands of dollars per year.

For example, using a balance transfer credit card or a debt consolidation loan can lower or even eliminate the interest you are currently paying so you can get out of debt faster. As you pay off your debt, you can divert the money you were using for debt payments to your savings.

16. Maximize Employer Benefits

Take advantage of your employer’s 401(k) match, if they offer one. With this benefit, your employer will match your contributions to your 401(k) up to a certain amount. That’s an easy way to get free money to grow your savings faster without much effort. Your employer may also offer you a health savings account that can help you save money on health care costs, plus perks like employee discounts on products and services from various businesses.

17. Deposit Unexpected Windfalls Into Savings

Windfalls can include raises or bonuses that you get from work, inheritance money, your tax refund, and cash gifts from friends and relatives. Saving these windfalls instead of spending them can give your savings a boost and get you closer to your savings goal.

18. Work Overtime

If you are eligible for overtime, your employer must pay you at least 1.5 times the amount of your hourly pay rate. You can then use the extra income you’ve earned for your savings goal.

19. Get a Side Gig

Working a side gig, such as pet sitting, making deliveries, or freelancing, can supplement your current income and give you more money that you can put toward savings.

20. Ask for a Raise

Trying to save $20,000 in a year is a lot. It may not even be feasible with your current income. If your income is too low to allow you to save $20,000 in a year, you may want to consider asking your current employer for a raise. A pay raise can give your savings an extra boost.

21. Switch to a Job With Higher Pay

If your current employer is not willing to give you a raise, or you don’t have the time to work overtime or get a side gig, you may want to consider switching to a job with higher pay. A higher salary means you can increase how much you set aside for savings every month. Of course, this is much easier said than done.

How to Increase Your Chances of Saving $20,000 in a Year

Decide What You Want to Use the Money For

Determining what you want to use the money for can motivate you to keep saving so you can reach your goal. For example, knowing that you want to save $20,000 so you can move out on your own or buy a new car will make it more likely that you will save your money instead of spending it.

Break Your Goal Into Smaller, More Manageable Objectives

Saving $20,000 in a year might seem impossible, but if you break the savings goal into smaller, more manageable steps, it may be easier to deal with. For example, you can save $1,667 a month or $769 every two weeks.

Give Yourself an Incentive to Save

Reward yourself for making progress toward your goals. For example, you could decide to treat yourself with a baked good from your favorite café when you have saved 25% of your $20,000 savings goal. A small reward can encourage you to keep saving until you reach your final goal.

Use a Budget to Optimize Your Savings

A budget allows you to plan out how you will allocate your income among your expenses and lets you see how much you have left over to save after paying your bills. A budget can also help you figure out how to save more money by identifying non-essential areas where you can cut back on spending. You should add your goal of saving $20,000 in a year to your budget, so you can make sure you are allocating money to that goal every month.

For more tips, check out WalletHub’s guide on how to save money.