Struggling To Save? Here's Your Step-By-Step Guide To Saving $1,000 (Or More!)
We've all seen the articles: "Save $500 a Month" or "How to Reach Your $10,000 Savings Goal." And on the algorithm - “Save $500 easy”, “You're losing $10K a year by doing this..” These sound all great and good, but when you look at your budget, it feels impossible. Been there. The truth is, many of these articles and algorithmic posts skip a crucial step: how to find the money to actually save.
That's where this guide comes in! The purpose of this post is to not only get you to save your $1000 but to understand how to start with the small to grow it. When you save a little, you can take your formula to grow that savings. I want to help you unlock the "how" behind saving your first $1,000. This might seem like a small goal, but trust me, it's a powerful first step towards financial freedom. Did you know that 57% of Americans can't cover a $1,000 emergency expense? Let's move you to the other side!
This actually will help you with starting and building your emergency fund, like the articles and algorithm tells you, but let’s walk through this:
Step 1: The Wallet Audit - Know Yourself, Know Your Money
Think of a wallet audit like a financial deep dive. You know where you want to go with your money, like saving that first $1000, but you have to look at your financial GPS to know where you’re starting from. Doing this will allow you to uncover exactly where your money goes each month, beyond your bills. Imagine emptying your wallet onto the table – receipts, bills, everything! Now, instead of just shoving it back in, we categorize everything. This might mean separating spending on bills, groceries, entertainment, and more.
It might sound tedious, but this "wallet audit" is key to setting realistic savings goals. By understanding your spending habits, you can create a plan that works for you. Here's how this ties into saving $1,000: by identifying areas where you can cut back – maybe those daily coffees or unused subscriptions – every dollar saved adds up! More on that later.
Here are some tools to get you started with your wallet audit:
Pen And paper: Track your non-essential spending for a month.
Bank/Credit Card Statements: Gather the last 3 months' worth to see where your money goes.
Budgeting Apps: Budgeting apps like Monarch Money, Copilot, Quicken, Empower or YNAB can help with tracking and categorization. I talked more about these apps in this post.
Remember to repeat your wallet audit every few months. This helps you stay on track and motivated as you see your progress towards your savings goals! After you have done this, you will be able to fully understand where the potholes in your wallet are and how to plug them up before starting to do a budget correction vs a budget cut. Talked about that here a bit.
Step 2: High-Yield Savings Account (HYSA) - A MUST!
You've probably heard whispers about HYSAs lately. I talked about this here a bit more in depth. These are simply savings accounts that offer a higher interest rate than traditional savings accounts, meaning your money grows a little faster. This is where your $1,000 will live! The interest you earn will help your savings grow over time. Some of my favorites are Marcus by Goldman Sachs, Ally (love their sinking funds/savings buckets), American Express, Capital One, etc.
Head over to my YouTube channel for a deeper dive into HYSAs – a couple of videos are talking about them here (don’t forget to subscribe).
Step 3: Rolling Over Money - Pay Yourself First!
Another major strategy to help you save that more- no matter how much you’re focusing on? Pay yourself first. Before you even think about spending your paycheck, set up automatic transfers from your checking account to your HYSA. The amount you transfer will depend on what your wallet audit revealed. Heck, you can even designate a portion of your paycheck to be deposited into another account to do it for you.
Think of it like this: by automating this transfer, you're essentially "paying yourself" and building your savings consistently. Every dollar saved is a dollar closer to your $1,000 goal!
Step 4: Slashing Expenses and Finding Extra Cash
Now it's time to get tactical! Here are some ways to find extra money to fuel your savings:
Negotiate Your Bills: Many bills – cable, internet, phone – can be negotiated! Think about it – you negotiate your salary, why not your bills? Check out my blog post on "money scripts" for tips on negotiating with creditors.
Track Your Spending: Use budgeting apps to identify areas where you can cut back, even if it's just a small amount each week. Checking in with your money at least twice a week will allow you to stay as close as possible to your budget because you did that audit. Also, you can’t measure (build your budget) what you don’t track.
Embrace Grocery Smarts: Plan your meals, cook at home more often, and set realistic grocery budgets. Gave some tips over on my substack about doing this. Yes, you can shop at big box stores, but how much are you using and how much are you saving? Can you meal prep to ease the pain in your wallet/budget?
Become A Deal-Finding Savvy: Look for deals on self-care services, entertainment, and everyday purchases. If you know that you love getting facials or getting your nails done, can you find other ways to get that upkeep done like Groupon or DIY? Looking at your spending will allow you to know what you can save up for or trim the cost. I have moved some of my upkeep to low spending or saving up for.
Gift Cards = Budgeting Tools: Consider using gift cards for your everyday purchases. This can help you stick to your budget by limiting your spending power. I will talk about this a bit in another blog post/video.
Step 5: Smart Saving Hacks
Saving money doesn't mean giving up everything you enjoy! Here are some clever hacks to save without sacrificing your lifestyle:
Coffee On A Budget: Invest in a reusable mug and brew your coffee at home. BUT give yourself a budget to know how much you can allocate towards coffee at home or coffee budget to spend. I do this with my coffee apps, I set a specific amount I can spend… when it’s gone - there’s coffee at home. I’m starting to get into doing barista stuff in-house too.
DIY Self-Care: Explore at-home spa treatments or face masks using ingredients from your kitchen. Talked about this a couple of scrolls up in this post. I look at what I spend the most on and find a way to keep the vice and don’t hurt the value of your budget.
Gift Card Deals: Look for promotions where you can get bonus gift card value with your purchase. Will you find deals that help you deal with your budget? You’re legit winning while you weaning your spending.
Remember, every dollar saved is a dollar closer to your $1,000 goal! By making small changes to your spending habits, you can find creative ways to save and reach your financial goals. Saving “some” will increase your “sum”, it’s also better than saving none.
Financial Planning + Saving Your $1000
Building a savings habit is crucial, no matter the amount. This exercise will not only help you save your first $1,000, but it will also give you valuable insights into your spending habits. As you get comfortable saving, you can use this knowledge to plan for bigger financial goals, like a down payment on a house or a comfortable retirement.
Bonus Part: Turn Your Savings into a Habit: Automate and Track Your Progress!
Now that you've identified ways to save money, let's make it automatic! Here's how to reverse-engineer your savings and set up a plan for success:
Know Your Net Pay: Check your most recent pay stub to see how much money you take home after taxes and deductions (your net pay).
Check Your Budget: Take a close look at your budget (created during the wallet audit) to see what you can realistically save each paycheck. Remember, you can't save what isn't there! Be honest with yourself about how much you can cut back on discretionary spending without feeling deprived.
Revisit Your Savings Goal: Is $1,000 your target, or do you want to adjust it based on your wallet audit? Be Realistic: After completing your wallet audit, revisit your savings goal. Did you uncover areas where you can cut back more than expected? Perhaps you can increase your target amount. On the other hand, maybe you have more fixed expenses than you realized. Adjust your goal accordingly to ensure it's achievable.
Set A Realistic Timeline: Divide your adjusted savings goal (based on your budget review) by the number of paychecks you receive in a month. This will give you a baseline amount to save per paycheck. For example, if you get paid bi-weekly (twice a month) and your new goal is $800, you'd aim to save $800 / 2 paychecks = $400 per paycheck.
Automate Your Savings: Set up automatic transfers from your checking account to your HYSA after each payday. This ensures you "pay yourself first" and consistently builds your savings. Think of this savings like a sinking fund or just your first HYSA.
Track Your Progress: Most budgeting apps and online banking platforms allow you to set goals and track your progress. Seeing that number climb can be a huge motivator!
Another One (Tip): Every Dollar Counts!
Let's say you find some extra cash throughout the month – maybe a birthday gift or a side hustle income. Allocate that extra money towards your savings goal! This can significantly reduce the time it takes to reach $1,000.
You Can’t Measure What You Don’t Track: Savings Goals
Building a savings habit takes commitment, but celebrating milestones keeps you motivated. Schedule regular check-ins with your savings goal. Did you reach your target amount saved per paycheck? Are you on track to hit your $1,000 goal by your desired deadline? Adjustments might be necessary, but checking in with your goals allows you to check off that goal for your list! You set up the milestones or check-in dates: put them in your calendar with alerts. It’s up to you to stay locked in with your goals for them to happen!
Conclusion
Ready to take charge of your finances and save your first $1,000 (or more)? Head over to my YouTube channel (coming soon) for a video walkthrough of the wallet audit process, along with even more money-saving tips and tricks! Don't forget to like and subscribe for more financial planning advice to help you achieve your money goals. If you need more direct help, I am accepting clients to help with their cash flow & budget.
In the comments below, let me know which tip you're most excited to try to reach your savings goals! Remember, you've got this! Focused and Funded!