How to Save $1,000 in a Month — Yes, It's Possible
Saving $1,000 in a month is more feasible than you think. These eight tips can help get you started.
Contributing Writer at Tally
October 18, 2021
Sixty-nine percent of Americans have less than $1,000 in savings. If you're one of them, you may be looking for ways to put away extra money. Perhaps you'd like to build an emergency fund or just improve the overall picture of your personal finances.
Or, maybe you've made some poor financial decisions in the past. You might’ve overspent to keep up with the times and are looking for ways to get back on track.
In this article, we cover how to save $1,000 in a month. Specifically, we provide eight tips that you can implement today to . By the end of this article, you should have a much better understanding of what you can do to save more money and put some extra cash in your savings account or pay down credit card debt.
Why saving money is important
Saving money is important from both a long and short-term perspective. From a long-term perspective, it's critical to focus on retirement savings. You need to have enough money on hand to cover your basic expenses and medical bills when you retire.
If you put $1,000 into an investment account today and earn 8% a year, it will be worth $10,062 in 30 years. A trusted planner or advisor can give you qualified financial advice about your investment and retirement strategies.
From a short-term perspective, saving money is essential because it provides comfort and flexibility. If you know you have cash in a bank account, you don't need to stress when unexpected expenses arise. For instance, if you find out that your car needs new tires, you can rest easy knowing that you already have money in your account to cover the transaction. This prevents you from having to put the purchase on a credit card.
When you use a credit card, you essentially borrow money from your bank. If you don’t pay your balance back in full before your statement due date, the lender will charge you interest on what you've borrowed. Credit cards typically have high interest rates. The interest compounds, meaning interest charges on top of interest.
Once you take on credit card debt, it can be difficult to get out from underneath it. That's not even considering other monthly debt obligations you may have, such as student loans and car payments. Having some cash set aside makes it easier to pay your bills and reduces the likelihood of acquiring more debt.
How to save $1,000 in a month — 8 money-saving tips
Are you ready to become a saver? Below are eight tips that can help you put money in your bank account quickly.
1. Automate your savings
Start saving money by automating the process.
For instance, let's say that you receive $900 in your weekly paycheck after taxes and withholdings. You normally spend $600 on household expenses and $300 on yourself.
You can set up your bank account to automatically move money into a savings account each payday. For instance, you might move $150 into savings, thereby keeping $150 to spend on yourself.
While you could perform this transaction manually, automating the process prevents you from forgetting. It also reduces the temptation to skip a month. Because the money isn’t in your checking account, you won't be tempted to spend it.
2. Make a budget
Budgeting is an effective tool to help keep you on track. There are different budgeting techniques available, though you may want to consider the 50/30/20 rule to get started.
This rule states that:
50% of your net income goes toward expenses
30% goes toward personal spending
20% goes toward savings or debt payments
Building a budget forces you to look closer at the money that you have coming in and going out. It can also help hold you accountable and prevent overspending.
3. Review monthly subscriptions
Another way to save money is by taking a closer look at your monthly subscriptions.
For example, do you still watch cable, or only use streaming services like Netflix? Perhaps you can cancel one or the other, so that you’re not paying for both. Are there some streaming services that you use more than others? Even if you only cancel one service, you may save upward of $15 to $20 per month.
Also, consider canceling your gym membership if you have one. You can work out at home or a park instead.
4. Earn more money
If you live paycheck to paycheck, you may need to boost your income to save money. One way to do so is by picking up a side hustle. A side hustle is a job that you work in addition to your full-time job.
Even if you only earn $100 per week, you'll end up having an additional $5,000 per year. Putting this money directly into savings can potentially improve your overall financial health.
5. Check tax withholdings
If you paid taxes last year, you might’ve gotten money back from the federal or state government. While receiving money back from your taxes always comes as a pleasant surprise, it's not an effective long-term strategy. The tax credit you receive is money that you're owed because you paid too much in taxes. By overpaying, the government was able to collect interest on your money instead of you.
Review your taxes from last year. If you received a credit, use the Internal Revenue Service's withholding calculator to determine how much should be withheld from each paycheck.
6. Sell unwanted items
If you have unwanted items or clothes around your house, sell them to help generate some cash. These items don’t gain value by sitting in your home unused. Clothes, shoes, bags, furniture, and electronics can all be sold on sites like Craigslist, eBay, Poshmark or thredUP.
7. Shop at inexpensive grocery stores
Groceries can cost a lot of money if you're not careful. Instead of shopping at expensive grocery store chains, try looking for cheaper alternatives instead. Trader Joe's and Aldi are two grocers that tend to be a bit more affordable, if they happen to be in your area.
8. Negotiate insurance rate
Insurance providers may be willing to negotiate your rates if you make payments on time and aren’t a high risk.
For instance, if you have a strong driving record and do not have any recent tickets or accidents, you may be able to lower your car insurance rates. Even if you only lower your premium by a few bucks per month, you still come out ahead, as you can now put the extra money into savings.
Start saving today to reach financial freedom
Learning how to save $1,000 in a month may seem daunting, especially if you don’t have much money in your checking account. However, with the eight tips we've outlined, reaching your savings goals is more achievable than you think.
Getting out of debt can be a key component to saving more. If credit card debt is keeping you from building your savings, consider Tally†, a smart debt repayment tool. When you use Tally, you'll benefit from automated credit card payments, a lower-interest line of credit, a custom payoff plan and avoiding late fees.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.