Setting aside extra funds might be harder than ever today, as inflation and rising prices squeeze our paychecks, and the Consumer Price Index continues to rise.1
However, having extra cash on hand can significantly reduce stress and prevent the need to rely on high-interest debt, whether you're aiming to save for a dream vacation, build a solid emergency fund or even splurge on a special purchase.
As a first step, why not gamify your finances with a money savings challenge to set aside $500 in 30 days? While that sum might sound overwhelming, it can be achievable by following the steps below.
1. Reset Your Mindset
Think of these 30 days as a time to hit “reset" on your spending habits. You're not going to stay in an extreme savings mode forever, but you can use this time to practice taking note of where every dollar goes. That means looking closely at your expenses, cutting back on unnecessary purchases and focusing your money on what matters to you. As you spend more thoughtfully to save more, you can better manage your budget and reach your financial goals.
“We're going to put these [500] dollars together from all those places where we spend mindlessly," says Kitty Bressington, CFP and founding principal of Linden Financial Consultants, an independent financial planning and investment consulting firm in Rochester, New York. As you make your 30-day budget, decide beforehand—mindfully—what your necessary spending is for the month.
2. Set a Daily or Weekly Goal
If $500 saved in a month sounds like an insurmountable figure, chop up the total into smaller, more achievable parts. Aim for $125 a week, or even $17 a day. Set up a tracking app or use a daily journal so you can continually see how you're doing on your savings challenge.
“I rarely like to have a goal with a long time frame," says Bressington.
After all, when you're trying to achieve smaller goals, if you miss a day, it's less overwhelming to make up for it the next day—and you're less likely to get completely off target.
3. Assess Your Current Budget
Reviewing your budget to determine where your money is allocated allows you to highlight spending on existing nonessentials like dining out, entertainment or shopping. Then, you can shave those expenses. If you already use a plan (like the 50/30/20 budget), look at the “30" part—funds allocated to discretionary purchases—to identify low-hanging fruit to cut.
If you don't have a budget, create a simple one by adding up your fixed expenses. These include housing, car payments and savings, along with any debt you have, such as credit cards and student loans. You'll want to at least make the minimum payment on debt—and ideally more—to help erase it even faster. Then, add up what you spend in an average month for variable expenses on categories like dining out, entertainment, subscriptions and other discretionary line items. While your fixed expenses may not be adjustable in such a short time, you can probably trim some of your nonessential spending.
One simple way to make a quick budget for this cost-cutting challenge is to use the “cash stuffing method," whereby you allocate cash to envelopes for each of your different spending categories. As you remove the funds from the envelopes, you can quickly see if you're running short in a particular area so you can modify your spending.
4. Identify Where To Cut Your Spending
Once you've reviewed your budget, you might find some easy places to cut spending. But if you're not sure where to start, here are 10 creative ways to find potential savings:
- • Pause subscription services and gym memberships.
- • Plan to cook at home rather than dining out or ordering in.
- • Minimize your grocery spending by getting creative with what's already in your pantry or freezer. SuperCook is a fun website that can help you find recipes using the ingredients you have on hand.
- • Take public transportation, walk or bike instead of shelling out for a taxi or rideshare or incurring parking fees and gas charges with your car.
- • Try “loud budgeting," whereby you declare your intent to friends and family and enlist their support.
- • Call your cell phone and insurance providers to request cheaper plans.
- • Switch to a no annual fee cash back credit card.
- • Check out local social media feeds to find free events.
- • Host a clothing swap with friends.
- • Use apps and websites to identify savings before making a purchase. One simple method is to add a browser extension like Honey or type "coupon for [store]" in your search engine to identify any current deals.
“Live like you're that broke college student again," says Bressington. “Most people spend so much mindlessly that they could probably find $500 using this mechanism."
5. Look For Additional Income Sources
The other way to augment your savings account is to earn some extra dough. Here are 10 side gigs to boost your income that require minimal commitment and little to no up-front costs.
- • Sell clothing, household or technology items online or on consignment.
- • Dog walk or pet-sit.
- • House-sit for friends or family.
- • Deliver food.
- • Participate in online surveys or mystery shopping expeditions.
- • Offer hair or makeup services to local high school students before a big event.
- • Run errands for busy friends and neighbors.
- • Offer lawn mowing, leaf raking or flower planting services.
- • Request extra shifts at your current job.
- • Rent out equipment, like tools.
6. Track Your Spending
Once you've identified potential avenues for saving $500 in 30 days, pay close attention to where your money is actually going. Tracking your spending encourages accountability and allows you to follow your progress and see how well you stick to your plan. Regularly reviewing your budget helps you stay on track and adjust as necessary to hit that $500 goal.
7. Bucket Your Savings
A surefire way to make sure your savings don't slide back into the spending column is to stash cash in separate bank accounts—a technique called bucketing your savings.
Opening different types of accounts also lets you better track your long-term savings goals, and automatically depositing a chunk of money from your paycheck is one way to do this. For instance, after reaching your goal of saving $500, moving the money into a high yield savings account or opening a certificate of deposit (CD) will allow you to earn interest on your savings. This also keeps the money separate from your checking account—and prevents you from accidentally spending it.
8. Celebrate Your Goal
Take a minute to recognize your success and acknowledge the hard work and discipline that allowed you to achieve this milestone. Your self-congratulatory gesture could entail sharing your success with a small group of friends, in the spirit of loud budgeting and inspiring others. Or you could celebrate with a small purchase of something that's been on your budget chopping block, such as a latte or vending machine treat at work.
9. Recalibrate Your Budget
After you've lived without some regular expenditures for 30 days, assess what you truly need to add back into your monthly spending.
“We have reset the budget and slashed as much as humanly possible—and then we add back in mindfully," Bressington explains.
What did you miss? What are your nonnegotiables? You don't want to live in a state of deprivation, but you've probably seen obvious places to cut back, such as only turning on one or two subscription streaming services or continuing to eat at home more often than not.
10. Make Your Money Work as Hard as You Do
While a concrete plan makes it easier to stay focused and motivated, using the right financial products can ensure that you're maximizing the money you've diligently saved. For example, a high yield savings account can help your money earn a competitive interest rate while remaining accessible for short-term needs, making it ideal for an emergency fund. For medium- and longer-term savings, look into a money market account or CD for competitive interest rates that amplify the savings power even more.
Cathie Ericson is an Oregon-based freelance writer who covers personal finance, real estate and education, among other topics. Her work has appeared in a wide range of publications and websites, including U.S. News & World Report, MSN, Business Insider, Yahoo Finance, MarketWatch, Fast Company, Realtor.com and more.
READ MORE: Could You Come Up With $3,000 in a Year?
Sources/references
1. Consumer Price Index – April 2024. Bureau of Labor Statistics. May 15, 2024.
