How to Save $5000 in a Year

Simple Tips to Get You Started.

Matt Viera
January 13, 2023

Image by Arek Socha

Good morning and Happy Friday!

Welcome to another edition of The Matt Viera Newsletter.

Thank you for your continued support.

I recently chatted with a friend who informed me that one of his goals for 2023 is to save $5000.

I told him it’s a great goal to strive for, and I drafted this post to discuss the idea.

Who couldn’t use an extra $5000 sitting in their savings account?

$5000 is:

A vacation fund
An emergency fund
The start of a small investment
Money to buy something you may need without resorting to credit cards

What does it take to save $5000 in a year?

$417 per month.

$105 per week.

You can stop reading if you have $5000 in your checking or savings account.

However, if you’re looking to save $5000, here are some simple tips to help you get started.

1) Stop buying coffee in the morning.

I don’t typically buy coffee in the morning, so I don’t know how much coffee costs. Let’s go with $3. $3 for a cup of coffee from your favorite coffee shop. $3 per day, 5 days per week, over a year will add up to ~$780.

$780 spent over a year to buy coffee on your way to work.

Make coffee at home and save $15 per week.

2) Stop buying lunch.

Again, I don’t typically buy lunch during the week. However, when I do, I end up spending about $15. I know NYC is expensive, so lunch in your area may be cheaper. So let’s assume you’ll pay $12 per day for lunch. $12 per day, 5 days per week, over a year is ~$3120.

Instead of buying each, just making coffee and lunch at home will net you $3900 over a year.

Some people may not buy coffee or lunch daily. Or you may be working from home. If so, deposit $75 into a high-yield savings account at the end of the week.

3) Audit your finances.

Grab a notebook, your computer, and a cup of coffee (you brewed at home), and take some time to analyze your spending and expenses.

You want to look for categories of spending you can reduce, e.g., take-out, brunch, happy hours, impulse purchases, etc..

Also, investigate if you can reduce the cost of your monthly cell phone or cable/internet connection.

For example, for years, I was spending about $100 just on my internet connection at home (I don’t have cable TV). I got rid of cable because of the cost; however, $100 for an internet connection seemed excessive to me.

I reduced my internet bill by $70 per month by calling my internet service provider and letting them know $100 a month was too expensive for me.

Not only did they reduce my monthly payment by $70, but the bandwidth of my connection was increased.

$70 per month over a year is $840.

Also, audit your subscriptions. You may be spending money on subscriptions you may not even be using.

Now, after analyzing your expenses, let’s say you were able to find a similar savings of $70 per month. Let’s take a look at the math:

$780 per year saved by not buying coffee

$3120 per year saved by not buying lunch

$840 per year saved by auditing your finances

That’s $4,740 saved over a year.

How can you make up the difference?

Put into this practice this concept I recently learned: a “No-Spend Week.”

For 7 days, do not spend any money on anything that is not essential, i.e., do not spend any money unless it is for your mortgage/rent, car payment, utilities, or groceries. If it is not essential, do not spend money on it.

Try this for 7 consecutive days over a month or two. Or try it every month for a year if you’re feeling ambitious.

The whole point of this exercise is to find ways to save $105 a week for a year.

Every Friday, deposit $105 into a high-yield savings account. I have a savings account that currently offers a 3.3% interest rate.

I plugged these numbers into a Savings Account calculator. If you saved $420 per month into a savings account offering a 2.4% interest rate, you would save $5,096.23 over 12 months.

Bankrate.com

It’s essential to take the time to understand your finances. Remember to be disciplined and consistent if saving $5000 in a year is your goal.

And, if you can save $5000, you should consider saving more.

Your future self will thank you for the financial actions you take today.

Interesting reads:

Is New York City facing a ‘doom loop’ scenario?

Money is emotional — but personal finance advice rarely accounts for that

Thanks for reading!

Please feel free to reply to this email with suggestions, questions, or comments.