Trying to save $25,000 in a year? Consider these strategies

Saving $25,000 in a single year may seem like a daunting task but it’s an achievable goal if you create a budget and follow a savings plan. From trying to boost your emergency funds for expenses like medical bills and home repairs to taking a dream vacation or saving for retirement, allocating $25,000 to your savings each year can help you achieve many of your financial goals.

Consider these savings strategies which may help you save $25,000 each year:

1. Open a high-yield savings account
2. Create a budget
3. Increase your income
4. Reduce your bills
5. Enroll in automatic transfers

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1. Open a high-yield savings account

Before you investigate savings strategies, you should ensure that whatever savings you currently have are growing to their full potential. A traditional savings account typically offers low interest rates but APY rates on a high-yield savings account are often substantially higher.

Though interest rates are variable, a high-yield savings account is a low-risk way to grow your money compared to other investment strategies. Currently, APYs are low but that doesn’t mean you should wait to open an account. Opening one now allows you to begin growing your money in an account that’s FDIC or NCUA insured. Rates will increase over time and some banks may waive minimum balance requirements or maintenance fees for new account holders.

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2. Create a budget

Creating a budget is a wise move to help you meet your financial goals. In order to do this, calculate approximately how much of your monthly income remains after paying your monthly expenses. Then, create a budget to determine how much of this balance you’ll use for personal expenses and how much you can dedicate to your savings.

3. Increase your income

Though it’s easier said than done, any extra income that you can earn could be solely dedicated to growing your savings. There are countless freelance, temporary and part-time employment opportunities that you can complete online. Simply earning an extra $100 per week will enable you to save $5,200 each year, which equates to over 20% of your $25,000 goal.

4. Reduce your bills

Saving can seem challenging when you compare your current monthly income to your monthly expenses. If you’re unable to generate extra income, you should try to reduce your bills. Small changes like cutting down on water or electricity usage, downsizing your cable plan and finding a cheaper auto insurance plan can save you hundreds each year.

If you have outstanding debt, consider refinancing your loans or consolidating your debt so you can allocate more towards saving. Visit the Credible marketplace to discover how loan refinancing or debt consolidation could help you reach your financial goals.

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5. Enroll in automatic transfers

Growing your savings can be difficult for those who are tight on time and money. One of the easiest ways to consistently increase your savings is to enroll in automatic transfers. Most financial institutions allow you to schedule a preset amount to be transferred to your savings account at specific intervals, such as once a month. Remember, you can always increase or decrease how much you’re dedicating to your savings to ensure that your other financial responsibilities are continually met.

Final thoughts

The best savings plan for you will be one that doesn’t cause added financial stress. Even if you’re still unsure of which methods will help you achieve your $25,000 savings goal, it’s still wise to open up a savings account and begin earning interest. A high-yield savings bank account can help you substantially increase your savings, even if you only start with the minimum required balance.

Here are a few things to consider when exploring your high-yield savings options:

• Determine how often you can withdraw from a high-yield savings account at your preferred financial institution. Some of these accounts limit the number of times you can take money out and charge penalty fees if you exceed this limit.
• Inquire about fees associated with opening, maintaining and closing a high-yield savings account. Some banks may charge fees related to low balances, service charges, paper statements and premature account closure.
• Consider opening a high-yield savings account no matter the current interest rates. Though it may seem counter-intuitive, you will likely still receive a rate higher than a traditional savings account and the rate will likely increase over time.

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