Saving $20,000 in a year seems overwhelming — but looking at it in smaller numbers can make it less daunting.
With 2024 upon us, Téa Angelos, the Australian founder and CEO of Smart Women Society, has created a three-part money-saving challenge to help you boost your bank balance.
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If you’re hoping to save $5000, $10,000 or even $20,000, the lawyer-turned-finance-guru says the key is to break the amount down into bite-sized goals — with the flexibility to put aside more or less funds — based on your monthly budget.
To get started, Angelos says you need to know exactly where every dollar is going as this can help you stay focused.
“Give your money saving a purpose — write down exactly what you are saving for and why you are saving for it,” Angelos tells 7Life.
To avoid spending temptations, the author of Smart Moves: Simple Ways to Take Control of Your Life suggests automating your savings so the money is out of sight, out of mind.
“Set up an automatic transfer to your bank account the day after your pay day,” she says.
“The best part about this is the saving happens without you having to think about it and before you can spend it.”
Once you know what you’re saving for, Angelos says you need to make the challenge fit your current routine and lifestyle.
“Don’t try and drastically change, take one step at a time,” she explains.
“Trying to completely overhaul your budget and make drastic changes to your spending is the quickest way to not staying committed to your money-saving journey.
“Instead, make small, slow changes to your spending so it’s sustainable.
“Consistency is better than short drastic changes that you won’t stick to.”
Actively track spendings
If you’re living pay cheque to pay cheque, Angelos says you should start actively tracking where your money is going.
By looking through your bank statements, you will be able to reel in any unwanted or unnecessary spendings.
“Start by reviewing your current spending — you will really understand where all your money goes every month and reflect on your purchases and if they were necessary,” she says.
“Next, try and cut the spending that doesn’t impact your current lifestyle.
“For example, negotiate your bills and regularly review your subscriptions and memberships, and cancel any you don’t use.
“Then target your non-essential spending such as your eating out and personal shopping spending.
“Wait 24 hours before you buy anything non-essential to avoid impulse shopping.”
How to save $5000
If you want to save $5000, break the figure down unevenly so you can pick and choose how big or little you want to save that month to suit your budget.
For example, you can save $520 in January, $410 in February, $165 in March, $600 in April, $390 in May, $550 in June, $745 in July, $500 in August, $135 in September, $340 in October, $495 in November and $150 in December.
“Those savings challenge numbers are randomised each month as a fun challenge — you can swap any of the months around,” Angelos says.
She says there are other ways you can put your money aside — depending on your earnings.
“Alternatively, you can save the same amount each month by dividing $5000 by 12, which is $417 a month,” she says.
But if you prefer to save more frequently, Angelos suggests saving $192 every fortnight or $96 a week.
For those looking to hit their goal faster, you can save $5000 in three months if you put aside $385 a week — or $193 every week for six months.
How to save $10,000
The same money-saving strategy applies to bigger figures.
As the numbers get bigger, Angelos says it always helps to break down the big money goal into monthly morsels.
To save $10,000, you will need to set aside $635 in January, $940 in February, $1340 in March, $755 in April, $1160 in May, $430 in June, $1150 in July, $1200 in August, $430 in September, $770 in October, $940 in November and $250 in December.
Otherwise you can opt to save $193 per week over 12 months, $385 a week in six months or $770 a week in three months.
The smaller you break it down, the easier it is to digest the savings goal.
How to save $20,000
When it comes to saving $20,000, each month breaks down to $1,666.66.
The amount may seem overwhelming for many.
But when you’re trying to save money in smaller increments, it can be achievable — depending on your cash flow.
However, if you want to do things differently, Angelos breaks down the amount into different goals to give you the option to swap any of the months around to suit your budget.
To save $20,000, you will need to set aside $1150 in January, $1550 in February, $1650 in March, $1800 in April, $1750 in May, $2100 in June, $2400 in July, $2050 in August, $1850 in September, $1500 in October, $1250 in November and $950 in December.
You have the option to pick a more or less expensive month as long as you stick to the savings plan.
If you want to break it down even more, you can save $54.80 a day for 12 months.
For a three-month goal, save $219.20 per day — or set aside $109.60 per day over six months.
How to budget
Angelos shares a simple budget trick using the 50/30/20 rule.
“First 50 per cent of your budget goes to needs. This includes all your essentials like rent or mortgage, bills, groceries and transport,” she explains.
“Then 30 per cent goes to your wants. This is all your ‘fun’ spending a month on things like eating out, new clothes and Netflix.
“The last 20 per cent is the most important for your savings and investments. Increasing this percentage will make you rich faster.”
She adds: “You can alter the percentages so they work better for you - you don’t have to stick to 50/30/20.”
Find financial freedom
To cut down on your spending, Angelos points out the five things that will “kill your financial growth”.
- Buying things to impress people
- Living beyond your means
- Not having an emergency fund
- Impulse shopping
- Always needing the newest car, bag or latest gadget
“It’s never too late to start working on your finances for future you,” she says.
Bank accounts to set
If you’re looking to “grow your wealth”, Angelos suggests the five bank accounts you need to set up.
- Daily account: Everyday expenses
- Daily account: “Play” money for eating out, shopping and “fun” activities
- High yield account: Short-term goals including holidays
- High yield account: Long-term goals such as buying a house
- Emergency fund: Ideally you should have three to six months of living expenses saved in case anything goes wrong
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