How to Save $20k in a Year

Have you ever caught yourself daydreaming about your financial goals? Maybe you’re picturing yourself relaxing on a sunny beach, seeing your student loan account balance hit $0, or navigating the home-buying process with ease. While these goals are fun to dream about, they’ll stay nothing more than a daydream until you start working towards them. Fortunately, you don’t have to wait a decade to make progress. Saving a large amount of money in a short time is possible with the right strategies. Here’s how you can save $20,000 in a year. 

1. Start small

Stashing $20,000 into your savings account over twelve months sounds intimidating and maybe even impossible. Luckily, breaking the goal down into smaller chunks makes it far less scary. In order to reach $20,000 in a year, you need to save $1,666.67 each month. Broken down even further, that’s $384.62 weekly and $54.79 daily.

Those smaller numbers might seem more manageable and can give you a little boost of dopamine when you reach them. Even if you don’t hit $55 every single day, consistently putting money aside is still progress. When you’re dealing with a savings goal this large, you won’t want to procrastinate. However, reaching your goal last minute or falling just short is still better than not starting the money challenge at all.

2. Create a budget

Once the goal feels doable, you need to create a plan for how it will happen. Begin with establishing (or updating) your budget to reflect your priorities. Write down what you earn and what you spend on the expenses you can’t avoid, like rent, gas, and phone bill, as well as extras, such as hanging out with friends or subscriptions. Make sure to also include a dedicated category for your savings goal.

The word budget may sound restricting, but it actually gives you the freedom to spend on things you enjoy doing. If your income varies from month to month, try budgeting based on your lowest earning month to add a little cushion. Using a budgeting app or simple spreadsheet can help you stay organized, but even a paper template will work if you stick with it.

3. Lower your expenses

Cutting costs is often the fastest way to boost your savings. Start by trimming unnecessary expenses, like streaming services you barely use, impulse coffee runs, or gym memberships you forgot existed.

When that’s done, look at your fixed expenses. You might be able to lower your internet or phone bill by switching carriers. Perhaps you could split rent with a roommate or carpool instead of covering parking daily. Even eliminating digital costs can help, like deleting duplicate photos instead of paying for extra storage. Try thinking of it less as cutting back and more like making room for what really matters to you long-term. 

4. Increase your income

With a savings goal this large, it’s hard to save on cutting out expenses alone. Sometimes, you need to earn extra income. If you’re trying to make money quickly, you can always sell unused items, such as old textbooks, clothes, or unused tech.

Getting a part-time job or picking up a side hustle, like babysitting or freelance work, could be a good option. Additionally, you should always take advantage of student discounts and cashback programs when shopping online. Saving even an extra $100 per month becomes $1,200 by the end of the year. 

5. Don't lose sight of debt

Your debt won’t just go away when you’re trying to save. After covering all your monthly living expenses, there may not be enough left over to do both. When you have to decide between saving money and repaying debt, there is no one-size-fits-all answer.  

High-interest debt can sneakily halt your progress. If the interest that you’re paying is higher than what you’d earn saving, then you may want to consider paying that debt off first. If you only have student loans or another lower interest debt, you can likely put a majority of your discretionary income towards savings.

6. Try different savings strategies

Saving for your future doesn’t have to be boring, as there are many creative saving challenges to try. One month you can try a no-spend category, where you pick a category for a month, like clothing, and avoid all spending in it. Using a cash envelope system or trying a 52-week savings challenge could also help to bring diversity to your savings strategies. 

Another easy way to save is to automatically transfer money from your checking account to your savings. When you automate your savings and “pay yourself first”, you set up good money habits without having to lift a finger. Choose a strategy that keeps you motivated, and don’t be afraid to switch or add another if you start losing momentum. 

7. Practice discipline

Saving $20,000 will take a lot of financial preparation and discipline. You’ll need to learn to swap small wins today for larger wins later. This may involve learning how to say no and potentially having awkward conversations about money with your friends, when your group’s spending habits don’t align with your savings plan. 

If you struggle using your credit card for unnecessary purchases, try using a waiting period before you buy anything. Whether it’s 24 hours or one week, waiting to buy something can weed out impulse purchases and help you spend on only what you need. Unsubscribing from sales emails and removing shopping apps from your phone can also be a game changer. 

8. Stay motivated

Finally, do your best to keep your motivation. As $20,000 is a large amount of money, it will take some time to reach your goal. It’s easy to get burnt out and forget why you started. That’s why it’s important to remind yourself often of what you’re working towards. Put a photo of your goal on your mirror or lock screen, so every day you have a visible reminder.  

Creating a visual tracker of the money you’ve saved so far can also be incredibly motivating. Celebrating milestone rewards, like every $5,000 saved, could also give you the inspiration to keep going. Finally, it’s smart to follow finance blogs and creators who share relatable advice. Watching reels and reading posts that affirm your goal will help you stay positive. 

Saving $20,000 in a year is no easy feat. In fact, it’s downright impressive. Even if you only make it halfway, imagine being $10,000 closer to your future goal. With a little sacrifice now, you’re setting yourself up for future financial success. And remember, consistency beats intensity every time. The small choices you make daily can have a big impact on your finances.