Could You Weather a Financial Emergency? 6 Ways to Save $2,000 This Year
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Life hits. It’s an emergency. You need $2,000.
Can you tap into your savings?
Emergency funds, also known as rainy day funds, are essential. You never know when you’ll face an unexpected medical procedure, hefty car repairs or a vet bill.
When it comes down to it, only 15% of Americans could come up with that $2,000 right now, according to a Penny Hoarder analysis of Federal Reserve survey data.
This, my friends, will get you into trouble.
But don’t worry. Although $2,000 might seem like a hefty chunk of money, we’ve brainstormed some hands-off strategies to help you beef up your savings within a year.
6 Ways to Save $2,000 This Year
Here are a few strategies that’ll help you tuck away $2,000 by this time next year:
1. Let an App Determine How Much You Can Afford to Save
If saving more than $50 at a time sounds unrealistic, here’s a simple solution: Recruit a savings app to help you determine how much you can comfortably afford to tuck away.
Digit is one app option. Its algorithms analyze your income and spending habits and automatically withdraw small (and safe) amounts of money to stash in a separate FDIC-insured savings account.
Because you have a specific goal in mind — $2,000 in a year’s time — let Digit know by adding a “personal goal.” Digit will do what it can to help you hit that goal (without causing you to overdraft).
Although Digit costs $2.99 a month after a free 30 days, you’ll earn a $5 bonus when you sign up, as well as 1% balance bonus every three months.
2. Round Your Purchases to the Nearest Dollar
It’s difficult to guarantee you’ll save $2,000 in a year this way, but if you’re struggling to save a fixed amount of money each day, week, month or paycheck, then this will get you going in the right direction.
Use the app Acorns to round up each of your credit or debit card purchases to the nearest dollar. When that digital spare change adds up to $5, it’ll get deposited into small investments of your choice.
Here’s the thing with this tactic: You’re investing, so there’s always a bit of risk. However, we’ve chatted with several people who used Acorns to save. For example, in about 20 months, Jeremy Kolodziej accumulated $1,076 in spare change through Acorns.
So, yes, this tactic is a little more slow-moving, but you’re less likely to notice the impact it has on your bank account. You also have a chance to earn dividends, which is neat.
3. Open a Second Bank Account (and Stop Paying Bank Fees)
If you have a budget, build your savings into it, and treat it like any other bill: $167 a month.
We suggest hiding this money in a separate hands-off account. You’ll find a number of savings accounts on this list, but you can also keep your money in a checking account — and still earn interest.
Try Chime. Chime is an online-only bank account that offers some unique features, including a connected savings account. It allows you to automate your savings with features like the round-up tool, which will round up your transactions to the nearest dollar and dump the change into savings.
Bonus: Chime doesn’t charge overdraft fees, monthly maintenance fees, foreign transaction fees or minimum balance fees.
Chances are, your round-ups won’t equate to $167 a month, but your round-ups will make that $167 monthly goal less daunting.
Plus, it takes about five minutes to sign up. The bank verifies your personal information, takes note that you’re at least 18 or older, then you’re good to go. No opening deposit required.
4. Approve $5.50 Daily Saves
If automating your savings makes you feel uneasy but you also don’t trust yourself to consistently save, find a happy medium.
Let me explain… A free iPhone app, Joy, offers advice but ultimately gives you the final say.
Its free savings-account feature identifies exactly how much you can afford to put away each day. But before automatically sliding that money out of your account, it’ll ask for your approval.
You can approve saves as little as $5.50 each day and still hit your goal of $2,000 this year.
5. Play Games, and Save $39 a Week
You’re right: It’s more fun to spend. But how about turning saving money into a game? Then it’ll get a little more exciting.
The folks who created Long Game have you covered with a game that’s fun and helps you achieve your financial goals.
As you save and accomplish missions you’ll earn coins to play mini games for cash prizes! We’re talking the classics, like slot machines, scratch-offs and spin-to-win wheels.
I use Long Game to save money. Every two weeks, it sneaks $5 out of my bank account and rewards me with coins.
In two months, I saved $35.70, just by playing games on my phone. Plus, my winnings amount to a gain of about 2% — way higher than interest on any other savings account I have.
Once you link your bank account, you’ll earn 300 coins, so you can start playing while you wait for payday. If you sign up before November 30, 2018 and enter the code PENNY5, you’ll also get a bonus $5 in your account!
At $39 a week, you’re guaranteed to accumulate $2,000 this year — and you’ve got a chance to hit the jackpot if you save it through Long Game.
6. Consolidate Your Debt and Pocket the Extra Cash
Have you ever considered consolidating your debt? It could substantially lower payments you’re already making and help you put more into savings each month.
A lot of us are being crushed by credit card interest rates north of 20%. If you’re in that boat, consolidation and refinancing might be worth a look.
A good resource is online lending platform Upstart, which can help you find a loan without relying on only your conventional credit score.
Unlike traditional underwriting models that use only the common FICO scoring model, Upstart’s technology looks at factors like your education and employment history to determine your creditworthiness (though it does require a 620 credit score).
It can help you borrow up to $50,000, potentially with better terms (e.g. lower interest or lower monthly payments) than traditional lenders. If managing many different bills and credit lines is a hassle, you can also use an Upstart loan to streamline all of your loans into one.
If That $2,000 in Savings Still Feels Too Far Away…
If putting away $2,000 this year still feels out of reach, that’s OK.
Give yourself more time. Maybe you need two years. Don’t overwhelm yourself. Be realistic, or you risk falling into that doom-and-gloom mindset.
If you need, you can also give your income a little boost with a flexible side gig. For that, we compiled a list of 50 ways to help you make extra money.
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder. She favors the what-you-don’t-see-you-don’t-miss mentality and directly deposits a percentage of each paycheck into a hands-off savings account.
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