How To Save $15,000 In A Year – Forbes Advisor – Technologist

Saving $15,000 in a year is a goal worth setting, and if you reach it, you will have saved more than the national average.

According to data from the Federal Reserve Bank of St. Louis and the Bureau of Economic Analysis, the national per capita disposable personal income in July 2024 was $62,245, and the personal savings rate was 2.9%. Based on this data, Americans were able to save around $1,805 per person in July.

Hitting that $15K target and progressing toward your long-term financial goals will take consistency and a solid plan. Here’s how you can do it in a year.

How To Save $15,000 in a Year

Saving $15,000 in a year means putting away at least $1,250 a month. Before attempting to do so, take a look at your finances and subtract your monthly expenses from your take-home pay to determine whether this goal is achievable. If not, you either have to decrease your monthly expenses or increase your income.

Here are a few expert tips to help you increase your monthly disposable income, accelerate your savings rate and reach your $15,000 goal.

Automate Your Savings

“The biggest tip I have to increase your savings is to automate wherever possible so that you are not relying on willpower alone,” says Kendall Meade, certified financial planner at SoFi. If you struggle with impulse spending, set up direct deposit so that a portion of your paycheck goes directly to savings, removing the temptation to spend the money instead.

Let’s say you park your savings in Ally’s high-yield savings account. To automatically put away $1,000 a month, log in to the mobile app and set up recurring monthly transfers directly from your checking account. This way, you’ll stay on track with your money goals without having to remember to make a transfer.

Check out our list of the best high-yield savings accounts to grow your funds and speed up your savings rate.

Save and Invest Unexpected Income

“Many people focus on how much they’re currently saving for the future, but how you handle raises, bonuses, and unexpected income is just as important as current savings,” says Meade.

If you use the extra income to temporarily increase your standard of living, you’re not building long-term wealth and may even fall victim to lifestyle inflation.

Instead of using your bonuses, raises or tax returns to fund an extravagant vacation or buy a new wardrobe, save and invest it to achieve your $15,000 goal. “This method can be relatively painless because if you immediately put away the unexpected income, you’ll never get used to having this income to live off, which means you won’t have to make budget cuts later,” Meade adds.

Take Advantage of Balance Transfer Cards

Credit card interest rates are painfully high, according to Forbes Advisor’s weekly credit card rates report. If you can lower your credit card interest payments each month, you’ll have more money to contribute toward your $15,000 savings goal. One way to do so is by taking advantage of balance transfer cards. Balance transfer cards typically promise 0% annual percentage rate (APR) for a limited amount of time in exchange for you transferring a balance from an existing credit card.

“If you owe $10,000 on your credit cards, you’ll save over $2,000 in interest just by swapping into a 0% credit card deal that lasts for 12 months,” says Lynnette Khalfani-Cox, money coach, keynote speaker and author of “Bounce Back: The Ultimate Guide to Financial Resilience.” “Unless you have no other options, don’t pay hefty interest rates and stay in debt longer than necessary,” she adds.

Check out our list of the best balance transfer cards on the market to find the one that suits your financial situation best.

Slash Child Care Costs

According to Care’s 2024 Cost of Care Survey, the national average cost of a nanny for one child averaged $766 per week, or approximately $3,000 a month. Even day care costs nearly $1,300 a month.

If you have kids and are trying to save money, start by finding ways to slash child care costs. Khalfani-Cox suggests you consider doing a nanny share with another family to lower your monthly expenses. “A nanny share is when two or more families ‘share’ a nanny by employing the same caregiver during the same hours for their kids. This lets you split the cost of the nanny and could put $5,000 to $10,000 or more back into your budget per year,” she explains.

And if you have a qualifying child under 13 years old and pay for child care so you can work, see if you qualify for the Child and Dependent Care Credit. You can typically claim from 20% to 35% of your child care expenses—up to a maximum of $3,000 for one person or $6,000 for two or more dependents.

Get a Better Cash-Back Card

Andrea Woroch, a nationally recognized consumer finance and budgeting expert, suggests reevaluating your credit cards to see how well they’re rewarding you for the purchases you’re making anyway. “Look at your year-end statement to see where you spent the most in 2023 and look for a rewards card that gives you bonus cash back for those categories. You can then put that extra cash back to work towards your savings goal,” she says.

She believes that most consumers would earn more money back each month using a flat-rate cash-back card like the Bread Cashback American Express card that offers an unlimited 2% back on every transaction with no spending limit.

Take On a Side Hustle

You can cut down your spending only so much before it starts to affect your quality of life. If you’ve already done everything you can to slash monthly expenses, consider getting a second job or starting a side hustle to bring in extra cash each month. Here are some profitable side hustle ideas to boost your income:

• Pet sitting or dog walking
• Renting your spare room on Airbnb
• Online tutoring
• Freelance writing or graphic design
• Selling your used items on sites like eBay, ThredUp or Depop
• Becoming a part-time real estate agent
• Driving for ride-service companies like Uber
• Starting a blog and monetizing it through ads or affiliate marketing

How Long Does It Take To Save $15,000?

How long it takes to reach your $15,000 savings goal depends on various factors, including:

• Initial deposit amount
• Monthly contribution
• Interest rate, if applicable

Say you start with $50 and contribute $600 into a savings account with a 5.00% APY compounded monthly. In this case, it’ll take you around two years to reach this goal. However, if you up your monthly contribution to $2,500, it’ll only take around six months to build your savings to $15,000. Use our savings goal calculator to figure out how much you’ll need to put away each month to reach your savings goal within a certain time frame.

What To Do With $15,000

With 71.93% of Americans living paycheck to paycheck and having $2,000 or less in savings, reaching your $15,000 savings goal is worth celebrating. But once you’ve patted yourself on the back for your hard work, it’s time to think about what you should do with the funds. Here are a few ideas to consider:

• Invest in stocks or mutual funds
• Pay off high-interest debt
• Use it as a downpayment toward a house
• Max out your individual retirement account (IRA)
• Fund your health savings account (HSA)
• Look into real estate investment opportunities like real estate investment trusts (REIT)
• Start a business
• Support a charitable cause
• Put a portion of it into your emergency fund
• Invest in courses, workshops or certifications

Ultimately, there’s no one right way to allocate your $15,000 since it depends on your unique financial circumstances. However, Shinobu Hindert, certified financial planner and author of “Investing Is Your Superpower,” believes it’s important to strike a balance between investing for the future and treating yourself.

“If you have had your head down and have been working hard without a lot of leisure time, don’t be afraid to invest in some fun. A great solution is to split the $15,000 of savings into buckets. You can invest half of it and spend the other half. Or invest a third, spend a third and park the rest in an interest-earning account,” she says.

If you’re still unsure about what to do with the extra $15,000 in your bank account, consider working with a financial advisor to help you map out the best course of action.