No matter your timeline, saving $5,000 is achievable with some discipline — provided your budget allows for it. For supersavers, there’s also a savings challenge that nets $5,050 in just over three months.
If you don’t have a budget and want to save money, now is the time to make one.
A budget’s main purpose is to help you track your spending, plan for upcoming bills and set a practical savings goal. Before starting your plan to save $5,000 in a year, create a budget to see if you can realistically afford it.
If you’re confident you have enough income to save $5,000 in a year, then creating a simple savings plan might be the ticket.
You can tackle a $5,000 savings goal in several ways:
As you work on saving $5,000, you may want somewhere secure to store that cash. A high-yield savings account (HYSA) provides FDIC or NCUA insurance and can help your savings grow without any extra work from you.
HYSAs have significantly higher interest rates than average. The average rate on a savings account is just 0.46%, whereas HYSAs often offer rates between 4% to 5%. (1)
With a high interest rate, insurance and the ability to set up automatic transfers for easy savings, a HYSA is a great place to store savings while you’re saving and well after you’ve met your $5,000 goal.
| Savings APY | Balance | Interest earnings after 1 month | Interest earnings after 6 months | Interest earnings after 1 year |
|---|---|---|---|---|
| 5.00% | $5,000 | $20.37 | $123.48 | $250 |
| 0.46% | $5,000 | $1.91 | $11.49 | $23 |
If you want to save $5,000 quickly, the 100 Envelope Savings challenge can help you save $5,050 in just 100 days.
To start the challenge, gather 100 envelopes and label each from one to 100. Next, you’ll add money to each envelope every day for 100 days, adding the amount that corresponds to the envelope’s number. For example, you’ll add $1 to the number ‘one’ envelope or $100 to the ‘100’ envelope. Once you stuff all 100 envelopes, you’ll have saved $5,050.
The order in which you fill the envelopes does not matter, but it’s often easier not to go in order. If you go in order, you’ll need to save $1,045 in the last 10 days of the challenge — which may not be easy or even feasible.
Similar to the 100 Envelope Challenge, you can try a monthly version and save $1 through $30 every day for 30 days, which yields $465 in savings. If you repeat the 30-day Envelope challenge for 12 months, you can save $5,580.
If you struggle to save manually, consider automating your savings contributions.
You can set up your direct deposits to divide automatically among your various accounts, such as 80% of your paycheck to checking, 10% to your savings account and 10% to a brokerage account. Automating these contributions reduces the mental load, and you no longer have to rely on willpower to save every month.
If you get paid biweekly, you’ll need to save around $192.30 per paycheck to reach a yearly savings goal of $5,000.
There are also other automatic savings tools, such as the SoFi Checking and Savings account savings round-ups. This feature rounds up each debit card purchase to the nearest dollar and deposits the rounded-up amount into the SoFi Savings account automatically.
It’s easier said than done, but you’ll probably need to reduce your unnecessary spending to save $1,000 per month. A great way to cut spending is by identifying expenses that can be reduced or eliminated.
Some places to look for savings include:
Narrow down top savings accounts by monthly fees, APYs and features. For a closer comparison, tick the Compare box on multiple options to see the benefits side by side.
Saving $5,000 in one year can be achieved with a smart plan and enough room in your budget. To reach $5,000 in 12 months, you’d need to save at least $416 per month. Breaking down those contributions into weekly or biweekly deposits might be easier than making monthly lump sums.
Additionally, placing your savings in a HYSA can grow your funds passively and provide peace of mind thanks to federal deposit insurance.
Compare and read our savings account guides for more top accounts to store your savings.
The 100 Envelope Challenge is trending on TikTok as a way to quickly save money. We share tips on maximizing savings and modifying your goals.
The Upgrade high-yield savings account offers one of the highest APYs available. The only catch is you need to have a $1,000 balance to earn.
A sinking fund is money that you set aside for an expected upcoming expense, such as Christmas, vacations or car maintenance.
A money market account offers check writing abilities and a higher interest rate, while a savings account has lower deposit requirements.
Deciding whether one, the other or both make the most sense for your financial situation.
The banks that offer the best vacation and travel savings accounts are SoFi, Upgrade, Bread, Bask, Varo, Marcus, Barclays and more.
If you struggle to save, you could benefit from a savings account or CD that won’t allow you to withdraw funds.
Uninterrupted compound interest accounts pay interest on your initial balance and the interest you continually earn if you don’t withdraw.
How to choose the best savings account for your situation.
Some of the top banks with the highest interest rates are Customers Bank, TAB Bank, Cloud, UFB, Bread, Bask, Upgrade, Varo and more.