If you target this goal, know upfront that you’ve given yourself a serious challenge. Building a savings fund of $50,000 in 12 months will require you to set aside $5,000/ month, and this will take some extreme measures to make it happen. First, look at every single dollar you can cut from your current spending. Here are a few ways to aggressively trim your expenses.
Move in with a friend or family member to cut rent: Offer to do work around the house in exchange for room & board.
Sell Assets you May Not Need Anymore: My friend recently moved back to the city, and has decided to rent for a year. Living in the heart of West Loop means a car is not necessary anymore especially with all the public forms of transportation available. Plus the savings on car insurance as well.
Get rid of expenses you don't need: That can include everything from services like Spotify and XM Radio to impulse shopping for new cloths are gadgets.
Downgrade services for cheaper options. Perhaps you can reduce your insurance coverage and drop the cost of your monthly premiums. Other places to consider: your cellphone plan and your groceries. Your new rule should be “If I don’t need to buy it, I won’t.” Remember, you need to bank $4,167 every month. Many people’s total monthly budgets don’t add up to the amount you’re trying to save!
In addition to saving, you’ll probably need to consider earning more to meet your goal. Take on additional work or get a second job to generate more income. While this might not be sustainable for years, doing so for 12 months could give you the boost you need to save that 20%.