How to Save $500 in a Year

By Kaitlyn Szabo • April 24, 2019

Are you financially prepared for a $500 emergency? If your answer is “no,” you are not alone. According to a 2018 Federal Reserve report, 4 in 10 adults would not be able to pay for an unexpected $400 expense or would need to sell something or borrow money to cover it.

While life’s unplanned expenditures can hit us hard, having an emergency fund provides a small cushion to soften the burden.

Here’s how to save $500 in one year to bolster your emergency fund.

Think about this savings goal as a monthly bill:

$500 yearly goal / 12 months in a year = $42 monthly saving goal.

Now, review your budget and find an expense to cut out and another to scale back on to save at least $42 every month that you can transfer over to an emergency fund.

Here are the three steps to focus on:

Cut out $21 of expenses
Scale back on another $21 of costs
Transfer over $42 monthly into a separate savings account

Ideas for Expenses to Cut Out

What is something I can completely stop spending money on to save $21 every month?

Cancel an unused membership, recurring subscription, or other regular paid service
Designate one day every other weekend as a “no spend day” and try a free activity
Avoid extra fees by using your bank or credit union’s ATMs and limiting overdrafts

Ideas for Ways to Scale Back

What is something on which I can spend less money to save $21 every month?

Eat out one less time a month, or reduce your order by one appetizer or drink
Call your service providers (like insurance companies) to ask for a lower rate
Extend the time between non-essential personal care appointments (like hair cuts)

Need more ideas for how to save? Here are 54 ways to save money from America Saves.

Keep Your Emergency Savings Separate

Be sure to put your savings into a separate savings account to keep emergency funds away from your day-to-day money.

If you want to automate your savings plan, you can schedule a recurring monthly deposit of $42 from your checking account to your savings account, or if you get paid through direct deposit, you can set up a direct deposit of $42 from your paycheck straight into your savings account.

Money Management E-newsletter: April 2019