Want to Know How to Save $20,000 in a Year? Do This

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Saving $20,000 in just one year might sound impossible – especially if you’re living paycheck to paycheck or struggling with expenses.

But what if I told you it’s absolutely doable with the right strategy?

You don’t need a six-figure salary or extreme frugality to make it happen.

You just need a solid plan, a few smart money moves, and the discipline to stick with it.

In this guide, I’ll break down exactly how to save $20,000 in a year – step by step.

From cutting unnecessary expenses to maximizing your income and automating savings, you’ll discover practical and realistic ways to reach your goal without sacrificing your quality of life.

Whether you’re building your emergency fund, saving for a down payment on a house, or financial freedom, this plan will show you how to get there.

Ready to start stacking your savings? Let’s dive in.

15 Steps to Successfully Save $20,000 in One Year

1. Create a Plan to Save Money

If you want to save $20,000 in a year, you need more than good intentions – you need a solid savings plan.

Think of it like building a house: without a blueprint, everything falls apart.

A plan gives you structure, direction, and the ability to track real progress.

The problem for most people is that $20K is a big, scary, number.

To fix this, start by breaking your goal into smaller pieces.

Doing this makes it feel more manageable:

• $1,667 per month
• About $385 per week
• Roughly $55 per day

Next, set up milestones or a money saving challenge along the way to keep you motivated.

Maybe create a goal of saving $2,500 in the next few months.

This is the trick I used when I was digging out of debt.

Paying off $10,000 felt impossible.

But when I broke it down into smaller chunks, it felt doable.

After you have this part covered, you can start filling in the specifics of your plan, like areas where you will cut back on spending, how you will earn more money, etc.

Finally, make sure you put this plan into writing.

When you write it down, you are 42% more likely to achieve it.

Make sure you look at and review your plan as often as possible (ideally daily) so it can motivate you to keep pushing forward.

2. Create a Budget

After you set up your plan, your next step is to create a budget.

A budget isn’t a punishment – it’s a financial plan that shows where your money is going.

If you’re not tracking your monthly expenses, you’re probably spending more than you think.

First, look at your transaction history from the past three months.

Identify how you spend money, especially on things like dining out, streaming services, and impulse purchases.

Next, break your budget into categories: (This is the 50/30/20 rule)

• Necessary expenses (rent, car payments, utility bills, groceries, gas, health insurance)
• Wants (eating out, buying clothes, entertainment)
• Savings and debt

Cutting back on unnecessary costs like gym memberships (you can workout for free at home using YouTube) or free trials that turn into subscriptions can save you hundreds per month.

The goal isn’t to eliminate fun but to avoid spending traps that keep you from saving money.

Unsure of the right budget system for you? Here is a breakdown of budget methods you can choose from.

3. Cut Unnecessary Expenses

Once your budget is set up, it’s now time to take a hard look at your spending weaknesses – those small leaks that drain your bank account.

Do you really need a $6 coffee every day or that fifth streaming service?

Cutting back doesn’t mean cutting out everything.

If you supermarket shop with a list, you’ll avoid impulse buys.

Cheaper options like generic brands can save you more money over time.

While streaming can cost you less money than cable, having multiple subscriptions adds up.

Consider looking into free streaming sites, which offers a ton of content at no cost to you.

The main key is to stop buying things that don’t add value to your life.

If it doesn’t help you reach your savings goal, reconsider it.

I’ve found two ways of doing this.

The first is to stop buying things.

Instead of seeing something and buying it, I write it down. Then a week later, I review the list.

I’ve learned that many of things I thought I wanted were impulses and I no longer want them.

So, I delete it from my list.

The second thing I do is have a notebook with the things I want in life.

Every morning I review this notebook for a few minutes, to remind me what I value.

This makes it easier to say no to things because I’d rather have the money for what I really want, like a vacation home or to quit working.

4. Reduce Fixed Costs

Most people feel as though their fixed expenses are set in stone, but there are ways to reduce them.

If your rent is too high, consider cheaper options like getting a roommate or negotiating with your landlord.

You could also move to another apartment when your lease is up.

If you have a mortgage, you might be able to refinance or recast your mortgage if you paid off a significant amount.

If that doesn’t work, can you rent out a room, your garage, or attic?

Look at your health insurance too.

If you are relatively healthy, you can save a lot on your monthly premium by switching to a high deductible plan.

The bonus here is that many employers will put some free money into your health savings account, which is money you use to pay for medical expenses.

Finally, don’t forget about utility bills.

Unplugging devices, using energy-efficient appliances, and switching to a cheaper plan can easily save you hundreds a year.

Every dollar saved gets you closer to saving $20,000.

5. Automate Your Savings

The easiest way to start saving is by setting up an automatic transfer to your savings account.

This removes the temptation to spend money before saving it.

If your paycheck is deposited into your checking account, schedule a portion to be transferred immediately – before you have a chance to use it.

It’s like paying yourself first.

Some employers will even let you split your paycheck.

Here you can have 90% go into your checking account and have the other 10% go into your savings account.

The beauty of a recurring automatic transfer is that you only have to do it once and you will continue to save money going forward.

I also encourage you to set up a savings account dedicated to this goal.

But not just any account.

A high-yield account will earn more interest and help your money grow.

My favorite is CIT Bank.

The reason for separate savings accounts is to you can quickly see your progress, which will help to motivate you.

6. Increase Your Income

For most people, simply cutting costs isn’t going to be enough save 20,000 in a year.

You are going to have to earn more money.

The good news is there are many options here.

For starters, you can see if you can earn a raise at work.

Take on more responsibility or learn new skills related to your job so you can command a higher salary.

If your employer won’t give you more money, look elsewhere.

According to recent studies, you can earn anywhere from 5% up to 15% more doing the same job simply by switching employers.

And even if you love your job, go through the process of trying to get an offer.

Most companies will match or come close to it to keep you.

Aside from increasing your income with your career, you should also consider a side hustle.

Gigs like freelancing, tutoring, or selling items online can bring in extra cash without disrupting your full-time job.

If you have a specialized skill, consider part-time jobs or consulting work.

Even an extra $200 a week can help you save thousands over the course of the year.

7. Use Cash Back & Discounts

Another way to free up money to save is to pay less for the things you need to buy.

Why pay full price when you can get free money back?

Sign up for credit card rewards that offer cash back on everyday purchases.

Before buying anything, check for coupons, promo codes, or loyalty discounts.

Here is what I do: before I buy anything online, I see how much cash back I can earn using Rakuten and Swagbucks.

Both of these sites offer cash back at hundreds of retailers. In fact, I usually buy online simply so I can earn cash back.

Then I pay with my cash back credit card as a way of double dipping.

For example, I recently wanted a new laptop.

I went on Rakuten and saw Lenovo was offering 15% cash back (this was around the holidays when most retailers offer crazy high cash back amounts).

I bought a laptop for $1,200 and earned $195 in cash back from Rakuten.

And since I paid with my cash back credit card, I earned another $24, so $219 in total.

Another option is Honey.

You add this to your browser and Honey will automatically apply and coupons to your purchase.

It’s really so easy to save, there is no reason why you shouldn’t be.

8. Use Other Hacks to Get Free and Discounted Stuff

While the previous example is a great way to lower the cost of things you buy, there are other things you can do to reduce costs.

For starters, consider buying used.

You can find many things you want to buy on Facebook Marketplace.

Another trick I like to use is to go to yard sales in wealthy neighborhoods.

You can get high-quality name brand items for a fraction of what they cost new.

And many times, even if it’s old, it is still in excellent condition.

You can also set up price alerts and get notifications when prices drop.

CamelCamelCamel is a popular one for Amazon.

The key is simply to think outside the box.

Make it a game to figure out how to get what you want without paying full price.

9. Limit Dining Out & Entertainment Costs

Eating out often is a spending trap that drains your bank account.

Cooking at home is healthier, cheaper, and can help you save thousands a year.

To make it easier to cook at home, make a list of your favorite meals and then find simple recipes for these dishes online.

From there, pay attention to grocery sales fliers so you are always buying things on sale.

Once I got used to our local grocers sales cycle, I was getting a ton of free food and major savings from sales.

It was common for me to save 50-75% on my shopping trips.

Entertainment is another expensive habit for most people.

Look for cheaper options for entertainment – parks, free events, or even library memberships.

Cutting back doesn’t mean cutting fun; it means being smarter with how you spend money.

I have an article with a ton of ideas for a money free weekend.

I’m certain you will not only find things there to interest you, but you’ll also have a ton of fun!

10. Use the 24-Hour Rule for Purchases

Impulse buys kill savings.

What’s worse is you end up regretting most of the things you bought, which means you basically flushed your hard earned money down the drain.

To combat this, before making a purchase, wait 24 hours. You’ll be surprised how often you realize you don’t actually need it.

I like to make a list of the things I think I need.

Then I revisit the list a few days later.

Not surprisingly, many of the items are no longer of interest.

For the ones that are, I begin working on ways to get that item for less than full price.

This could mean waiting for a sale or searching for a used version on Facebook Marketplace or eBay.

The benefit here is sometimes, even the things I think I still want, I really don’t.

I only realize this after I begin searching for a less expensive version.

By making this one small change helps you avoid spending on things that don’t contribute to your financial goals.

11. Sell Unused Items

If you want to save $20,000 in a year, every bit of extra cash helps.

And one of the easiest ways to get started is by selling things you already own but no longer use.

It’s like finding free money lying around your house.

Walk through your home and take a serious look at your stuff.

Old electronics (you’d be surprised that you can sell old iPhones still), clothes you haven’t worn in a year, kitchen gadgets collecting dust, toys your kids outgrew, books you’ll never read again – they’re all potential money sitting on shelves.

If it’s not being used and it still works or has value, it can be sold.

Here are a few places where you can sell your unwanted items:

• Sell on Facebook Marketplace, OfferUp, or Craigslist for local, fast sales
• Use eBay or Poshmark for name-brand clothes or collectibles
• Try Decluttr for old phones, DVDs, or gaming consoles

I like Facebook Marketplace the most and have had the most success with it.

In the past I’ve used eBay, but the hassle of shipping things makes me use Marketplace more.

The keys to getting top dollar for you stuff is to take great pictures and give a lot of detail in the description.

I like to price in-line with what others are charging.

And here are two tips to help you succeed.

First, don’t give in to a lower price at the start. I usually wait a week or two to see the level of interest before accepting a lower price or lowering the price on the listing.

Second, if an item doesn’t sell, I donate it. Then I write off the value of the item on my taxes.

Granted you have to itemize to take advantage of this, but if you do itemize, you can lower your tax bill.

12. Negotiate Bills & Expenses

Want to save more money without giving anything up?

One of the most overlooked strategies in personal finance is simply negotiating your bills.

Most companies don’t advertise lower rates – but they will offer them if you ask.

Start with your biggest expenses:

• Car insurance: Shop around and get quotes from at least 3 competitors. Then call your current provider and say, “I’ve been a loyal customer, but I found a better deal. Can you match or beat it?” You’d be surprised how often they’ll reduce your premium – sometimes by hundreds per year.
• Phone and internet: Ask for a “loyalty discount” or inquire about current promotions. Let them know you’re considering switching providers unless you can get a cheaper option.
• Streaming services & subscriptions: Look at your transaction history. Are you paying for gym memberships, music, or apps you barely use? Cancel them or ask if there’s a lower-cost plan.

Negotiating doesn’t require special skills – just a phone call and a little confidence.

It’s a powerful way to cut unnecessary costs, avoid spending traps, and free up extra money to put into savings.

One call could be worth more than an hour at a part time job – and it gets you one step closer to your goal.

If you don’t have the time to do this step, use a service like BillTrim.

For a one-time fee, they will negotiate your bills for you.

And if they can’t save you at least $300 in a year, you don’t pay anything for their service.

13. Try a No-Spend Challenge

A no-spend challenge (or savings challenge) is one of the most eye-opening ways to hit reset on your spending habits and jump-start your journey to save 20,000 in one year.

It’s simple in concept: you commit to not spending any money – outside of essentials – for a set period of time.

That could be a day, a week, or even an entire month.

When you commit to savings challenges, you quickly realize how often you’re tempted to spend – like grabbing takeout, buying that one thing you think you need from Amazon, or impulse purchases during an expensive week.

During the challenge, you only pay for true essentials:

• Rent/Mortgage
• Utility bills
• Groceries (no snacks or extras, just the basics)
• Gas, health insurance, car payments, etc.

Everything else? Put it on pause.

No new clothes, no takeout, no subscriptions.

You’ll save more money, build discipline, and likely uncover some spending weaknesses you didn’t know you had.

If this sounds too overwhelming, start small and pick one category at a time.

Don’t buy any new clothes for a month. Next month, no takeout.

Put the money you save from these saving challenges toward your goal of $20K.

Like this idea and want to learn more? Here are close to 50 money saving challenges I’ve come up with.

14. Pay Off High-Interest Debt

If you’re carrying high-interest debt – especially from credit cards – it’s like trying to fill a bucket with a hole in the bottom.

You might be saving money using the tips I outlined, but you’re losing even more thanks to the interest you pay on your debt.

Think of it this way: every dollar you pay in interest is a dollar you can’t put toward your ultimate goal.

Some credit cards charge 20% or more in interest. If you owe $5,000, that’s over a $1,000 a year gone – just for borrowing the money.

And I won’t get into how most of what you bought was probably an impulse buy in the first place.

Here’s how to tackle your debt:

• List your debts by balance and interest rate.
• Focus on paying off the one with the highest interest first (the avalanche method), while making minimum payments on the rest.
• If the balances are similar and you need motivation, you can use the snowball method (start with the smallest balance).

Not sure which debt payoff method to chose? Here is my breakdown to help you decide.

I encourage you to check out my Debt Tracker Spreadsheet as well. Simply enter in your debt info and it will tell you what debt to pay to help you stay on track.

You can also consider a balance transfer credit card with a 0% introductory rate or a debt consolidation loan – but only if you’re disciplined enough not to run up your cards again.

Every debt you eliminate reduces your monthly expenses, frees up extra money, and brings you closer to financial stability.

Once that interest drain stops, your money can finally start working for you – not against you.

15. Track Your Progress & Stay Motivated

Setting a big savings goal like $20,000 in one year is exciting – but without tracking your progress, it’s easy to lose focus.

You wouldn’t start a road trip without a map, and the same goes for your financial plan.

If you can see how far you’ve come, you’re more likely to stay motivated and finish what you started.

Start with a simple system:

• Use a spreadsheet, a budgeting app, or even a wall chart.
• Break your goal into monthly and weekly targets (e.g., ~$1,667/month or ~$385/week).
• Log every time you make a deposit into your savings account or cut an unnecessary cost.

This visual progress gives you momentum. When you see your bank account growing or your spending habits improving, you feel empowered.

Along the way, be sure to celebrate small wins.

Hit a $5,000 milestone? Treat yourself with something free or low-cost, like a favorite meal at home.

Of course, it won’t always be a smooth ride.

Along the way, you will hit bumps in the road.

When things get tough – like unexpected living expenses, expensive weeks, or temptation to spend money – review how far you’ve come.

Your record reminds you why you started and helps you escape spending traps that could derail your progress.

Remember: this is a marathon, not a sprint.

With each week, you’re not just building a bigger balance – you’re building powerful savings habits that can lead to long-term stability and peace of mind.

This is how you don’t just save $20,000 – you change your relationship with money for life.

And here is a bonus idea to keep you motivated: use an accountability partner.

I’ve used one for paying off debt, but there is no reason why you can one to help you save money.

Simply tell them your goal and update them on your progress.

This works because you get excited to tell them how things are going and they can help rescue you when things are tough.

Where to Put Your Money: Savings Account vs. Stock Market

When it comes to saving money, the stock market is one of the best places you can put your money because it offers a higher rate of return.

But with the savings plan we are talking about today, you don’t want to save money in the market.

You want to keep it in a safer investment.

The reason for this is simple: one year is too short of a period to grow your money considering the risk involved.

Yes, the market will allow your savings to grow into more money.

But you also risk losing it.

The stock market can drop 5%, 10%, 20% or more in one year.

There is nothing worse than doing all this hard work to save money and then the market tanks one day and your $10,000 investment is only worth $8,000.

So here is your rule: For any savings goals where you need the money in less than five years, start saving in a savings account or other safe investment. (I highlight many of the options here.)

For goals longer than five years, invest in the market.

You might even consider investing in dividend paying stocks so you can begin earning passive income.

But that is a topic for another day.

Final Thoughts

There are your steps for how to save 20000 in a year.

Saving $20K might sound like a stretch – but as you’ve seen, it’s absolutely within reach with the right plan, mindset, and consistency.

It’s not about being perfect or depriving yourself.

It’s about making intentional choices, cutting back on what doesn’t matter, and creating new savings habits that support your long-term goals.

Whether it’s reducing expenses, increasing income, or finding small ways to save money every day, each step adds up.

Over time, those small wins compound into something big, along with the confidence that you’re in control of your future.

Start today. Apply just a few of the steps outlined here, and you’ll be surprised how quickly your momentum builds.

You’ve got this – and your future self will thank you.