Yes, You Can Save $1,000 in 4 Months. Here’s How I Did It, Step by Step

My husband and I weren’t always financially savvy. We spent recklessly, lived paycheck to paycheck and made impulsive purchases, like eating out several times a week.

We didn’t have any savings, and we were sitting on a mountain of debt. But everything changed when we found out that we were going to have a baby. We started to think about the bigger picture and the financial costs of raising a child. We knew we had to change how we handled our money. So we set a goal to save $1,000 in four months. Here’s how we reached our goal and how you can do the same.

1. Create a realistic budget

As a couple who had never saved money, $1,000 felt like a challenging feat. We didn’t have a working budget, so we started there. In order to know how much we could save each payday, we needed to know the exact amount we had left after bills. You can use a budgeting app to help or do it the old-fashioned way.

I created our budget by hand. I pulled out a sheet of paper and wrote down the amount of our direct deposits from each of our jobs. Then I subtracted our bills, food and gas to determine how much we could save.

2. Open a high-yield savings account

After we saved our first $100, we started stashing our savings in an American Express high-yield savings account with a 4.9% annual percentage yield -- which helped us reach our goal faster. We knew receiving close to $5 for every $100 we deposited wasn’t much, but it was much more than keeping our money in a traditional savings account with a 0.01% APY. (Note: Amex’s savings rate has since dropped.)

3. Take a close look at your spending habits

Once we knew how much we could save each month, we looked for ways to increase that amount. We categorized how we were currently spending our money by reviewing our past month’s bank account transactions. 

The biggest expense was food. We spent so much dining out that the amount was embarrassing. But the realization helped us start meal planning and planning when we were going to eat out. 

Separating the money that was allocated to bills, we categorized the rest into five categories: food, shopping, fun and convenience. Our fun included movies, museums and concerts with family and friends. We still allotted for meal delivery, professional cleaning and car washing services in our convenience category. 

We didn’t let small miscellaneous purchases blow our budget. Every payday, we set aside $50 to $75 for unexpected purchases, like field trip fees or last-minute coffee dates. Any money we didn’t spend, we moved to savings at the end of the pay cycle. 

We also canceled monthly subscriptions that we were no longer using. And for the ones we kept, we switched to annual payments, which can typically save you a few dollars each month. These two steps alone helped us save a couple of hundred dollars that we added to our savings account.

The area where we realized we could cut back the most was our top spending category: food. We spent an obnoxious amount on fast food, restaurants, convenience apps and deliveries. So, we decided not to spend money on food (other than groceries) for the next month. After that, we set a budget for how much we would spend on restaurants and takeout moving forward.

4. Keep money for expenses and leisure separate

To better help us keep an eye on our spending, we decided to keep our bill money separate from our other leisure expenses. So we opened a second checking account with our bank and nicknamed it “spending.” This account covered groceries, dining out, gas, shopping, date nights and any other spending we needed to do for that payday.

Every payday, we would move the money leftover from budgeting into our spending account. Since we could only spend what we transferred into this account, it prevented us from overspending. Separating our money also helped us to monitor our spending more carefully -- while still making sure other expenses were covered. On average about 30% of our income went to our spending account, 5% went to paying down debt and 10% went into savings, the rest paid all of the bills.

5. Use your skills to add a new stream of income

To meet our goal in time, we knew we needed to boost our income. We found this to be the biggest challenge during our savings journey. We took on side jobs, and they were a big help. I was a full-time accountant but did bookkeeping and personal taxes after hours to make additional money. My husband played piano for special events, like weddings, to bring in additional income.

On average my husband would bring home an additional $250 per month, while I would bring an additional $300 per month. We contributed $200 of the extra $550 per month toward our savings goal, plus $100 from our paychecks to help us reach our goal in four months. 

I love side hustles that don’t require me to leave home. So I considered a few others that may come in handy for you, too -- such as writing resumes on Fiverr and transcripting jobs on Upwork.

6. Don’t let setbacks stop your progress

Our journey definitely wasn’t a smooth one. When we had around $450 in savings, we had to pause our savings efforts to pay for car repairs. Later, when we had accumulated around $750 in savings we had to pull $200 out of our savings account for a small plumbing issue -- setting us back to $550. 

If it wasn’t for these challenges, we may have been able to hit our goal faster or work fewer side jobs. But you never know when an unexpected expense could pop up. A setback may delay your success, but it doesn’t have to prevent you from reaching your goal. 

Ultimately, even with the challenges we experienced, we still hit our $1,000 savings goal in four months.

7. Schedule weekly money dates to check on your goals

We tracked our progress using a savings chart within my budget planner. Each payday we would pull out this chart and color in each amount to have a visual representation of each deposit we made getting us closer to our goal.

My husband and I had weekly money dates every Sunday. We checked on our savings, debt reduction, income and budgeting goals. We also discussed upcoming purchases and made adjustments for the coming week, like lowering our eating-out cadence from five days a week to two.

These conversations kept us aligned and made a major difference with our finances. We also made these dates as fun as possible, by having our favorite dessert or watching a movie together afterward. Then, after hitting our savings goal, we went out for a celebratory dinner. But our money check-ins didn’t end there. At the restaurant, we celebrated our discipline and began plotting out new financial goals.

Making money talks a regular part of your relationship can help you stay on track, and get you and your partner excited about working together toward new savings goals.