How to save $20,000 in a year

It's easy once you break it down into simple steps - here's how.

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Setting yourself a goal to save $20,000 in a year might seem aggressive, but it's definitely achievable.

The key? Break it down into a smaller goal of saving $1,666 a month, and it's suddenly a lot less daunting. And make sure you're getting a solid rate of interest on your savings account, so your savings are working for you. (Easy tip: the Finder app can automatically compare your existing account's rate and tell if there are better rates out there.)

$20,000 seem to much? Just apply the same rules to a smaller amount. With any savings goal, you need to set yourself a clear target and design a budget to help you achieve it. Here's how to do that.

Step 1: Set a goal

Think about why you want to save. Are you planning a holiday? A renovation? A home deposit? A new car? Want to pay off your mortgage? Need to put money aside for next year’s school fees? Regardless for what it's for, having a clear financial goal helps you to focus on why you’re saving in the first place.

A clear goal will also help you determine the amount you need to save and your time frame for reaching that amount. For example, your goal could be to save $20,000 to take the family to Disneyland in Paris in a year from today.

Setting a specific goal is much more effective than having a vague goal like "Save some money so we can go for a holiday someday" Remember, goals work best when they're realistic, measurable, achievable and have a set time frame for completion.

Step 2. Set a budget

The next step is to look at your budget. List everything you need to spend money on each month and the amount of money you bring in each month. Outlining your income and expenses helps you to see where you’re spending too much and where you can save money.

When putting together your budget for the year, set yourself really clear goals of how much you want to save along the way. For example, to save $20,000 a year you need to save $1666 a month and $385 a week. Set yourself a reminder at the end of each month to check how you're going with your budget. If you've a bit under one month, you'll know you need to be extra frugal to make up for it the following month.

Step 3. Make it happen

You need to be continually checking in on your progress against your budget throughout the year. If you're having trouble meeting your monthly (or weekly) targets, you need to look at your spending and make some changes.

If you've gone through your spending with a fine-toothed comb and can't find anywhere to cut back, you could try to increase your income instead. Ask your boss for a pay increase, switch to a new job that offers more money or take up a side hustle.

If you find yourself constantly caving to impulse purchases, you might want to consider a savings account or term deposit that offers bonus interest when you leave your money untouched. That will reduce the temptation to spend your savings, and you'll earn more interest too.

Compare savings accounts

Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees
Virgin Money Boost Saver (25+ year olds)
1.5%
0.1%
1.4%
$0
Intro rate of up to 1.50% p.a. for the first 3 months and an ongoing bonus rate of 1.20% p.a. thereafter when monthly criteria is met (T&Cs apply). To earn these bonus rates customers aged 25+ need to deposit at least $2,000/month into your bundled Virgin Money Go Transaction Account and make 5+ transactions/month.
Rabobank High Interest Savings Account
1.35%
0.25%
1.1%
$0
Maximum variable rate of 1.35% p.a. for 4 months, reverting to a rate of 0.25% p.a. No deposit or withdrawal conditions. Available on balances below $250,000
MyState Bank Bonus Saver Account
1.1%
0.05%
1.05%
$0
Ongoing, variable 1.2% p.a. when you deposit at least $20 into the account each month and make 5 or more Visa Debit card transactions from a linked MyState transaction account. Bonus interest available on balances up to $250,000.
Great Southern Bank Home Saver Account
0.95%
0.05%
0.9%
$0
Ongoing, variable 0.95% when you deposit at least $2,000 into a linked Everyday Snap Account each month and make 5 or more Visa Debit card transactions per month. Bonus interest available on balances up to $250,000.
Bank of Queensland Fast Track Starter Account (for 14-24 year olds only)
2.5%
0.05%
2.45%
$0
Only available to those aged 14-24. Ongoing, variable 2.5% p.a. when you link to an BOQ Day2Day Plus Account, deposit $200+ into the Day2Day account each month from an external account and make 5 eligible transactions a month. Max bonus interest applies on balances up to $10,000. Balances between $10,001 and $250,000 will earn a lower bonus rate. Base rate applies on balances over $250,000.
Virgin Money Boost Saver (18-24 year olds)
1.5%
0.1%
1.4%
$0
Intro rate of up to 1.50% p.a. for the first 3 months and an ongoing bonus rate of 1.20% p.a. thereafter when monthly criteria is met (T&Cs apply). To earn these bonus rates customers aged 18-24 need to deposit at least $1,000/month into your bundled Virgin Money Go Transaction Account and make 5+ transactions/month.
Bank of Queensland Fast Track Saver Account
1.05%
0.05%
1%
$0
Ongoing, variable 1.05% p.a. when you link to an BOQ Day2Day Plus Account, deposit $1,000+ into the Day2Day account each month from an external account and make 5+ eligible transactions per month. Available on balances up to $250,000.
Virgin Money Grow Saver
0.65%
0.1%
0.55%
$0
Earn an ongoing variable 0.65% p.a. each month you make at least one deposit of any amount and no more than one withdrawal.
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