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Saving $10,000 in a year is a great goal to have, and believe it or not, it’s achievable. It may not feel like it just looking at the number - it’s big, there’s no doubt. But, with the right steps, some discipline, and a little thinking outside the box, you too can save $10,000.
It doesn’t matter if you have a specific goal in mind, like buying a house, setting up an emergency fund, or a rainy day fund. How you save money is what matters.
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Crunch the Numbers
Before you try saving $10,000 in a year, crunch the numbers. Know how much that comes out to each month. For the standard person, it means saving $833 a month. If that’s not possible because you work on commission or have higher expenses during certain times of the year, play with the numbers.
Work out a plan that feels doable for you. That’s the key. Looking at $10,000 and saying you’re going to save that feels like climbing Mt. Everest. But, if you say, ‘I need to save $500 a month or $800 a month,’ it sounds a lot more doable.
So start by crunching the numbers, then you can use the steps below to save $10,000 in a year.
10 Steps to Save $10,000 in a Year
1. Revisit Your Budget
If you already have a budget, revisit it. If you don’t have a budget, create one now. Your budget is your roadmap, telling your money where to go and what to do. Without a budget, you don’t know where you need to spend your money or even where it goes.
We suggest pulling your bank and credit card statements from the last 12 months and categorizing your income and spending. First, are you making more than you spend or vice versa? If you’re upside down, fix that first.
Next, look at where you can cut back, so you have room to save. You may find you already have room, and you just weren’t allocating the money to your savings or investments. If you don’t have the room, get creative using some of the steps below.
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2. Break the Goal Down Into Manageable Pieces
If you’re starting over on your budget, don’t throw a big number out there and expect it to work. Even $833 can seem overwhelming in a month if you’re already living paycheck-to-paycheck or close to it.
Knock it down even further into a weekly or daily goal. For example, to save $10,000 a year, it breaks down to $192.31 a week or even $27.39 a day.
3. Cut Back on Spending
Once you have your number that you must save daily, weekly, or monthly, figure out where you can cut back on your spending. This is where your budget plays an important role.
Look closely at your spending and in each category. Most people are shocked at how much they spend when they break it down. Here are some common categories people overspend in and try to cut back:
- Eating out
- Nail, hair, or other grooming appointments
- Coffee shop stops
- Unlimited data on cell phones
- Unneeded memberships or subscriptions
4. Shop Around for Cheaper Services
As you look at your expenses, look at the services you must have, such as car insurance or even cell phone service, and see how you can cut back. For example, when’s the last time you shopped around for cheaper insurance? You may save a few hundred dollars or more a year just by changing your insurance.
The same is true of cell phone services, the internet, or even health insurance. Any service you pay for regularly, see what other options you have to decrease your costs. Every dollar you save puts you that much closer to saving $10,000 in a year.
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5. Save First Spend Second
When you set up your budget, make sure savings are a line item in it and always save first. Just like you probably pay your mortgage and car payment first each month, pay yourself first each month too.
Too many of us spend then save, only to find out we don’t have any money to save at the end of the month. When you treat saving like a bill, you’re more likely to make sure it happens on time every month.
If you aren’t sure how much to save, consider the 50/30/20 budget where 50% of your budget is fixed expenses, 30% is ‘wants, or unnecessary expenses,’ and 20% of your income goes to savings.
6. Automate Your Savings
If you’re worried about not saving money, automate it. You can do this a couple of ways:
- Set up direct deposit to your savings account. Many employers allow you to split up your direct deposit into multiple accounts. Choose a fixed amount to direct to your savings account and let it happen automatically from your paycheck each pay period.
- Set up automatic deposits from your bank account. If you don’t have direct deposit or would prefer the transfers come from your checking account, set up recurring deposits from your checking account. Just choose the amount and the date, and it will continually transfer to your bank account every month.
7. Consider a Side Hustle
If you don’t have money to save, consider starting a side hustle. Any money you bring in from the side hustle, you can use to reach your $10,000 savings goal. Side hustles could be anything from answering surveys online to driving for Uber or freelance writing online.
Today it’s easy to find a side hustle. People start side hustles selling craft items that they love to make, walking dogs, or transcribing audio into written format. A quick search online for side hustles with your skills or passions will show you the possibilities to make extra money to reach your savings goals.
8. Invest Your Money
The fastest way to reach your savings goals is to make your money work for you rather than the other way around. Investing your money may make it grow faster than a low-interest savings account may allow.
Investing can mean buying stocks and bonds, investing in a CD, or even a high-yield savings account. The key is to earn interest higher than the amount your local bank will pay (which is usually pretty low). The more aggressive you are with your investments, the faster your money will grow, though. Just make sure you don’t invest too aggressively and make yourself uncomfortable.
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9. Track Your Progress
Tracking your progress is important when trying to save $10,000 a year. You may find you have days or weeks that are great and others that you don’t save as much. Cut yourself some grace, learn from your mistakes, and move forward.
If you find you’re on the right path, keep going. If your tracking shows that you’re behind on your goals, figure out where you can pick up the slack to reach your $10,000 goal. It may take a little trial and error to get there.
10. Don’t Give Up
No matter what happens, don’t give up. Changing your saving, spending, and other personal finance habits takes time. You may fall behind some days and other days do great - the key is to keep going.
Be as consistent as possible in your efforts, and don’t give up if you get behind. There are always ways to pick up the slack, whether you start another side hustle, cut back further on your spending, or invest more aggressively.
The Bottom Line
It’s not as hard as it seems to save $10,000 in a year. It takes consistency, dedication, and a whole lot of grace. Let yourself make mistakes, but learn from them. See what you can do to save more money or to cut back on what you spend.
The more dedicated you are to saving $10,000 in a year, the easier it is to make changes to your personal financial habits. In time, saving $10,000 in a year won’t seem hard, and you may even increase your goal to save even more!