Graham Stephan: How To Save $10,000 Fast
Everyone could use an extra ten grand, but saving that amount sounds impossible for most.
However, personal finance expert Graham Stephan explained why he disagrees in a YouTube video called “How To Save $100,000 FAST.” He pointed out that the average American saves just 5% of income and that one in four households doesn’t have any emergency savings. It doesn’t have to be this way, he said.
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For those who have trouble saving or who are looking for a road map, Stephan offered six steps to save $10,000 quickly.
Break It Down
The first step to saving $10,000 fast is to break it down into something more manageable. Stephan suggested determining a realistic time frame instead of just using an ambiguous period.
For example, to save $10,000 in one year, you’ll need to save:
$833 per month
$27.40 per day
$1.40 per hour
$0.02 per minute
While the details aren’t essential, they give you a snapshot of what you must do to achieve your goal. Saving $27.40 a day sounds more doable than the daunting task of saving $10,000.
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Start Now
Stephan’s second step is to start as soon as possible. It’s easy to get started when you’re excited and motivated, but the longer you wait, the less motivation you’ll have. Capitalizing on your momentum is a better strategy than waiting until you pay off the big expense that’s coming up. If you don’t begin immediately, you might not get started at all.
Keep a Budget
Budgeting is a key element of saving. Stephan explained that if you’re going to find a way to save $27.40 each day for a year, you’ll need to track your expenses. Using a budgeting or money-tracking app simplifies this task.
Stephan said the average American spends almost $18,000 annually on nonessential items. Budgeting and keeping tabs on your spending habits in real time allows you to determine which expenses you should reduce or eliminate.
Reduce Spending
After tracking your spending habits for 30 to 60 days, you’ll be able to find areas where you can cut back spending. You also can look for cheaper options for essential expenses like car insurance and internet.
Stephan said saving is more impactful than increasing your income. Earning money costs money to do. You’ll often need to spend money on areas such as travel, internet use and taxes on your earnings. On the other hand, deciding not to go out to eat puts the money you would’ve spent directly in your pocket.
Here are some areas that Stephan recommends you focus on to reduce spending:
Housing
Monthly housing payments take up the largest percentage of the average budget. If you can reduce your costs in any way, you can save a lot. Some ways to pay less in this category include finding a cheaper place, renting out a bedroom, asking the landlord for a reduction and cutting back on utilities.
Transportation
Owning a car can be a big expense. If you’re not able to take public transportation, you might want to consider getting a more fuel-efficient and reliable car instead of a flashy new car that doesn’t do much to cut your costs. Stephan also recommends keeping your car as long as possible rather than trading it in for a new one every few years.
Taxes
The average single American worker paid 29.9% of their income in taxes in 2023. While everyone must pay taxes, understanding how the system works and how you can take advantage of it is important for saving money. If you don’t have the time or patience to understand the tax system, hiring an accountant to help might be beneficial.
Food
Stephan cited a study that concluded the average person in the U.S. spends about $6,600 on food annually. That breaks down to $550 a month, 40% of which is from eating out. While it’s important to treat yourself and your family, Stephan explains that going out to eat or getting food delivered because you’re lazy is terrible for your savings.
Debt Repayment
Debt is a killer when it comes to saving. Stephan said the average American has $5,700 in credit card debt with a 24% interest rate. This means the average American pays $114 a month in interest. Paying off your debt not only means spending less on interest but also being able to put all of the money toward saving. This should be your No. 1 priority, as it will help you get to $10,000 in savings the fastest.
Apparel
Stephan said Americans spend an average of $133 on clothing each month. He recommends you take a look at the clothes you already have. If you’re wearing certain shirts and pants 90% of the time, you should try to cut your clothing spending in half.
Pay Yourself First
Paying yourself first means taking out a predetermined amount of money each month for savings before paying any expenses. Most people first take care of housing expenses, groceries, entertainment and other things before calculating how much they can save from what they have left.
Stephen said the average American has a saving problem, not an earning problem. No matter your salary, if you’re living paycheck to paycheck, your spending habits are in the same proportion as your income. This lifestyle inflation, earning more to spend more, is a huge reason people find it hard to save. By setting up automatic deductions from your paycheck, you can pay yourself first and save more.
Side Hustle
Finally, one of the best ways to save is to get an extra income. A simple part-time job can be your primary way to save $10,000. Stephan calculated that if you find a part-time job and earn as little as $15 an hour after taxes, you’ll be able to make and save $10,950 annually by averaging just two hours of extra work per day. If you don’t have any extra time for a side hustle, you may want to try asking your boss for a raise.
Build Your Savings Over Time
Stephan emphasized that making small changes and starting small will grow your savings over the long run. To further improve your finances, put your savings into a high-yield savings account, money market account or CD.
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