Here’s How You Can Save $10,000 in a Year or Less — It’s Easier Than You Think
Whether it takes you 12 weeks or 12 months, you can reach your savings goals simply by sticking to a plan. If your goal is to save $10,000 in one year, here are some tips and tricks to steadily grow your bank account.
See: 3 Things You Must Do When Your Savings Reach $50,000
How To Save $10,000 in a Year
Whether it’s by examining and breaking down some of your biggest expenses or simply taking on some extra income, saving $10,000 in a year could be more doable than you think. Here are 10 steps to take to start saving:
Break down the amount you need to save
Review your personal finances
Make a budget
Cut back spending on nonessentials
Save money on essential expenses
Earn more income
Save your windfalls
Don’t pay interest on your credit cards
Make your savings automatic
Save in a high-yield account
1. Break Down the Amount You Need To Save
Saving $10,000 may seem like an insurmountable task, but if you break it down, it’s much more manageable. If you want to save $10,000 in a year, you’ll need to shave $833.33 off your monthly budget — or add $833.33 to your monthly income.
Still overwhelmed? That’s the same as $384.61 every two weeks, or $192.31 per week. If you really want to break it all the way down, it’s $27.40 a day.
2. Review Your Personal Finances
To know where you can save money, you first have to know where your money is going.
Using a spreadsheet or budgeting app, list all of your household income. Include salaries from W-2 jobs and any money you earn from side gigs, investments, pensions or government benefits.
Next, go through your last few months’ worth of bank and credit card statements and receipts and list all of your monthly spending, including rent or mortgage payments, bill payments and debit purchases. Also log your cash spending — small purchases you make without much thought add up.
Now subtract your monthly expenditures from your monthly income. If you’ve got at least $833.33 left over, you’re all set — just transfer that amount into a savings account each month and you’ll have $10,000 within a year. If, on the other hand, your leftover income falls short, you’ll have to make up the difference.
3. Make a Budget
A budget will keep you accountable for your spending. The first step is to divide your expenses into two main categories:
Essential: Mandatory spending is any expense that’s necessary for your health, safety and financial well-being. Groceries, housing, child care, elder care, transportation, utility bills (including wireless and internet), insurance, medical care and professional dues and licensing fees all count as mandatory. Loan payments and minimum payments on your credit cards are also mandatory expenses, as are basic clothing purchases.
Nonessential: Nonessential expenses are things you enjoy but could live without if you had to. Cable, streaming subscriptions, gym memberships, meal deliveries, dining out, delivery subscriptions and miscellaneous optional purchases all fall into this category.
You’ll note that some of your essential expenses are fixed and some are variable. Payments for fixed expenses like rent, insurance and loans are the same every month — or every quarter or year, depending on how they’re billed. Calculate how much you need to put toward these each month.
Variable expenses like groceries, utility bills and credit card bills change from month to month. Average them out across 12 payments.
Add up your fixed and variable monthly expenses and subtract the total from your income. That’s how much you have left after your essential expenses. Subtract your $833.33 savings goal from that amount to see how much you have left for nonessential spending.
What happens next depends on whether you’re left with a positive or negative number.
If it’s a positive number — for example, $6,000 in monthly income less $4,000 in essential spending equals $2,000, less $833.33 equals $1,166.67 — you can simply pare down your nonessential spending to the amount left over after you sock away the $833.33.
If it’s a negative number — for example, essential spending leaves you with just $500 at the end of the month, which is $333.33 short of the savings goal even without nonessential spending — you’ll need to reduce your essential spending and/or generate more income.
4. Cut Back Spending on Nonessentials
Nonessentials are the easiest expenses to cut back on, so they make a next step toward giving your savings a major lift.
Cancel or Rotate Subscriptions
Look carefully at subscriptions to see which ones you can eliminate. Don’t let the fact that they’re low-priced fool you — eliminating a few subscriptions at just $5 each per month can add up pretty quickly. If you don’t want to give them up entirely, rotate between your favorites, pausing those that you don’t need right now.
Cancel or Downgrade Your Gym Membership
Unless you’re a hardcore bodybuilder, body weight workouts can be a good, no-cost alternative to weight training at a gym. In addition, you can trade on-site fitness classes for free or low-cost online versions — or participate in a sport or other activity to maintain your fitness level.
Save on Entertainment
Instead of going out for full-priced dinners, opt for happy hours and restaurants with weekly specials, or go to lunch instead. Better yet, invite your friends to take turns hosting dinner parties, potluck dinners, wine tastings, game nights — whatever works for the type of entertainment you enjoy.
If you typically spend money on live performances, check for Groupon discounts before you buy tickets. Also check local venues that might offer quality shows for less than the major venues charge.
Save on Gifts
Take advantage of savings offered by shopping apps like Rakuten, Ibotta and Capital One Shopping. You can even choose fewer or less expensive gifts and make it the thought that counts.
5. Save Money on Essential Expenses
Essentials are the goods and services you can’t live without, but that doesn’t mean you can’t get some of them for less.
Pay Less for Groceries
If you’re still buying name brands, particularly for things like paper products, consider switching to generics. And look at how much food you’re throwing out because it goes bad before you can eat it. Planning meals in advance, and shopping based on that plan, can help you avoid overbuying and waste.
If your weekly grocery shopping includes a trip to the warehouse club, make sure you’re taking advantage of it in the right way. When you compare prices between the club and your regular grocery store, don’t forget to factor in the annual membership fee. If you only go to the warehouse club every couple of months, that $60 annual fee could be adding an extra $10 to your bill each time you go. Make sure it’s still worthwhile.
Cut Your Cable, Internet and Wireless Bills
Cable, internet and wireless providers are sometimes willing to discount services, but you’ll have to get on the phone with a representative to ask for a break. If they’re unwilling to reduce your monthly fees, consider scaling back your data or transfer speeds or switching to a different provider to reduce your costs.
If you’re still paying for cable, switching to antenna TV and streaming over the internet service you’re already paying for could free up $100 a month, according to CNET.
Spends Less on Gas
Gas is taking a bite out of everyone’s budget these days, so be sure to shop around for the best price. Using a gas app can help you find the best deal wherever you are, even if it’s near home. Your regular gas station may not have the lowest price every day, so it helps to compare. And try to consolidate trips so you’re driving less and using less gas.
Reduce Your Insurance Premiums
It’s a good idea to review your homeowners/renters and auto insurance policies periodically to make sure you have enough protection, first of all, and also to make sure you don’t have more than you need. Eliminating collision and comprehensive coverage on an older car or increasing your deductibles as your savings grow could save you money on your premiums. So can shopping around for less expensive coverage or bundling policies with the same company to earn a discount.
6. Earn More Income
You have three options for increasing your income: ask your employer for a raise, get a new, higher-paying job or take on a side gig.
Average wage growth was 5.8% as of February 2023, according to an analysis by Zippia. That’s not bad, but with an average salary of $60,996, a raise might not be enough to get you to your savings goal. Changing jobs, on the other hand, increases salary by an average of 14.8%, according to the Zippia analysis. That increase alone could earn you enough extra cash to save $10,000 even without changing your spending habits.
The other option is to take a second job or add on a freelance gig. Walking dogs, delivering groceries and ride-sharing can all bring in $16 to $20 an hour if you’re in an area with high demand, according to ZipRecruiter.
A note of caution about a side hustle: Make sure you set aside some of your additional income for taxes. If you earn extra money all year long, you may need to pay estimated taxes every quarter so that you aren’t penalized at tax time.
7. Save Your Windfalls
When you get a windfall like a tax refund, year-end bonus or raise, it’s tempting to splurge on something you’ve been wanting. But if you use that money to pay off high-interest debt or put it into savings right away, it can make a big dent in your $10,000 goal.
8. Don’t Pay Interest on Your Credit Cards
According to the Consumer Financial Protection Bureau, consumers who carry credit card debt paid 94% of total interest and fees charged to U.S. cardholders, but they earned just 27% of the rewards from major credit card companies.
If you carry a balance on your credit cards — even if you’re racking up points and cash back — you’re paying extra every month for that tank of gas you’ve already used and that dinner you’ve long forgotten. Pay off your credit cards, and then stop using them.
If you have credit cards that charge an annual fee, consider getting rid of them. There are so many fee-free cards that have rewards and other bells and whistles, there’s really no good reason to pay an annual fee if you’re not getting the value back in rewards you actually use.
9. Make Your Savings Automatic
This will help you stay on track with your savings goals. Have part of your paycheck direct deposited into a savings account. If you have a side hustle, have that money go directly toward savings, too, making sure you account for taxes.
10. Save in a High-Yield Account
The average savings account balance earns just 0.46% interest as of Dec. 18, 2023. However, some high-yield savings accounts pay over 10 times that much, and high-yield CDs can pay even more, especially on CDs with terms of 12 months or less.
How much difference does this make? At 4.60% interest compounded daily, a $10,000 savings balance would grow to $10,470.71 after a year — that’s $470.71 in free money, with no risk to your initial deposit. At 0.46% interest, the same $10,000 balance would grow by just $46.11.
Takeaway
If you take all of these steps and you realize the projected savings indicated, you’ll have saved $10,000 by the end of the year. Now you can put that money toward a special long-term goal or keep it in the bank as a financial cushion.
You could even try a money-saving challenge to make a game out of saving money for you and your family.
FAQ
How long does it take to save $10,000?
With some careful budgeting, you can save $10,000 in a year. The breakdown for what you would need to shave off your budget looks like this:
$833.33 per month
$384.61 every two weeks
$192.31 per week
$27.40 per day
How long should it take to save $10,000?
If you save $500 a month, it would take you 20 months — close to two years — to save $10,000. You can increase or decrease your monthly savings to save $10,000 in more or less time.
Saving $10,000 in one year would mean saving $833.33 every month.
How can I save $10,000 in three months?
To save $10,000 in three months, you would need to save $3,333.33 each month, or $833.33 per week. You can get started with that goal by examining your budget and determining what you can cut out, then deciding if you need to pick up a side gig or two.
Karen Doyle and Caitlyn Moorhead contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: Here’s How You Can Save $10,000 in a Year or Less — It’s Easier Than You Think
