Do you want to save $10,000 in a year?
Maybe it's for a down payment on a home or to build up your emergency fund.
Either way, saving money can be a challenge for anyone, especially if you want to save $10,000.
In this post, I'll explore some of the best ways you can save $10,000 or more in a year, how to save $10,000 fast, and what to do with $10,000. Let's get started!
Do the Math
When you're trying to figure out how to save $10,000 in a year, you'll need to start by doing the math. This means figuring out how much money you'll need to save each month to reach your savings goal.
$10,000 in a year amounts to $833.34 each month. So you can think of it as “how can I save $833 each month?”
Depending on your spending habits and income this could be easier for some but will certainly be a challenge for others.
Find extra cash each month to reach your financial goals will take some discipline and hard work – but it can be done.
Related: 65+ Frugal Living Tips
Create a Budget
The most obvious way to boost your savings is by creating (and sticking to!) a budget. Creating a monthly budget is an excellent way to keep track of your finances to help you save money fast.
Start by analyzing your previous spending habits with a fine tooth comb. You can use this information to create categories for your spending and allocate a certain portion of your budget towards. For example, if you routinely spend $200 on entertainment expenses each month – this is a good starting point for your budget.
You'll also need to analyze your income to budget correctly. Write down your total income for the month including any supplemental income you make from side hustles, interest payments, or a part time job. If you are paid bi weekly you can simply double your income to get your total monthly income.
Now it's time to see where your finances stand. Subtract your expenses from your income to see if you have a surplus each month or not.
If you are left with a positive number, you can save more money each month.
If you are left with a negative number, this means you are losing money each month. You'll need to cut costs or earn more to balance your budget.
If you want to save money you'll need to track each dollar you spend. The goal of creating your budget is to be left with zero dollars at the end of the month. Every dollar should be accounted for.
Related: Ways to Drastically Cut Expenses
Establish an Emergency Fund
If you haven't already heard of an emergency fund – also called a rainy day fund, it's time to learn. Emergencies happen, it's only a matter of time.
Having an emergency fund can help you to weather these storms and reach your savings goal.
To start your emergency fund, it's wise to stow around $1,000.
Once you've reached this level, it's time to move to the next.
Your next savings goal should be equivalent to 6-9 months of living expenses. This includes items like your mortgage or rent, utility bills, groceries, and other critical monthly expenses you cannot live without.
This money should be stored in a savings account and only be used for true emergencies. Items like routine car maintenance, a vacation, or new television do not classify as an emergency.
Make Saving a Habit
One of the best ways to save money is by making it a routine habit.
You've probably heard that it takes around 21 days to establish a habit in your life. That's doesn't change when it comes to saving money.
Each week, try to set a small savings goal to better form your habit.
You can also make small tweaks to your everyday life to increase your annual savings. Things like avoiding snacks from inside the gas station or using your local park to save money on entertainment costs are both great options.
Have No Spend Days
Do you have days set aside where you don't spend any money?
These no spend days can help you reach your savings goal faster than you think.
Incorporating a regular spending freeze into your routine can help you to start saving money. You don't need to do them every other day, but it's important to get them penciled in on the calendar.
So how do you do a no spend day?
In theory, it's quite simple – you pick a day and don't spend any money that day. In reality though, it's much more difficult.
You'll need to plan your no spend days ahead of time so you can plan your schedule accordingly. Because the average household spends money every day, saving money can be difficult.
Meal Plan to Expedite Savings
Meal planning can be a great ways to eliminate wasteful spending to reach your savings goals without making extra money.
If you're looking to save more money, try planning your meals ahead of time so you don't find yourself in line at your favorite fast food restaurant at the end of the day. If you aren't sure how much you should be spending on food, try running the numbers based on the size of your family.
How do you meal plan?
First, create a calendar that lists the meals you will eat each day of the week. Then, create a grocery list that contains all of the ingredients and items you'll need from the grocery store. Not only will this limit eating out, but it will also help to reduce over spending at the grocery. Finally, prepare your meals for the week and store them for easy access.
The savings you generate from meal planning can become a nice chunk of your $10,000.
Related: Best Cheap Foods to Save Money
Start a Side Hustle
Starting a side hustle isn't necessarily a way to save money, but it can help you to increase your income to save $10,000.
There are thousands of side hustles you can consider based on your skills and hobbies. For example, making money selling candles can be a great method for those with a creative side.
Side hustles are perfect for low income earners looking to save $10,000 because of how accessible they are. Anyone can start a side hustle if they have the free time and motivation.
You can deposit your earnings into a savings account for it to grow even further and reach your savings goal.
So what are the best side hustles to help you save $10000 in a year?
I like side hustles that pay well and you can get started quickly.
With these side hustles you can earn money in your time off to boost your savings.
Cancel Unused Memberships & Subscriptions
One of the quickest ways to save money each month is by cutting out unused memberships – yes, we're talking about that gym membership you got in January.
Another common culprit – subscriptions. Items like streaming services and music subscriptions can often be eliminated from your budget to save money.
When you cut bills you can easily save money and reach your lofty goal of saving $10,000.
Take Advantage of Compound Interest Accounts
Storing your money in a compound interest account is a no brainer when it comes to saving $10,000.
By storing your savings in these accounts, you can earn extra money each month with no work required.
I recommend opening a high interest savings account to earn interest and increase your income while also saving money.
There are a few account options you might consider for your savings. A certificate of deposit or money market account are also good option to store your savings.
Celebrate Savings Goals Along the Way
To save $10,000 in a year, it's going to take some time and motivation. To stay motivated, celebrate the small wins along the way.
This doesn't mean you should go overboard, however.
Celebrating might include a meal at your favorite restaurant, a night out at the movies, or something else that won't break your budget.
Reduce Debt to Save Money
If you've never experienced the negative consequences of debt, you probably haven't realized how much it can stifle your savings goal.
Because of this, it's important to reduce your debts as much as possible before starting your savings goal.
Just think, what if all of your debt payments went towards your savings goal?
Automate Your Finances
With the technology of the 21st century, the logistics of saving money have become much simpler.
Long gone are the days of having to manually transfer money between your checking account and savings account. Now you can complete this step automatically.
Setting up automatic transfers to pay down debt, save money, or make your monthly mortgage payment are all great ways advance your financial situation.
Eliminate Fees to Boost Savings
Between credit card fees, banking fees, and others, it's possible to accumulate a few hundred dollars of fees each year.
To save money, try to eliminate as many of these fees as possible.
This means making credit card payments on time, finding a bank account with zero fees like SoFi, and paying your utilities with an automatic payment from your checking account.
Related: Truebill vs Mint
When shopping for groceries you can easily save money by switching to generic alternatives that often taste extremely similar.
This is an easy way to cut your bills instantly without any effort and it can make a huge dent in your savings goal.
Are the premium brands really worth the extra cost? I don't think so!
You can also save money using Ibotta at the grocery.
Save on Landscaping
Nobody likes landscaping. But spending your hard earned dollars on it can damage your savings.
Instead of paying some one else to do it – boost your savings by doing it yourself.
Reaching your savings goal will require you to make some sacrifices like this but it's certainly worth doing.
How to Save $10,000 Fast
Many of the methods listed above will help you save $10,000 fast but I've added some faster methods below!
Ask for a Raise
Asking for a raise at your current job can be one of the easiest ways to boost your income and save more money.
If you want to better your chances of increasing your pay – come with numbers and data to backup your performance.
Related: How to Ask for a Raise
Sell Items Around the Home
If you need cash fast, you might consider selling unused items from around your home.
This can include items like clothing, old electronics, furniture, and any other items you can make money with.
House Hack to Increase Savings
Saving money by house hacking is a great way to reach your goals.
What is house hacking?
It involves renting out a portion of your living space to others in order to lower your housing costs and save money each month.
What Should I Do With $10,000 Savings?
If you currently have $10,000 saved, you might be wondering what to do with it. Should you keep it save? Perhaps invest it? Maybe use it to pay down your mortgage?
Below I'll explore some of the best things to do with 10k.
Depending on your financial situation, investing your 10k can be an excellent option to make extra money each month on your financial journey.
I would recommend investing your savings into a low-cost index fund or ETF. These investments are well-diversified and grow at an average rate of 7% annually.
Making your money work for you is great advice for anyone looking to strengthen their financial future.
Pay Down High Interest Debts
For those with large amounts of high-interest debts – namely credit card, personal loans, or student loans, paying down these debts should be a top priority.
These forms of debt can wreak havoc on your life and cost you a fortune over time.
What is a high interest rate debt?
I consider any debt with an interest rate over 5% high-interest.
Use it For a Down Payment
If you plan on purchasing a house in the future, you know you'll need a down payment. Depending on the house, this can be a sizable amount of cash.
It's common to pay anywhere from 3% to 20% of the borrowed amount for the down payment of your house.
It's worth noting that you'll need to have this cash stored in a bank account to be considered a down payment.
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Save for a College Fund
If you have children, saving for their education can be an excellent choice for your money.
With the rising costs of college, saving for their future education can be vital. Just like saving $10,000, saving for a college fund will take some time.
As a bonus, you can open some investment accounts to grow your savings as your children age.
Final Thoughts on How to Save $10,000 in a Year
No matter your timeframe, saving $10,000 is going to be a challenge.
Whether you plan to use your money for a down payment on a home or use it to invest for your child's education, saving money is essential for almost everyone.
Do you have any savings ideas you've used to save cash? Comment below!