Saving $10,000 can be life-changing and so it might seem like a daunting goal. But it does not have to be difficult to save the money if you make a plan. Changing your spending habits can go a long way, as well as starting a side hustle. Once you have $10,000 in your savings account, you have a plethora of options for what to do with it. Choosing investments can help you save even more.
Everyone has spotted a product on television or while walking across the mall that they wish they could afford. Maybe it’s an upgrade from your old Hyundai to a more modern Tesla. Perhaps it’s a new set of guitars, loop pedals, and speakers for your band. In many cases, saving $10,000 can help you afford those costly wish-list items. As long as you plan carefully and start to trim around the edges of your lifestyle, then $10,000 is not an insurmountable sum to save in 365 days.
The first order of business is to establish a monthly budget and list your monthly expenses. This will give you a good idea of what is already going in and out of your bank account and how much you need to save. Once you decide how to cut costs, it might be time to get a side hustle to help contribute to your savings. When you have that $10,000, what should you do with it? We will cover all these steps and more to help you build $10,000 in savings and get on the road to further financial success.
Saving $10,000 by the numbers
The first step to reaching a goal of $10,000 in savings is dividing it up throughout the year. It might put your mind at ease to think of it in smaller increments. Just to break it down:
Let’s look at an example of how saving in different areas can add up to $10,000 over a year.
|How to save||Amount saved|
|Eat out less||$2,400|
|Lower your housing costs/work remotely||$3,200|
|Trim around the edges||$1,000|
|Use public transportation||$1,000|
|Create a savings goal||$1,200|
|Get a side hustle||$900|
|Invest and earn interest||$300|
8 steps to save $10,000 per year
Everyone has a different budget and lifestyle, so you will have to determine the best ways for you to save. But these actions can potentially alter your finances and help you save money throughout the year.
1. Understand and edit your monthly budget
Many people feel they have a comprehensive knowledge of what goes in and out of their bank accounts, but they don’t know the details. The first step is to record EXACTLY how much money is coming in and going out, noting even the smallest details. Once you have a full grasp of your income and monthly bills, then you can start to cut items. Here are some questions to ask yourself:
- Do you know the specific amount that you spend each month, and if so, how precise are you?
- When you pay your bills, what are the exact due dates?
- Are the due dates the same every month, or do they differentiate?
For example, say you currently live more or less paycheck-to-paycheck. You receive $5,000 a month, and $5,000 goes to various expenses. Now you know you need to add or cut $833 per month to reach that $10,000 savings goal at the end of the year. That would trim your monthly budget to around $4,150. The next steps can help you do that.
2. Eat out less
Those wonton crisps that you keep ordering on Friday nights at 1 a.m. aren’t helping your budget. The best way to remedy this situation is to cook more food yourself. You would be surprised at how many dishes are easy to cook without too much prep work. It also can give you a chance to diversify your diet. If you hate shopping or meal planning, you can use an app to have your groceries delivered or sign up for meal prep kits.
Potential savings: $200 per month or $2,400 per year
3. Lower your housing costs
Housing costs are often people’s largest expenses, so cutting them can make a huge difference. As remote work has become more commonplace, many people aren’t chained to one location anymore. Thus, many people have moved to a new city with a lower cost of living. For instance, Singapore is one of the most expensive places in the world, even more than New York or London. Right across the border of Singapore in Malaysia, homes are a fraction of the cost. Therefore, many workers will live in Malaysia and commute to Singapore. If you work remotely, you can live pretty much anywhere you want. It might be time to consider exchanging your big-city apartment for a more affordable house in the suburbs.
Potential savings: $266 per month or $3,200 per year
4. Trim around the edges in your life
Once you take a look at your monthly budget, you will probably come to the conclusion that a lot of your spending is superfluous and can be trimmed. This doesn’t mean that you still can’t do what you like to do; you just need to be smarter about how much you spend on it. For instance, say you go to Starbucks for a Caramel Macchiato most mornings. Why not just brew your own coffee instead and put some caramel syrup in it? Instead of opting for fancy microbrews when you are out with your friends, maybe get the cheaper beers from your college days. Pretty much everything you do can be trimmed around the edges to save money.
Potential savings: $83 per month or $1,000 per year
5. Use public transportation
Public transportation is a great way to save money, help the environment, and improve your health. One of the features of “blue zones,” or areas of the world with the longest lifespans, is consistent walking and less driving. Public transportation can also be a great way to explore your city and the people in it. And you can save money on gas, parking, tolls, etc.
Potential savings: $83 per month or $1,000 per year
6. Create a savings goal and stick to it
In this case, we are talking about $10,000, but you might want to have an even higher goal. Saving $50,000 over 4-5 years could be enough for a down payment on a house. With such a long-term goal, it’s important to stick to your budget but be realistic. For example, you might not be able to save $833 in one month, so you only save $533. This means that next month you need to save $1,133 to stay on track. As long as you stick to your plan and understand the numbers, you can sometimes eat caviar and sometimes eat Hot Pockets. Of course, you can also save a smaller amount as part of your overall savings plan.
Potential savings: $100 per month or $1,200 per year
7. Get a side hustle
Earning some extra income from a side hustle can help you reach your savings goal without having to trim as much from your budget. Everyone knows the tech companies in the gig economy, such as Uber, that are famous for providing side hustles. However, if you have a special ability, you can turn that into a business without an intermediary. For instance, if your parents are from Peru, and you know how to make a special ceviche, this could be an opportunity. You can head to your local farmers market or craft food festival and set up a booth. Or maybe you would be a great math tutor or you could teach people to sew. Think about how you could turn your skills into extra cash.
Potential savings: $75 per month or $900 per year
Looking for a side hustle that will help you save $10,000 this year? Here are some job opportunities to consider.
8. Invest and earn interest
If you already have some money saved and you are trying to turn it into an extra $10,000, put your initial money in an account that earns interest. Different CDs and money market accounts will be available at your local bank. And as long as they are below the $250,000 FDIC insurance mark, you are virtually guaranteed a return.
Potential savings: $25 per month or $300 per year
What to do once you have the 10k in the bank
Once you have the 10k in the bank, you should spend it immediately on superfluous items like a rare Pogs collection from 1992, right? NO! You worked hard for this money, and you need to do what you can to preserve it or pay down debt. Here are some examples:
Pay down urgent debt
Debt is not always a bad thing — it can allow you to leverage your money to get a mortgage grow your wealth through real estate. However, credit card debt and student loan debt can be stressful and hurt your credit score. Pay down high-interest debts if you can.
Build an emergency fund
Any financial advisor will tell you that an emergency fund for unexpected events is a must. This $10,000 can sit in a savings account that will earn a bit of interest but will be easily accessible.
Invest it in traditional or alternative markets
The best part about saving money is that once you have it you can grow it with investments. For those with a low-risk investment profile, sticking the 10k in an ETF or a mutual fund can be a great way to get exposure to a market, with relative stability. For those who are more adventurous and have a high-risk profile, cryptocurrencies and other alternative investments can offer a higher return.
Buy real estate
Many people want to save $10,000 to put towards a down payment on a house. Depending on the state of the housing market, you could turn that investment into a lot more money by purchasing real estate. Or you could finally have your dream house.
How much do I need to put away to save $10,000 in a year?
In order to save $10,000 in one year, you need to put away an average of $833 per month or $27.50 per day. However this is an average, and some months/days will probably be different.
What is the fastest way to save $10,000?
The fastest way to save $10,000 is to lower your budget by a few hundred dollars. Lowering your housing costs or cutting out a car payment could help. If you also invest while saving the extra money, this could speed up the process.
What is the 30-day rule?
The 30-day rule is when you defer all non-essential purchases and splurges on superfluous buying for 30 days. This is one way to help you reach a $10,000 goal.
How much will I have if I save $100 a week?
If you put $100 in your savings account per week for 52 weeks, that’s $5,200 at the end of one year.
- Saving $10,000 is an attainable goal that can help you afford major purchases and open up doors in your life.
- The first order of business is defining what exactly your expenses are. Then you can have a good idea of how much you need to cut out.
- You can start by eating out less and cutting out superfluous items to help you attain your goals.
- You won’t have to trim as many items from your budget if you pick up an extra side job.
- After you save the $10,000, you might want to pay off debts, then invest the money to protect and grow it.