Saving $10,000 in a year may sound like a lofty or even impossible goal, but it is indeed doable. Provided you take the right steps, that is. And saving that five-figure chunk of change can have many benefits, such as helping you get out of debt, save, and invest.
How you go about saving $10,000 a year is up to you. You can accomplish it through budgeting, a side hustle, and other means. It’s a matter of finding what makes sense for your personal situation and financial style.
If you’re interested in achieving this kind of savings, read on. You’ll learn the scoop on:
• Is saving $10,000 a year possible?
• What are the benefits of saving $10,000 a year?
• What are the best ways to save $10,000 a year?
Is Saving $10,000 a Year Possible?
Wondering how to save $10,000 in a year? It’s possible if you can create at least that large a difference between your income and expenses. In other words, it’s just simple math.
If you don’t have at least $10,000 a year left over after all of your expenses are accounted for, you have two options to close the gap. You can either increase your income or reduce your expenses, or try a combination of the two techniques. Of course, you will also need systems in place to save that extra money, too.
Socking away $10,000 can be well worth your while. It can set you up with a significant amount of money that can help improve your financial wellness today and tomorrow. Next, take a closer look at how that could play out for you.
Benefits of Saving $10,000 a Year
The benefits of saving $10,000 may vary depending on your finances, but there are several ways it can be beneficial to the average person. Here are some things you can accomplish:
• Start an emergency fund
• Pay off debt — credit cards, student loans, personal loans, etc.
• Invest money in a portfolio
• Take a vacation
• Fund a wedding
• Save for retirement
• Add to one’s savings for a down payment on a house
• Help you buy a car
• Tackle a home renovation project
• Lower your stress levels and boost your self-esteem.
These are just a few of the potential benefits of saving $10,000 a year, but there are limitless ways in which putting that much money away can help. It may not be easy at first to save such a big sum ($833.33 a month in after-tax dollars), but you will likely be glad you did it.
12 Helpful Tips for Saving $10,000 a Year
As mentioned earlier, there are two basic ways to help you save $10,000 a year: decreasing your expenses and increasing your income. Saving money is important, for sure, but saving five figures in a single year can require true dedication, sacrifice, and smart financial management. Here, powerful steps to take to succeed in this money mission. Saving $10,000 in a single year will probably require a few of these tactics simultaneously:
1. Setting Your Goals
Setting financial goals is important because once you have a large aspiration in mind, you can then create smaller, actionable steps that can ultimately lead to success.
If saving $10,000 in a year is your goal, you might then see how you can alter your budget to get there. Having your goal might motivate you to save. For instance, if you typically go out for lunch Monday through Friday, you might pursue the smaller, actionable goal of ratcheting that down to once or twice a week. At the same time, you might set a goal of bringing in an extra $100 or $200 a month in income (more on that below). The idea is, by establishing your goals, you can take the right steps to achieve them. .
2. Creating a Budget
Creating a budget is worthwhile for two big reasons:
• It helps you see where your money is going. It’s possible you are spending a lot of money on things that are not very important to you. Thus, you might identify some areas where you can cut back.
• Budgeting helps hold you accountable. Having a budget means you can’t always spend money however you please. While that can be a harsh reality check at times, it will likely help keep you progressing towards saving $10,000 a year.
One important aspect of creating a budget is finding one that works for you. For some people, that means going all in on the 50/30/20 budget rule. For others, it might be keeping track of expenses with an app. Experiment a bit, and find a method that suits your personal and financial style.
3. Spending Less on Eating Out
One way to cut back on spending is to eat out less, as briefly mentioned above. The average American spends $198 a month on food prepared away from home, according to the Bureau of Labor Statistics’ Consumer Expenditure Survey.
Not only is to-go food pricey, it can be less healthy than what you prepare at home. While going cold turkey and abandoning takeout altogether may make you feel deprived and lead to your abandoning the effort, why not take a smaller step? If you vow to, say, cut down on your to-go mochaccino every morning and make it an only-on-Friday treat, it might become a ritual you look forward to that much more. This treat at the end of the week can help reinforce that you’re doing a good job saving. Go on, pat yourself on the back for your success!
4. Tracking Your Progress
Tracking your savings is a good idea because you probably aren’t saving $10,000 all at once. You don’t want 11 months to go by and find that you’ve only saved $1,000.
It isn’t necessary to assess your progress every day, but seeing where you are at the end of each month tends to work well. You can do this at the same time as paying your bills, reconciling your budget, and any other month-end tasks. When you know you are on track, it will keep you motivated to save.
Another way to check your savings is to use the tools your bank provides; many have online or mobile methods to see your balance and how well you’re advancing toward a goal. There are also apps available, separate from your bank account, that can help you keep tabs on your savings.
5. Automating Your Finances
Thanks to online banking, it’s possible to entirely automate your savings strategy. For example, you can set up a high-yield savings account and schedule a transfer to it from your checking account each time you get paid or once a month.
Automating your finances is a good idea because not only is it convenient, but it also facilitates your staying on track. If you have to set money aside manually every month, you might wind up spending some of it instead because friends invite you to join a pricey dinner or there’s a sale on something you’ve been eyeing. When you automate a transfer, though, you likely raise the odds that the cash makes it into your savings.
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6. Having No-Spend Months and Weeks
Also known as a no-spend challenge, another strategy is to have certain periods when completely cut out some of your spending. This can come in the form of spending no money whatsoever on certain days. Or you might completely cut out certain categories for 30 days, such as buying new clothing. However you decide to cut back, this gamified technique may make it more engaging, delivering a big boost to your savings.
7. Spending Less on Entertainment
Going out can be fun, whether it’s to see a movie, a concert, or to a bar. But these nights out can also be expensive, especially when you are looking for easy ways to save money.
Of course, the goal doesn’t have to be to cut these things from your budget entirely. If you usually go to the movies a few times a month, you can make it once a month instead. If you are taking your whole family to the movies, that alone can easily save you over $100 per month.
Also take a look at your at-home entertainment costs. How many streaming platforms do you really need? It’s not uncommon for people to have several pricey ones, which can add up over the course of a year. Try canceling a couple and enjoy putting those savings towards your goal of $10,000.
8. Having a Side Hustle
Cutting back on expenses can be an obvious way to save, but some of us already have quite low expenses. If that is the case, you can earn money with a side hustle and use that income to bolster your savings.
One of the easiest ways to start a side hustle is to use the skills you already have to do some work on the side. For example, if you work as a programmer, you can do some extra coding on the side on a freelance basis. You might also consider opportunities that are possible in your free time, such as driving a rideshare on the weekends or walking dogs.
9. Selling Items That You Do Not Use
Many of us have items lying around that we don’t really use, whether it’s that espresso machine you never got the hang of or a leather jacket that just didn’t suit your style. Why not try selling some of your stuff? Items like electronics, jewelry, and furniture can be valuable, but any bit of cash can help pump up your savings.
Selling your gently used items can be relatively easy on sites like eBay and Facebook Marketplace. Take a look around, and see what you have that might be worth something.
The Takeaway
If you’re wondering how to save $10,000 in one year, know that it’s possible if you find the right combination of smart budgeting, expense whittling, and income building. The solution will be different for each person, depending on their income, expenses, lifestyle, and financial style. By budgeting carefully, cutting costs, and finding ways to bring in more cash, you can accomplish this goal.
Looking for a great place to save your extra money and get some tools to help you budget and track your progress? Consider a high-yield bank account with SoFi. You’ll spend and save from one convenient place, as well as have tools to help you save while earning a hyper competitive interest rate. And with no account fees and a competitive APY, you’ll get the most out of your money.
FAQ
Is saving $10,000 a year good?
Saving $10,000 a year is great. It can help you accomplish a variety of financial goals, such as saving, investing, and paying off debt.
Is $10,000 a lot to save in a year?
It is, for many people, a considerable amount. Here’s a point of reference: More than half of Americans can’t cover an unexpected $1,000 expense. And it may be unlikely that the rest of the population have $10,000 saved. While saving $10,000 a year is a lot, it is possible.
How much do you need to earn to be able to save $10K a year?
How much you have to earn to save $10K a year depends largely on your expenses. The average annual household expenses were $61,334 in 2020, according to the Bureau of Labor Statistics. Thus, if you are like the average household, you would either have to earn at least $71,000 after taxes to have a margin to save $10K, reduce your expenses by $10K, or do some combination of earning more and spending less.
Photo credit: iStock/AndreyPopov
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