While you must be committed, saving $10,000 a year is more achievable than you think. Setting a goal for raising a specific amount of money can keep you from wasting money throughout the year. We talk you through 14 steps that can help you save $10K in just a year:
Track Your Spending
Before saving, you must fully understand how you spend your money. You can start by opening your bank statement to bring up a list of your regular bills and then look at ad hoc spending throughout the month. You can create a spreadsheet or use a tracking app to identify where you are spending.
Set a Budget
Once you have a clear view of your monthly spending, you can create a realistic budget to pay the bills and allow for extras while saving money. The 50/30/20 budgeting rule is popular, in which 50% of your wage is spent on bills, 30% on what you want each month, and 20% on savings.
Automate Your Savings
So that you are not tempted to skip saving money each month, set up an automatic transfer with your bank for the day you get paid. This “pay yourself first” approach ensures you prioritize saving and don’t rely on leftover funds.
Rethink Needs vs. Wants
It is natural to splurge now and again, but if you regularly buy things you want rather than need, your savings will suffer. Stop and ask yourself if you need to eat out rather than cook or if you can re-wear an outfit rather than buy a new one.
Boost Your Income
If you have free time, you can ask your boss for extra hours or take on a side hustle to earn extra cash. You can take a job that works around your primary career and do as many hours as you need.
Frugal Living
Most of us have an established routine with regular expenses, and we rarely challenge ourselves to save money. Small, frugal changes like cooking from home more, cleaning your home rather than having someone do it for you, or making the most of coupons are just some ways to save money daily.
Challenge Yourself with Saving Games
Make saving fun with small challenges to help you reach your goal. For example, using a jar to collect your small change, having a weekend without alcohol, or spending a month only buying second-hand clothes can boost your savings.
Pay Off Debts
If you have high-interest debt, it is best to prioritize paying it off before setting your $10k savings goal. Any overdraft, loan, or credit card debt means you are paying money for interest that could go into your savings.
Renegotiate Bills
It is essential to review your bank account to see what bills are coming in. You may be paying for things you no longer need, such as insurance premiums for items you no longer own. I’d also like to see if you can negotiate a lower rate through loyalty discounts regularly.
Explore Free Activities
There are many places in your local area that offer free or low-cost entertainment. Explore lush parks and history museums with free admission days, or participate in outdoor activities like hiking or biking. Summer is a great time to make the most of free events, with festivals and fairs that offer free entry.
Embrace DIY
Learning basic repairs or maintenance tasks can save you a lot of money. This could mean painting your home when renovating or hemming your pants instead of buying new ones. You can take a short course, learn from family members, or watch YouTube videos for guidance.
Share Expenses
If you are always the person who puts your hand in your pocket and pays the bill, stop. While treating people you care about now and again is nice, consider splitting costs with friends. You can also share streaming service subscriptions and household items with housemates.
Shop around for the Best Interest Rates
Rather than keeping your savings in a general bank account, you should shop around for the accounts that offer the best interest on savings. Some accounts offer higher interest rates if you are saving long-term, and others offer bonuses if you are up for taking a few investment risks.
Have Emergency Fund
No matter how on top of your finances you are, there are times when life throws us a curveball, and we need extra cash. Aim to build an emergency fund with 3-6 months of living expenses to cover unexpected costs and avoid going into debt. If you are fully prepared, you can quickly get back on track to reach your $10k goal once your finances settle.