Greetings! It never hurts to save more money, and in this post, I'm going to go over how to save $10,000 in a year. There are many ways to save $10,000 in a year, and perhaps the best way to do it is by simply combining multiple ways all at once.
Read on and learn how you can have a savings of $10,000 in 12 months' time. Here are 8 ways to save money that you can start doing immediately.
1. Update Your Monthly Budget
First things first, let's look at your budget. What are you spending the most amount of money on every month? Can you cut that back?
Related Post: Your Detailed Guide for Creating a Budget
One expense my wife and I were spending too much on was eating out, which I'll cover below. Another expense, which may be less common, was how much money we spent on energy drinks.
If you're a regular reader, you've probably picked up at some point or another that I really love energy drinks, despite how terrible they are for me.
We used to each have one energy drink a day, and each one cost around $2.50. So that's $5 a day spent on energy drinks between us. That's $150 per month or $1825 per year! Nuts.
While shopping at the grocery store some time back, we found the same energy drinks in a ten pack for $15.99, or $1.59 each. We then decided we would split the energy drinks instead of having one each.
This effectively lowered our $5 a day spending to $1.59 a day. $1.59 per day comes out to about $580 per year in spending, an annual savings of almost $1250!
What's the moral? Start saving by cutting out the little things from your budget, and you'll be able to reach your goal even sooner.
2. Spend Less Money on Eating Out
Did you know the average household spends around $3,000 per year eating out? That's around $58 per week. I'd wager some of us spend 2-3 times that.
I can tell you my wife and I used to eat out three times per week and spent an average of $500 per month doing so. That's $6,000 per year, by the way – definitely nothing to sneeze at.
A great way to save on eating out is to use an app like Ibotta to go grocery shopping. You'll save up to 10% on hundreds of stores. If you don't have time to shop on your own, grab a grocery delivery service like Shipt. Shipt will deliver your groceries, saving you loads of time.
To slow down on eating out, consider cooking more. Don't know how to cook? Is saving thousands of dollars per year a good enough reason to learn? In the long run, learning to cook will put extra cash in your pocket day after day.
I'm all for going out to eat, but by cutting back on your spending, you'll be closer to saving an extra $10,000 per year.
3. Lower Your Monthly Expenses
Lowering your bills every month is an excellent way to save more money. Some bills can be lowered by calling up your providers and negotiating your rate.
This can be as easy as saying you're a loyal customer, but you're having trouble paying the bill and don't want to cancel.
Many providers will work with you and reduce your rate. This includes your cable, internet, and phone providers, to name a few. The app Trim will negotiate your bills for you and automatically identify subscriptions that you may no longer be using so that you can cancel them. Twenty minutes with Trim saved my wife and me over $1000 a year.
You can cut your utility bills by lowering your consumption. This includes turning down your heat in the cold months, using less air conditioning in the warm months, turning off lights when you don't need them on, and using less water.
My wife and I saved over $3,000 per year simply by lowering our bills. That extra earned cash went straight to our emergency fund, which we keep in a high interest savings account.
Related Post: 11 Life Hacks to Drastically Reduce Monthly Expenses
Consider buying used cars instead of new cars. The average person will save around $150 per month on a used car auto loan versus a new car auto loan.
Related Post: How To Gain $100k From Buying A Used Car
Cancel unused subscriptions like the gym membership you're hardly using (or because you can workout at home).
4. Make A Savings Goal
Saving $10,000 in a year is equivalent to just under $850 per month. Saving nearly $1,000 per month can be a daunting task. So that's why you have to make a goal. Simply making a goal will help your money grow because you'll be more conscientious of what you're spending and what you're saving.
Do a 52-week money challenge where you save money each week. Stick to it because $10,000 saved each year is just under $200 saved each week, or $27.40 saved per day.
As I mentioned above, cut back on your expenses as much as possible. Once you've cut back, if you're still unable to meet your savings goal, you can take on a side hustle.
By combining cutting living expenses and earning more money, you'll have a better chance of meeting your $10,000 savings goal.
Contributing your tax refund to your $10,000 savings goal can also be quite helpful.
5. Have No-Spend Days Regularly
Go on a spending freeze on specific days or a week out of the month. On days where you have a spending freeze, the idea is to spend absolutely no money for any reason outside of an emergency.
Related Post: Your Emergency Fund: Are You Saving Enough?
The more days out of the month that you can go on a spending freeze, the more money you'll save in the long term.
By saving money through spending freezes, you'll not only close in on your goal of saving $10,000 in 12 months, but you'll also learn discipline around spending, which has value in itself.
Spending freezes help you if you're an impulse buyer as well. Many impulse-buys are prevented simply by sleeping on them.
Oftentimes waking up in the morning on a new day is enough to make you forget about the impulse buy that you thought you wanted the day before.
6. Invest And Earn Compound Interest
If you already have money and you're simply trying to save $10,000 more, use your existing money to invest in the stock market. S&P 500 index funds historically grow approximately 9.8% per year when averaged over decades. M1 Finance has an easy-to-use investing account via robo advisors, where you can set up automatic investing for mutual funds or index funds to grow your money on autopilot.
While you may not be able to save $10,000 in a year just from investing, (unless you have a lot of money to invest), you'll certainly be able to set yourself up for some significant earnings.
Compound interest is when your money earns money on itself. It's when you earn interest, and then you earn interest on the interest. Compound interest is often thought of as the eighth wonder of the world.
Use compound interest and investing to start your savings to $10,000.
7. Pick Up A Side Hustle
Besides saving $10,000 in a year, you can also earn $10,000 in a year through side hustles. Side hustles can include making money online while working from home or going out and doing work in your community.
Some people do their side hustles once a week, others do them every day, and some people live off their side hustles, essentially working for themselves all the time on their own schedule.
- The Best Side Hustles You Can Do In 2020.
- 12 Brilliant Ways to Make Money Online for Beginners
- How To Make Money With Print On Demand
- How To Make Money Blogging: An In-Depth Walkthrough
When I was in college, I earned a couple of hundred dollars a week being a math tutor. I didn't quite earn $10,000 per year doing it, but I came close.
Earning money can be easier than cutting back, especially depending on your lifestyle choices.
Almost anyone can pick up a side hustle and start earning extra money on the side. It doesn't have to replace your full-time income, but I can imagine the value in supplemental income is easy to see.
8. Automate Your Savings
Automating your savings helps you save money with each paycheck because you are paying yourself before anything else.
What I do is I have all sources of income come into my Charles Schwab Bank checking account, and then on the first of each month, I send a fixed amount of money to my CIT Bank online savings account. By doing this, I can maximize my savings and earn a solid interest rate on my money.
This fixed amount forces me to save right away. I then have an automatic transfer to my tax-advantaged Roth IRA. Once the two transfers are done, I then use the remainder of the money to cover bills and expenses as well as any fun money that my wife and I decide to use.
By automating your savings and paying yourself, you're essentially considering yourself a necessary expense, which encourages you to save every paycheck.
What to Do With $10,000
You may be on your way to saving $10,000, or you may have already done so. Now, the question is, what should you do with the $10,000? There's several things you can do with the money.
- What was your goal? First things first, why did you need the money in the first place? Were you trying to pay off a debt or save for something in particular? If you had something specific in mind, there's your answer.
- Pay down debt: If you have debt, such as credit card debt, use your hard saved $10,000 to crush it down to zero as fast as possible. Always get out of debt as fast as possible.
- An emergency fund: Perhaps you need an emergency fund. Most people recommend an emergency fund that can cover 3-6 months' worth of living expenses. Designate a bank account solely for your emergency fund.
- Investing: You could invest the $10,000 and compound your money year after year. This is an excellent use of $10,000 if you're looking to make your savings grow further. Aside from the stock market, you can invest in real estate, P2P lending, bonds, into a business, or into yourself. Invested money can be best used for retirement.
- Take a vacation: Okay, you might not want to spend $10,000 on a vacation, but you can sure spend a percentage of it! Check out this post on how to easily save money for a vacation!
- As part of a down payment on a house: $10,000 can definitely be either your entire or part of a down payment on your next house purchase. Track your savings each year and land the house of your dreams.
There are many ways to use $10,000, but my personal opinion is to use the habits that got you the $10,000 in the first place to save more and more each year. When you have all this money saved, you ascend the steps of financial freedom.
By increasing your savings, you get closer to the day where you are debt-free and can be financially independent.
Check out how Liz Brenner saved money and paid down $70k in debt in three years.
Wrapping It Up
When you're trying to figure out how to save $10,000 in a year, it boils down that there are many ways to do it, and oftentimes you'll want to combine multiple ways.
Once you've learned how to save $10,000 in a year, you can challenge yourself to save even more the year after.
This will lead you to financial goals such as owning a house outright, worrying less about unexpected expenses, and having the freedom to enjoy your life because you're not as bound by money being tight as you once were.
What would you with the $10,000 you save?