A lot of goals and events in your life come down to one main factor; Money. It’s true that money isn’t everything but it’s also true that money buys you freedom and options. Sometimes, we need an amount that's larger than usual to give us some of the options we want. I’m talking a five-figure amount.
Is a house down payment or epic trip is something you’ve been pining away for? Or maybe you want to kick your student loan debt to the curb once and for all? Or perhaps, you want to bulk up your investment accounts?
Well, saving an extra $10,000 this year could definitely help.
If you have struggled to save in the past or earn a low income, it might seem like a pipe dream. But don't dismiss it yet. What if I told you that with some hard work, and some financial resiliency, you can save $10,000? Here's a plan to help you do just that.
Figure out what saving $10,000 breaks down to
When it comes down to the basics of saving $10,000 in a year, you need to know what it breaks down to, and what it looks like. Cold hard numbers motivate you to save more than a fancy affirmation on a whiteboard does.
When you look at a number, you’re either saving it or you aren’t. Saving money is like losing weight. The number isn’t going to lie.
Each month for 12 months, saving $10,000 would break down to $833.33. That may seem overwhelming for a lot of people, including myself, so let’s break it down to something that’s smaller than someone’s rent payment. Finding money to save in smaller increments may seem more achievable to you than trying to find almost $1,000 a month.
If you are paid bi-weekly, saving $10,000 would equal putting aside $384.62 per paycheck. If you are trying to decide what it would be weekly, it would mean finding $190.30 to stash. No matter what number you prefer to break it down to is up to you but the point is, this is what you need to hit your goal.
Finding ways to save $10,000
Now you know what the break down is, let's go over specific ways in which you can start saving!
1. Save on bills
The easiest way to find $833 dollars to save per month is to sit down and go over your expenses with a fine-tooth comb. Some people may not have a significant amount to cut but twice as many have expenses that can easily be trimmed.
Now is the time to call your providers and see what you can negotiate. Is there a service on your cell phone bill you’re not using? Are you carrying too much insurance coverage on a vehicle considered a beater? See what can get cut and pay for only what you need.
The biggest expense someone has in their budget is usually rent but see if you can get a roommate or if you would be better off finding a new place to rent altogether.
A great tool to keep track of your spending, recurring bills and subscriptions is a tool called Truebill. It can help to monitor your overall financial big picture, your spending and even negotiate the cost of certain bills like your cell phone or internet service to a lower rate.
2. Cut back on eating out
Americans love eating out and the typical household spends thousands a year doing so. Even if you aren’t eating at a fancy restaurant every week, coffees and lunches through the drive-through add up.
If the money factor wasn’t enough to persuade you to start bringing lunch more often, think of the calories you’ll be stopping from going to your waistline if you stopped eating out so much. Start packing a salad and learn how to make tasty meals at home more often.
3. Reduce your entertainment costs
If you’re a social butterfly, you might spend a few hundred on outings with friends per month and not even realize it. Brunch, happy hours, admission and Lyfts can run you to $300 a month easily.
I give myself $50 a week and I’m amazed at how it feels like I can barely make it cover one activity a week sometimes. But, I have found doing stuff at home more with friends, such as potlucks or game nights seems not only more relaxing but also doubles as a budget saver.
4. Find ways to earn more
A lot of people don’t have $833 a month to cut from their expenses. This is a fact. While I always advocate trying to find money to cut from your budget to avoid wasteful spending (more money in the bank means more money to travel!), but I’m also a firm advocate of earning more.
As a Latina, I earn on average 53 cents to a white non-Hispanic male’s dollar. I can’t save money I don’t earn. The only way to save more for a lot of people, including myself, is to earn more.
Make a list of all of your accomplishments for the past year and ask your boss for a raise. If a raise isn’t in the cards, ask how it could be. You may need additional training or skills so ask for a performance plan to get what you need so you can take your career to the next level.
Sometimes a raise isn’t realistic for your job or employer and in that case, it would benefit you (and your career) more to seek another position elsewhere.
If a new job or raise isn’t feasible, you can still earn more money. We live in a gig economy with so many jobs that can be done from home, online or both! Uber is a fast way to earn money while driving if you enjoy being around people and seeing your city. If people aren’t so much your speed, consider signing up to pet sit or walk dogs.
You can also make money from flipping items found at Goodwill on eBay, freelance writing or being a virtual assistant. So many gigs require different skill sets so there is bound to be something out there for you.
I’ve been able to grow my income to almost 65% as a non-profit professional by going back to school and negotiating my pay. I’ve also grown a successful freelance business by looking to support other small business owners. I’m a people person so when others win, I win.
My skill set allows me to flourish in both positions above. Once you discover what skills set you have, your options to earn more are endless!
5. Find easy ways to automate your savings
One way I’ve been able to hit my savings goal, such as saving to study abroad or financing an emergency vet bill, is by automating my savings. For example, my bank allows me to move a dollar into my savings account every time I swipe my debit card.
By not realizing I have small amounts being transferred here and there, I am pleasantly surprised to see a few hundred dollars in my savings account by the end of the year without having to think about it. You can automate a transfer like this or even a small but mighty amount per paycheck, then increase it little by little as you go.
6. Try a spending fast
One way to jump-start your savings, and to help you reach your goal faster, is to try a spending fast for a month. A spending fast is when you give up shopping or spending in certain categories to limit your cash flow.
By planning ahead, you’re able to distinguish your needs and wants to help you spend less and save more. A lot of people limit spending to just essential items such as food to be prepared at home and gas while others allow themselves a meal out or a pass to check out a new film they’ve been wanting to see. A spending fast and what you do with it is completely up to you.
By limiting your spending to needs and not wants, you can see realistically how much you need to get by. You’re also able to see what you waste money on and what expenses you can cut even further. Another benefit to a spending fast is you find ways to simplify your life, which results in less stress less cash being spent. All of this equals more money in the bank.
In summary - Remember what you’re saving for. You’re worth it
At the end of the day, a lot of personal finance is emotional. Our minds have different money scripts we may be trying to break after believing false money beliefs for years. This isn’t your fault and now that you know better, you can do better.
Remember why you started your big hairy audacious goal of saving $10,000 in a year in the first place. Was it to travel? Max out your retirement to help you achieve financial independence faster? A college fund for your kids? Or maybe it was the down payment for the little house on the corner that keeps making your heart sing.
Whatever the reason, remember you are worth it. It’s okay to put you, your needs and desires first. This doesn’t mean you’re selfish or greedy. Putting yourself first helps ensure you are able to be your best self and in turn, give more to others. Only when you have a solid foundation can you be of true service. This looks different for everyone but you know in your heart of hearts what it looks like for you.
A lot can change in a year. Saving $10,000 in a year doesn’t have to be unrealistic. It can be yours by cutting expenses, earning more and resetting the belief in yourself that you can do it. I think the question now isn’t going to be if you can but instead when are you getting started?