Are you tired of living paycheck to paycheck and struggling to save money? You’re not alone. Many people find themselves in this situation, but the good news is that there are steps you can take to turn your financial situation around.
In this article, we’ll share 10 clever steps to save big in a year. From creating a budget and cutting back on expenses to boosting your income and automating your savings, these strategies can help you break the cycle of living paycheck to paycheck and start building a better future for yourself. Keep reading to learn more about mastering the art of saving.
Saving a significant amount of money, like $10,000, can be a life-changing accomplishment. There are a lot of great things you could do with that money. You could buy a car, use it towards a down payment on a house, boost your retirement savings, pay off credit card debt or student loans, save for a wedding, save for your kid’s education, or do anything else important to you.
The Math Behind How to Save $10,000 in a Year
While it’s great to set a goal of saving $10,000 over the next 12 months, to have a realistic chance of succeeding, you’ll want to break it down so you know how much you’ll need to save each pay period.
It breaks down to:
- $27.40 per day
- $193 per week
- $385 every two weeks
- $833.33 per month
Saving the set amount from each paycheck is one way to go about this money-saving challenge. Another option would be to save a variable amount each week. Sometimes this can be a little bit more fun, and you can also start with a smaller amount and work your way up, so it’s not such a big shock.
How to Save $10,000 in a Year in 10 Steps
Now that we’ve looked at how much you’ll need to save each week or each pay period, let’s move on to the most important topics, like how you can actually make this financial goal happen.
1. Have a Purpose for Pursuing This Milestone
Because saving a big amount like $10,000 is not easy, it’s a good idea to have a clear understanding of why you want to save. It’s easier to make sacrifices when you know why you’re making them or how you’ll benefit in the future.
2. Commit to Reaching This Savings Goal
Don’t be wishy-washy on this money-saving journey. If you’re not committed to it, you’ll be likely to take the easy way out when some challenges arise. Commit to reaching your savings goal and you’ll be more likely to make the changes needed to save the money, and ultimately, more likely to succeed.
3. Create a Monthly Budget and Track Your Progress
If you don’t currently live based on a budget, I highly encourage you to create a budget as soon as possible. Budgeting and tracking your expenses will go a long way in getting the most out of your money and reducing unnecessary expenses. You’ll probably find some easy ways to start saving money right away.
4. Automate the Savings
While it’s not 100% essential, automating the savings can be a really big help. The best way to do it would be to set up a direct deposit so you have some money going directly to a high-yield savings account each pay period.
Most employers that offer direct deposit will allow you to deposit to multiple bank accounts, so you could have the majority going to your checking account, and have a smaller amount going to a savings account.
If direct deposit isn’t an option, you could set up an automated transfer from your checking account to your savings account each week, bi-weekly, or each month.
The only downside of automating the savings is that you’ll need to make sure you can still cover your essential bills with the amount that’s left in your checking account. If it’s going to be really tight, you might want to opt against the automated transfer.
5. Put the Money Someplace Safe (Where it Won’t Be Touched)
It’s essential that you don’t spend the money that you’re saving throughout the year as a result of budgeting. The best way to do it is to create a new savings account specifically for the money that you’re saving. Most online banks allow you to easily create additional savings accounts.
Keeping the money in a separate savings account makes it a lot easier to see exactly how much progress you’ve made, and to avoid spending the money. If you’re adding the money to an existing account, it’s really easy to accidentally spend it or use it for some other purpose.
6. Sell Stuff You Don’t Use
Most of us have a lot of stuff around the house that we no longer use. An easy way to quickly boost your savings is to sell things you don’t need or don’t use.
Even though you don’t use it, the item may have a decent value to someone else. Selling things like clothes, electronics, books, tools, furniture, or whatever else you have around the house can be a great boost to your savings (for ideas, see What Can I Sell?).
Fortunately, selling your stuff is actually pretty easy. You can use eBay, the Facebook Marketplace, Craigslist, or several other selling apps to find people who are looking for the things that you want to sell.
If you don’t have experience with selling your stuff, be sure to read my article How to Make Money by Selling Your Stuff.
7. Take Advantage of Easy Wins to Spend Less
When it comes to personal finance and saving money, there are a lot of what I call “easy wins”. These are ways that you can save money without spending a lot of time and without a huge impact on your life. Any time you’re looking to save money, I think it’s a great idea to start with easy wins to get the ball rolling. Here are a few ideas.
Cancel Cable
Cable TV (or satellite) is a major expense each month that you can do without. This one change can possibly save you about $100 in monthly expenses, or $1,000+ per year.
Fortunately, there are a number of really good cable alternatives. The cheapest option is to buy an antenna and get free TV. Netflix, Hulu, and Sling are all excellent options that are far cheaper than cable. If you’re an Amazon Prime member, you also have a big collection of TV shows and movies available through Prime Video.
My wife and I got rid of cable about 9 years ago and we’ve never missed it. Netflix has more than enough options to meet our needs.
Switch to a Discount Cell Phone Carrier
Another big monthly expense is for cell phone or wireless service. And an easy way to reduce that is to switch to a cheaper carrier. Several years ago, my wife and I switched from a major carrier to a discounted carrier and it literally cut our monthly bill in half. It went from $140 per month to $70 per month, which comes out to a savings of $840 per year! And it’s really had no impact on our service.
We use Cricket Wireless, but there are also some other great options like FreedomPop, Mint Mobile, and Ting. If you’re not currently using a discounted carrier I would highly suggest looking into it. It’s probably the easiest money I’ve ever saved.
Look for Cheaper Insurance
Insurance is one of those monthly bills that’s easy to overlook. You set it up, and then it’s probably billed to your credit card or taken out of your checking account automatically. But it pays to check in on your insurance rates every once in a while.
Obviously, there’s a lot of competition in the insurance industry and it’s usually not too hard to find better rates than what you’re currently paying. You can use resources like Quotacy (only for life insurance) or Policy Genius to easily compare rates and find better options.
Another way to lower your insurance premium is to adjust your coverage. Take a look at your current policies and see if you are over-insured. You may be able to reduce the coverage or increase the deductible to save a significant amount of money each month.
Credit Card Signup Bonuses
Many credit cards will offer bonus money if you sign up and meet a few basic requirements. Typically, you’ll need to charge a set amount of money to the card in a given period of time (usually 90 days). If you already pay for most of your expenses with a credit card, meeting the spending requirement may be no problem at all and without wasteful spending.
Of course, it’s not a good idea to sign up for a card if you have to change your spending habits in order to reach the spending requirements. And if you currently have credit card debt or if you don’t feel like you have the discipline to have a credit card, you should skip this one.
Most credit card signup bonuses will be at least $100, and some will reach $500 or more. Getting a $500 bonus from a credit card would give you 5% of your savings goal of $10k with virtually no effort. And if you’re married or with a significant other, if both of you were to get a $500 bonus, that gives you 10% of the savings goal very easily.
The best signup bonuses tend to come from cards in one of two categories: cash back credit cards and travel rewards credit cards. You can see an updated list of the best cash back credit cards here and an updated list of the best travel rewards credit cards here.
Let Trim Reduce Your Bills
Trim is a free app that can help to save you money in a few different ways. First, Trim will analyze how you spend money and look for subscription payments that can be canceled. Maybe you have a gym membership that you never use or subscription box payments that you could easily do without.
But the best thing about Trim, in my opinion, is the bill negotiation service. You can allow Trim to negotiate your cable, internet, and cell phone bill on your behalf. They have a great track record of being able to lower bills. I used Trim last year and they were able to reduce my monthly Comcast bill for internet access.
8. Scrutinize Your Recurring Bills
When you’re on a mission to save money, one of the most effective strategies is to trim or eliminate recurring monthly bills. Even seemingly small bills can add up significantly over a year. Avoid recurring expenses for things that aren’t essential or critical to you. While you might not eliminate all subscription payments, you can often find ways to reduce them.
Trim, as mentioned earlier, can help locate subscriptions to cancel, but you can also do it manually. Review your credit card and bank statements to identify recurring bills. Scrutinize each one to determine if it’s truly necessary, or if you could cut back or eliminate it. Gym memberships, subscription boxes, streaming services, and website memberships are common targets for savings.
Entertainment expenses can also be a significant portion of your budget. Look for free or low-cost alternatives that still let you have fun without breaking the bank. Check out our list of stay-at-home date ideas and ways to score free concert tickets.
9. Tackle the Biggest Expenses in Your Budget
To make a substantial impact on your monthly budget and free up more money for saving, focus on the largest expenses in your budget. These categories tend to be the biggest budget eaters:
- Housing
- Food
- Car payments
- Gas
While you may have other major expenses, these four are often at the top of the list for many people. Reducing costs in these categories might not be easy, but it can pay off if you’re willing to make changes.
If you’re targeting quick savings within our goal of saving $10,000 in a year, consider these options:
Housing: Explore refinancing your mortgage (depending on your current rate) or renting out a room or part of your house if feasible.
Food: Start preparing more meals at home and reduce dining out. Weekly meal planning and grocery shopping from a list can significantly cut food expenses. Many people can halve their food costs with simple changes.
Car payments: Investigate if you can eliminate your car payment. Assess if you truly need the car or if you can downsize to one vehicle.
Gas: Cut back on driving by carpooling, combining errands, biking, walking, or finding more at-home activities.
10. Increase Your Income (Side Hustle)
While saving is important, boosting your income can supercharge your savings potential, provided your living expenses remain constant. Increasing your income can often have a more significant long-term impact than cost-cutting. You can only reduce expenses so much, but your earning potential has virtually no ceiling.
Consider these approaches to increase your income:
Get a raise: Negotiate for a higher salary at your current job.
Get a promotion: Aim for a higher-paying position within your current company.
Find a higher-paying job: Seek employment with another company offering better compensation.
Work overtime: If your job pays overtime, this can be a quick way to earn extra.
If increasing your income within your current job isn’t feasible, starting a side hustle is a viable alternative. Opt for side hustles that generate quick income, as we’re focused on saving $10,000 within the next year.
Here are some side hustle ideas that can yield quick earnings:
Freelancing: Offer various services like writing, designing, or coding as a freelancer.
Rent Out Your Stuff: Rent out parts of your property, your car, or other belongings.
Become a Flipper: Buy items from yard sales, thrift stores, or auctions and resell them online.
Work as a Virtual Assistant: Provide virtual support services to businesses or entrepreneurs.
Become a Transcriptionist: Convert audio content into text and earn money.
Donate Plasma: Regular plasma donation can earn you $300 – $400 per month.
Take Surveys: Participate in online surveys on platforms like Swagbucks, MyPoints, and Survey Junkie for some extra cash.
Conclusion
In conclusion, achieving the goal of saving $10,000 in a year is a realistic possibility with careful planning and commitment. By implementing these 10 steps, from setting a clear purpose and creating a budget to exploring side hustles and scrutinizing recurring bills, individuals can take control of their finances, break free from the paycheck-to-paycheck cycle, and work toward building a more secure financial future.
FAQ’s:
Q: What are some effective strategies for reducing recurring monthly bills and entertainment expenses?
A: Effective strategies include canceling unnecessary subscriptions, cooking at home, and exploring low-cost entertainment options.
Q: How can I determine the best side hustle for increasing my income and accelerating my savings?
A: The best side hustle depends on your skills and interests; options include freelancing, renting out belongings, and online surveys.
Q: Is it essential to save a fixed amount from each paycheck, or can I save variable amounts to meet my $10,000 goal?
A: You can save a fixed amount from each paycheck or opt for variable amounts, depending on your preference and financial situation.
Q: What are some common challenges people face when trying to save $10,000 in a year, and how can they overcome them?
Answers in a single line:
A: Common challenges include unexpected expenses and maintaining discipline; overcoming them requires budget flexibility and commitment to the goal.
