How to save $10,000 in a year

Saving money is hard. Not only is life full of unexpected expenses, but you also work hard for your money — and you deserve to spend it on a lifestyle you love. Still, establishing savings goals is crucial if you want to meet certain milestones or achieve financial freedom. 

Whether you're experiencing money-saving challenges or simply want to save for a specific financial goal, like establishing an emergency fund or buying a house, we're here to help.

So how do you save $10,000 a year with your biweekly paycheck? Here's your guide on how to pull it off.

1. Assess your current financial situation

The first step toward creating a financial plan is understanding your current financial situation. Take stock of your current net worth, including the balances for all of your various bank accounts, your home equity, and any other valuable assets you hold, like stocks, collectibles, jewelry, and art.

Whatever your net worth is now, the goal with this project is to raise that number by $10,000 by next year.

2. Create a detailed budget

Creating a detailed, itemized budget will help you understand exactly where your money is going. Look at your budget as a function of your income and expenses.

Your income includes:

• Your paycheck

• Side-hustle income

• Tax refunds

• Dividends on stock holdings

• Alimony or other legally mandated payments

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Your expenses are simply the things you spend money on every month. It's helpful to look at your credit card and bank statements to itemize your expenses and get a clear visual of what you're spending your money on.

Set a specific savings goal

Your savings goal could be any amount based on whatever you're saving for. In this example, however, we're exploring how to save $10,000 in a year.

Prioritize savings in your budget

Your itemized budget should include a section for savings, whether you're moving money to a retirement account, an emergency fund, or some other investment account. If you want to reach a certain savings goal, determine how much you need to put aside each month to reach that goal.

3. Identify your nonessential spending

With your visualized budget, you can make decisions about recurring payments like subscriptions and identify areas where you can cut back.

Analyze discretionary expenses

Discretionary expenses are nonessential costs. They may improve your lifestyle, but they're avoidable costs that won't impact your household's ability to survive. 

Add up all of these expenses each month to understand how much of your income is going to nonessential things.

Reduce entertainment and leisure costs

The first thing on the chopping block should be luxury items, including entertainment, leisure, and pampering costs. 

Do you really need subscriptions to six different streaming platforms? Could you live without Amazon Prime? Can you skip the spring break vacation this year?

4. Cut back on your essential expenses

If you're really devoted to meeting your savings goals sooner rather than later and it's not enough to cut only your nonessential spending, it's time to lower some of your essential expenses.

Save on groceries

Most people who have reached this point have already stopped dining out at restaurants too often. As such, groceries are probably your largest expense. 

Find ways to save by collecting coupons, shopping during sales, and using grocery store chain apps to unlock additional savings.

Minimize utility bills

There are lots of ways to conserve energy, especially in the hottest and coldest months. Lower the thermostat in your home in the winter or run the air conditioner less in the summer. 

You can also lower the temperature on your water heater or run the dishwasher, washing machine, and other water-hungry appliances less often.

5. Automate your savings

Spending less is one thing, but many people still forget to move their money to a savings account. That's where automation can help.

Set up automatic transfers

Most banks offer online banking these days. As such, you can set up your accounts to automatically transfer amounts every week or month to ensure you don't forget to save. It's also smart to open a high-yield savings account that earns more interest every month.

Use apps for savings goals

Apps like Qapital, Oportun, and Acorns can help you not only automate your savings but also invest your money to build long-term wealth.

6. Establish smaller milestones

Big savings goals can sometimes feel too daunting to even attempt. Breaking them down into smaller chunks can help.

Break down the $10,000 goal into a weekly amount

How much do you have to save per week to save $10,000 in a year? $192.30. 

That may still feel like a lot, but it's a lot more attainable than $10,000!

Set additional targets

You know the weekly target to save $10,000 in a year, but you can easily break it down further based on when you get your paycheck or when you expect to have extra money coming in. 

Smaller goals can help you stay on track.

7. Track your progress regularly

The most important part of any savings goal is consistency. The only way you'll reach goals is if you keep working toward them.

Review expenses and savings monthly

By updating your budget every month, you'll do this anyway! Keep revisiting your budget to understand where you might have extra money coming in and where you can make additional cuts.

Use spreadsheets or budgeting apps

You can track your progress with Microsoft Excel or Google Sheets, or you can utilize apps like YNAB, EveryDollar, or Goodbudget to stay on track.

Commit to your money management and savings journey

If you're wondering how to save $10,000 in a year, it's easier than you think. This guide can help you build and maintain a budget that makes your savings goals more attainable. Whether you're saving to buy a house, send a child to college, or build an emergency fund, these steps will keep you on track.

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