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Last year, my husband and I did some home improvement projects since our house is getting older. We didn't want to borrow for our projects, which cost a little over $10,000. The good news was that we didn't have to because we set a goal the year before to save up the money.
Saving up $10,000 in a single year is definitely an ambitious goal, but it was important to us. And there may be many reasons why setting that same goal may be important to you as well.
Putting $10,000 into a savings account could provide you with an emergency fund to prepare for unexpected expenses. It could help you save for a down payment, allow you to afford a dream vacation, or enable you to make other big purchases like our home improvement undertaking.
However, if you want to rise to the challenge and save $10,000 in a year, you're going to need to take a few key steps. These include setting a clear goal, breaking big goals down into smaller ones, and keeping track of your progress to ensure you stay on track.
This guide will walk you through the process, from assessing your current financial situation to creating a saving strategy that can make your dreams a reality.
1. Get a clear picture of your finances
When you're setting an ambitious goal, it's important to know where your starting line is so you'll know how far you have to go.
When you are trying to save $10,000 in a year, the first and most important things to find out are:
- How much money you have available to save each month
- If necessary, how to free up more money to put aside to hit your target
To find out how much money you have available to save on a monthly basis, start by tracking your spending. You can do this either manually on a spreadsheet or using an app.
Once you see exactly how much you are spending, compare your outflows to your income. This will show you how much money is left over for saving. If you have high-interest debt, you may also want to prioritize paying that off, as interest costs could eat away at your wealth and make it harder to accomplish savings goals.
Ideally, you'll find that you have plenty of money left over after accounting for spending to save $10,000 per year. Unfortunately, for most people, that's probably not the case.
If you discover you don't have enough left in your budget to save enough, it's time to make some spending cuts. You could do this by creating a detailed budget. Your budget should allocate every dollar coming in either to saving or to a specific spending category.
As you make your budget, of course you'll want to look for ways to lower the amount you're spending or raise the amount you're earning. This will be crucial to give you more money to achieve your goal.
Adopting money saving habits like bringing your lunch to work or making coffee at home could help you make your budget work and prioritize saving.
2. Set a monthly savings goal
Next, decide how much money you're going to put into savings each month. Since your target is $10,000 saved this year, it probably makes sense to put aside around $834 every month.
Doing that would leave you with $10,008 in 12 month's time. Saving the same amount each month allows you to get into the habit and makes it easier to budget around this obligation.
If you don't have enough wiggle room in your budget to hit this monthly goal, you'll need to make some adjustments. You could reduce more from your spending, pick up some side gigs to earn extra income, or rethink the timeline for your $10,000 savings effort.
3. Open a savings account
It's going to take you time to save up your $10,000, and you want a place to put your money as you're working on it. Ideally, the place you park your money will be safe so you don't risk any losses — but it will also pay you reasonable returns so you get a little help growing your account balance.
Typically, this means you should open a savings account. In fact, even if you already have some money in a savings account, it's a good idea to open another one just for this goal. You'll want a dedicated account for this specific savings project so you can more easily track your progress and so you won't be tempted to spend the funds on other things.
As of this writing, the national average interest rate on savings accounts is just 0.45% (as of 10/21/24)1 according to the FDIC. This is a really low rate, given that you can get up 4.20% with direct deposit at SoFi and 5.05% (as of 10/1/24) at EverBank, so you probably don't want to open a savings account at your local bank or credit union without doing some research. There are high-yield savings accounts that pay yields that are more than ten times the national average, so it's a good idea to look into those options.
When looking for a savings account, there are a few other features to look for besides a high rate including:
- Fee-free: You don't want to pay fees that eat into your savings. Look for monthly maintenance fees, inactivity fees, or withdrawal fees.
- Ease of transferring money: Make sure you can set up automatic transfers from checking or direct deposit from your paycheck to make saving easier.
As soon as you've opened your account, you should automate the transfer of money into it each month. That way, the default status quo becomes saving enough to end up with $10,000 by year's end. If $834 comes out of your paycheck each month and goes right to savings, you don't have to force yourself to put away that much each month. It just happens automatically.
4. Cut down on spending
For most people, reducing spending is going to be essential to free up enough money to save each month to hit your $10,000 goal.
The good news is, there are many ways to spend less. Here are a few things to try.
- Switch to a cheaper cell phone plan.
- Avoid impulse purchases by setting a 24-hour rule so you have to think about the item for 24 hours before you buy. You could also remove your stored credit cards from online sites so you have to manually enter your card number each time to deter you from mindlessly clicking on items you want.
- Use tools like Rocket Money or Trim by OneMain to help find and cancel subscription services you've forgotten about (or go through your credit card statements to find these underused subscriptions yourself).
The more you can reduce your spending, the easier it will be to hit your target savings goal.
5. Consider a side hustle or find passive income opportunities
There's a limit to how much spending you can cut, so increasing your income may also be important to saving money during the year. Fortunately, there are many good ways to increase your income including:
- Trying out a side hustle
- Doing some freelance work
- Doing overtime at work
- Investing in assets that help you grow your earnings
- Selling unwanted items
- Doing surveys online
Even a few hours of extra work a month could help you to achieve your goal.
6. Take advantage of windfalls
When you come into money that isn't already earmarked for something during the year, put it into savings to help reach your target. Some good examples include:
- Tax refunds
- Bonuses from work
- Cash gifts
Ideally, you'll have a plan to move the amount you need into savings each month and won't have to count on windfalls to reach your $10,000 goal. But, saving windfalls could get you there faster and potentially make all the difference if you're falling a little short during some months.
7. Track your savings progress
Finally, you should track your progress both to help you stay motivated and to make sure you're on track so you can change course if you start to fall behind.
You could use spreadsheets and budgeting apps to keep tabs on your progress. It's also a good idea to evaluate where you stand each month to make any adjustments needed. You can reassess your spending and savings to see if you can free up more funds to hit your goal.
Recommended savings accounts
Here are savings accounts we think will help you meet your $10,000 savings goal.
Featured High Yield Savings Accounts
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Earn up to 4.75% APY2when you open a new LevelUp Savings account and deposit $250+ per month. Member FDIC.
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Earn up to 4.20% APY3 and collect up to a $300 cash bonus with direct deposit or $5,000 or more in qualifying deposits.4 FDIC Insured.5
FAQs
What is a high-yield savings account?
A high-yield savings account is a savings account that pays an interest rate above the national average. Many online banks offer high-yield savings accounts since online banks have lower overhead and can pay more interest because of it.
Is it possible to save $10,000 in one year?
It is possible to save $10,000 a year if you earn enough money and if you reduce your spending enough so you can save about $834 monthly. If you don't earn enough money to accomplish that, increasing your income and living on a budget can help.
How much do I need to put away to save $10,000 in a year?
You will need to set aside around $834 a month to save $10,000 in a year.
Bottom line
Saving $10,000 in a year will probably be challenging, and it may require some sacrifice. But, if hitting this target helps you do something you've been dreaming of or helps you become more financially secure, it's well worth it.
Just make your budget (perhaps using a budgeting app), cut your spending, increase your income, and contribute around $834 monthly to your account, and you'll be on track to hit this ambitious goal.
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Western Alliance Bank High-Yield Savings Premier Benefits
- Earn 4.46% APY6from a top-rated U.S. bank with $70B+ in assets7
- Enjoy 24/7 online access to your account and funds
- Interest is compounded daily and posted to your account monthly
- No fees,8$500 minimum deposit, $0.01 minimum balance to earn APY
- Enhanced security and FDIC insured
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