For most people, saving up $10,000 would significantly improve their financial life. For instance, with that money, they could pay off their debts, cover their tuition costs or start their journey into the world of investing. In short, having access to this kind of money can definitely make life easier. The problem is, for most people, saving up five-figures seems like a near impossibility but I can tell you first hand that with the right savings approach in place it is entirely doable and what I am going to do now is share with you 3 ways you can do just that!
There’s no doubting the fact that saving money is one of the most important financial habits to possess. This is because, no matter how much money you make, if you fail to save any of it then you will never get ahead financially. As such, the advice to save your money is some of the most common advice that is bestowed by parents onto younger generations. However, even with this advice being shared to the masses, there are still millions of people who either ignored this advice, didn’t hear it in the first place, or did hear it but still haven’t managed to put it into action. This is why, recent studies show that the median savings balance of Americans is just $5,300.
I’m sharing this statistic for two reasons. First, it’s to outline how fragile most people’s financial states are. For instance with just $5,000 to your name, you are one bad car repair or broken appliance away from being broke so this is all to say that $5,000 in the bank is not sufficient! The other reason I bring up that stat is to show you that if you follow what I am about to tell you, then you will be well above the mean in terms of savings. Now, is saving $10,000 going to be easy? No, but if you want to be a cut above the rest then it takes the use of discipline and sacrifice but knowing you have cash on hand to cover emergencies, invest or even treat yourself from time to time will definitely be worth it!
With all this being said, let’s get into the three ways you can save your first $10,000 or, if you’ve already saved this amount to date, then your next $10,000 instead!
The first way you can start working towards your next $10,000 in savings is to go on the defensive. As you can probably guess, going on the defensive means that you are going to be aiming to create these savings through cost reduction. As I just said, saving money does come with sacrifice and in this context, it’s going to mean reducing your monthly expenses in an effort to see your bank account grow. Now, going on the defensive is going to require you to complete three particular steps which we will get into now.
Playing Defense
The first step is one you are either going to love or you’re going to hate depending on the type of person you are and that is to create a budget. I know for myself personally, working on my budget and tracking my net worth is genuine fun but for others, creating and maintaining a budget is like pulling teeth. If even hearing the word “budget” makes you cringe, you need to ask yourself one simple question: what do I want more, $10,000 or to avoid having to budget? I know 99% of people are going to lean towards the $10,000 but there is that 1% of people who just don’t want to budget and given that I have the goal of leaving no one behind, I want to share how I budget which I know everyone can emulate in an effort to achieve their own budgeting success.
I use the 80/20 budget where I take my monthly after-tax income and split it into two groups: expenses and savings. 80% of my after-tax income goes towards all my expenses. This includes my mortgage, insurance, food and even money to spend on dates, that is if I ever end up getting any. By using this simple budget, if I adhere to its parameters then I am guaranteed to save money every month which makes saving up $10,000 or any amount to be a breeze.
Once you have a budget in place, assess how much you are currently spending and how much you are slated to save every month. If your budget indicates that you won’t be saving any money at all or an amount that will have you taking 50 years to save up $10,000 then you need to start to cut out expenses. This process will take place in two steps.
The first step is to review those line items that are costing you the most money every month. Without even looking at your budget, I can guess that those items are your housing costs, your transportation and your food and entertainment. Given these are the most costly items we all subject ourselves to, they are the biggest hindrances to our financial success but they also present the best opportunities for expanding our ability to save. So, how do you cut down these expenses? Let me share a few ways you can do just that now!
When it comes to housing, you really have two options, move to a smaller, more affordable place or use part of the property you already reside in to offset your monthly costs. By living in a cheaper house, you will realize a ton of savings from lower rent and utilities to lesser property tax bills and repair costs. On the flipside, if you want to stay where you are, you can rent out part of your property to offset some of your housing costs. Either approach will work, it really just depends on your current housing situation and what you feel most comfortable doing. However there is no doubting the fact that your housing costs must be under control if you want to have any chance of saving more money.
Next, there are your transportation costs. If every time you get into your car you inhale that new car smell or your monthly car payments could double as mortgage payments then you’re doing it all wrong. If you want to save up $10,000, a feat that very few people can achieve, then you need to master the art of getting around cheaply. Now, I know that no one loves using public transit when they could just drive somewhere instead but the reality is that cars are just too punishing of a liability for most people. They cost you an arm and a leg when you buy them, they only ever decrease in value and then when it dies on you, you have to replace it and start this money sucking process all over again. This is why you should either aim to incorporate alternate modes of transportation into your life or at the very least, buy an inexpensive used car and drive it until you’ve maximized its useful life.
Finally, we have your food and entertainment costs. Yes, we all need to go out and have fun from time to time but I see a lot of people eating and partying as if they will be here today and gone tomorrow. In the same respect as the other two costs I’ve already mentioned, your food and entertainment expenses need to be dialed in if you want to save five-figures.
Fortunately, this is easier to do than you may imagine. Simply swapping out a few outings for stay at home activities can help you save hundreds of dollars a month which if you extrapolate this amount over the course of the year could have you very close to saving $10,000 without any other major financial adjustments.
Now, one thing you may have noticed is that within our defensive gameplan there was no mention of common money saving advice like cutting out coffees or cancelling your Netflix subscription. This was done intentionally and for three very good reasons. First, I love my coffee so I could never ask you to cut it out in your own life. Second, Netflix has many utilities beyond allowing you to watch reruns of Friends and The Office so again I can’t ask you to cut out this very handy service from your list of expenses. Finally, and most importantly, is that I want you thinking bigger. Trying to nickel and dime your way to $10,000 in savings will only make you frustrated and have you quitting on this savings goal. Instead, you want to be focusing on the actions that will allow you to make much more meaningful progress in your financial life. Speaking of making major leaps in your financial life, let’s now move onto the second way to save $10,000 which is why playing offense.
Playing Offense
As you already guessed, playing offense means making more money. You see, as much as playing defensively can contribute greatly towards saving more money, it has two flaws. First, there are only so many costs you can cut before you reach a point where the only expenses that remain are those that are vital for your survival. The other issue is that you don’t want to have to completely neglect yourself of any spending or enjoyment in the hopes of saving a bit more money. Life is more than just about saving money and fortunately, making more money can help solve this issue. I know personally, when I first started pulling in six-figures a year, my ability to save money skyrocketed which is why I am so bullish on people making more money if getting ahead financially is important to them.
Now, the only trouble is, how do you make more money? Sadly, no one ever teaches us how to do this and this is why most people end up living in financial mediocrity for the entirety of their lives. Well, I’m here to change that and I want to share with you three ways I have increased my income in the past years which you can emulate to see your own income rise. Given that most people have a job, this is where we will start. If you are going to be trading 8 or more hours a day in exchange for cash then we need to make sure you’re making the most money you can when doing so. As such, you need to get more raises and promotions.
How do you do this? Simple, you expand the value you offer, capture evidence of said value being shared and then present your case for career advancement. For instance, let’s say you work in sales. If you can create a more efficient sales funnel that leads to more sales or less time spent per sale then you’ve added value. What you would do next is collect evidence of this new system working and the financial benefits it provides. Then, you would present this evidence to your employer when the time is right and aim to use this as a bargaining chip for a raise or promotion. And, if worst comes to worst and you aren’t given the raise or promotion you wanted, you have another accomplishment to share when interviewing for a new job that will meet the salary expectations you have for yourself.
However, given that most jobs will limit your ability to expand your income, you need to look to alternate means of making money if you want to see your savings balance multiply. Therefore, the second way to boost your income is to start a side hustle. Side hustles are extremely common these days with over 64% of millennials presently having a side hustle or having tried one in the past. As you can see, younger generations are realizing the limitations of the 9–5 mould most of us live in and are already taking action to make the money they need to make strides in their savings efforts.
The third and final way to start making money is to start a business. Fortunately, we live in a time where it’s never been cheaper or easier to start a business. With less than $100, you have a host of different businesses you can start from flipping items online to starting a blog and the list goes on. I know that I started my YouTube channel with less than $100 and it now makes me six-figures a year. The key to income progression in any aspect of your life is simply to start and continue to improve over time and with all the free resources out there today, again, making money through a business has never been easier!
Playing Both Sides
At this point, you now know two ways to work towards your next $10,000. However, what if you combined the two? This is the third method to save $10,000 and is by far the most effective. Without making more money, saving $10,000, regardless of how much you scrutinize your expenses will be tough. Without proper saving techniques, you can make all the money in the world and still never save up the $10,000 you want. In the end, like peanut butter and jam, while both are good on their own, they are exponentially better when together. So if you combine the savings and income techniques I just shared, then I have no doubt that you will easily be able to save up $10,000!
If you want to learn how I am making $1,000s extra a month and changing my financial life for the better and how you can do the same then check out some of my free guides here: https://adamdelduca.gumroad.com/