Saving $10,000 in 1 year is a huge milestone towards your journey to financial freedom.
It takes a lot of disclipine and constant savings for most people to reach this milestone.
If you want to save 10k in 1 year then I'll show you exactly how I achieved this goal in 2020.
I didn't use any complicated methods or fancy strategies to reach the 10k thresold.
All I did was apply simple and easy to perform habits that compounded into more than 10k in just 12 months.
Here's how I did it!
1. Set Goals
Finally, you cannot reach 10k if you don't set a proper goal.
If you are just starting out then save your first $100.
Then aim for $1,000.
All you need to do is follow the same habits to reach $10,000.
You're more likely to succeed if you write down a S.M.A.R.T goal and give yourself a deadline to reach the goal.
You can achieve this in 1 year if you follow the steps above and stay disclipined with your spending habits.
All your extra savings frees up money to invest in the stock market and grow your savings even more.
2. Pay Yourself First
Paying yourself first is the #1 most important step to building up savings. You cannot reach 10k unless you become a regular saver.
I learned this concept in a book called The Richest Man in Babylon by George S. Clason.
All you have to do is keep at least 10% of your monthly income and put it in a seperate savings account or investment account.
The higher your savings rate, the faster you will reach the 10k milestone.
Deposit the money into an account that you won't touch and allow the money to grow over the next 52 weeks.
3. Spend Less Than You Earn
It's a very important concept to understand but most people miss its simplicity.
Spend less than you earn if you want to build up a large savings.
I used to struggle with reckless spending until I started tracking my finances and understanding the power of compound interest.
The Latte factor is real. Small amounts do add up and can cost you a fortune over the long run.
The Latte Factor by David Bach is a great book that shows how you can retire a millionaire by savings small amounts every month.
Saving just $5 a day adds up to a massive fortune over time so remember that every dollar counts.
The quickest ways to reduce spending are simple tips like:
- Cooking your own meals
- Cutting down on monthly subscriptions
- Avoid addictive habits like smoking and alcohol
- Buying everything used instead of brand new
- Avoiding impulsive behavior and shopping
- Switching from credit cards to debit cards
4. Track Your Spending
You cannot start saving a lot of money until you understand exactly where it's going.
Mint is an excellent free personal finance app to track your spending. I use it every day to see exactly where my money is going.
You want to pay attention to 3 important metrics:
The goal is to increase your income while minimizing expenses.
Track your cashflow and try to increase it monthly, quarterly and annually.
This will help you reach the 10k milestone much faster because positive cashflow means you are spending less than you earn.
5. Invest in Assets like the Stock Market, Bitcoin, or REITs
If I just put the money in a regular savings account then it would have been harder to reach the $10,000 savings goal in just 1 year.
Choosing a solid investment vehicle with ample liquidity will help you reach your financial goals much quicker.
The stock market is the quickest and easiest way to grow your money passively with minimal risk.
Stocks are small portions of businesses that you use everyday like Google, Apple, Nike, etc.
You can purchase shares in many big companies by opening a brokerage account or downloading a stock trading app.
I recommend investing your savings to help the account grow faster.
Now there are some risks but you can mitigate those risks by investing in solid companies that you understand with good products & strong revenues.
These are the 5 simple steps I took to save 5 figures in less than a year. Hope this helps!