How to Save $10,000 in a Year

1. Assess Your Income and Expenses

First, calculate your take-home income. Then track your expenses, either by using an app or spreadsheet or by looking back at the last several months' worth of bank and credit card activity. Many financial institutions provide apps that will categorize your spending automatically, which is a useful shortcut to understanding where you could stand to cut back (more on that below).

For now, decide what budgeting method you'll use to get an overview of your expenses. Popular rules of thumb or budgeting methods, like the 50/30/20 rule, can provide a useful starting point when making adjustments. If you haven't done an audit of your fixed and variable expenses recently, now is the time to do it.

2. Create a Savings Plan

Estimate how much you'll have to save. If you're starting from scratch, you'll need to save about $833 a month to get to $10,000 in 12 months. If you already have a bit set aside, or you can use a portion of a tax refund or work bonus as a foundation, you can save less per month. Set up automatic transfers from your checking account so that saving happens in the background.

Savings calculator

To encourage yourself to save more regularly, you could do a spin on the 52-week money challenge, in which you save weekly, and deposit $1 more into your account each week. Could you save $5 in week one, and save $5 more each week? Here's what that would look like over one year:

52-Week Savings Plan Example

Your deposits by the end will be large—$1,030 total in the final month—but you'd have time to shift your expenses by then to hit your goal. You'd save more than $7,000 this way, and more if you started off with an even higher weekly deposit.

Income and expenses can fluctuate, however, so you may have to adjust this method to make it work for you. The big idea is to start small and increase your savings over the course of the year, which not only gets you into the habit of savings, but it might also motivate you to keep going. Saving weekly could also help you think more critically about everyday expenses and whether they'd be better redirected to your savings plan.

3. Pick the Right Savings Account

Choose where to put your savings so that you earn the most interest possible while keeping the money as accessible as you need it to be. Here are some options:

1. High-yield savings account: These allow you to earn more interest than a traditional savings account while giving you the option to withdraw your money anytime.
2. Certificates of deposit (CDs): These also come with higher rates than standard savings accounts, but traditional CDs don't allow deposits after you open the account. One exception is an add-on CD, offered by certain banks and credit unions. You'll typically have to make a larger initial deposit, like $500, and you'll need to keep your money locked up for the CD's whole term or else pay an early withdrawal penalty. If you don't need the money while you're saving it—meaning you already have a sufficient emergency fund—an add-on CD could be a good option.
3. Money market account: If you want to be able to make an occasional withdrawal from the account, or access the money as soon as you reach your goal, a money market account is a possibility. These accounts are a mix between a checking account and a savings account, since they pay higher interest rates than typical savings accounts but provide debit cards or checks for withdrawals (up to a limit, often around six per month). Their rates are not as high as what CDs offer but can be competitive with high-yield savings accounts.
4. Accounts that come with bonuses: No matter where you put the money you're saving, consider opening an account that offers a bonus for new customers. You might have to follow certain guidelines, like maintaining a minimum account balance, to qualify. But once you do, the bonus can help you hit your $10,000 goal.

4. Reduce Expenses

If you're unsure how to save the amount you've decided to earmark, go back to your income and expenses assessment. Take a look at:

• Transportation: Could you shop around for auto insurance to save on your premiums, take public transit instead of driving to work or downsize to a smaller or used car?
• Subscriptions: Are you using all the monthly subscriptions and memberships you currently pay for, or could you cancel or downgrade some of them? Are the plans you've chosen for each—individual or family plans, for example—the right fit for your usage and budget?
• Devices: Could you sit out the next cellphone, tablet, video game console or laptop release, or search for a cheaper or prepaid phone plan?
• Buying secondhand: Investigate what items you buy most frequently that you could get more cheaply or for free instead. Can you buy electronics, furniture or designer clothes secondhand? Can you pivot to using the library or used book websites instead of buying books new?
• Groceries: Can you create a list of your family's favorite meals and rotate them on a regular schedule, giving you the option to meal prep in advance?

5. Increase Your Income

You can also work on bringing in more income so you can send the extra earnings to your savings account. At your current job, you might ask for a raise or ask your employer to pay for a certification or advanced training that nets you a higher salary. You can also consider getting an online certification on your own that will help you qualify for a higher paying job, but that will take time to come to fruition.

You could make extra money from home by freelancing in your industry or tutoring online. You might also be able to make passive income by renting out an extra room in your home or a parking space you're not using. The options are only limited by your imagination.

6. Sell Items You No Longer Need

Spend a day or a weekend doing a deep dive into the clothes, media, furniture, electronics and more that you no longer use, and sell items online or at flea markets to add to your savings.

If that seems like too much work, you have options. Some online services, especially marketplaces for high-end items, will help you list the pieces to sell and communicate with buyers on your behalf. Or, if you have a lot to sell, you could hire someone to take photos, create listings and talk to potential buyers for you, which would still earn you a profit that you could save—and would be worth it if, without that person, you wouldn't have sold the items at all.

Frequently Asked Questions

The Bottom Line

It may be possible to save $10,000 in a year. Meeting this goal will require forethought about whether it's possible based on your current income and expenses. But shifting how you earn and spend, and choosing a savings strategy that will help you stay enthusiastic, will get you to the finish line. Take a look at the best high-yield savings accounts available right now to let earned interest boost your savings.