According to research by money.co.uk, 31% of us save less than £100 per month and nearly 26% of those surveyed have less than £1000 saved at all. Combined with the cost of living crisis making our daily lives even more expensive, how can we go from nothing to saving up £10,000 in one year?
A lot of you will be saying that this sounds impossible and I’ll admit, some of you won’t reach this goal. But I have personally done so, starting from nothing and while it’s not the easiest of tasks, it can be done. Regardless of where you end up, I promise that by following these simple steps, you’ll be in a far better position 12 months from now than you are right now.
Step 1 – Set your goal and commit to it
In a study conducted at the Dominican University of California, a psychologist discovered that you are 42% more likely to achieve your goal if you write it down, but only 1% of people actually do so.
If you’re serious about saving £10k fast, then you need to commit to it and the starting point is to put it into writing. Sticky notes on your computer, check. An A4 sheet on the wall in your office – also good. Stopping short of tattooing it on your arm, make the goal visible to you every day.
Personally, I create a new graphic for my phone, so that I am reminded about the goal every time I pick it up. It is always top of mind and as I use my phone a lot, it keeps me laser-focused on the things I’m working towards. And this is key because as time passes we often lose motivation, or other priorities take over and we end up quitting on our goals.
“Setting goals is the first step in turning the invisible into the visible.”Tony Robbins
Sticking to your goal is hard and the discipline we need to achieve it is harder to maintain today than ever before. So let’s take a second to visualise your goal. What would saving 10k do for you? For many of us, 10k is a life-changing sum of money. It can help you get out or stay out of debt, it can reduce financial stress in the very uncertain period we live in or it can become the foundation of your future personal or professional growth.
Knowing the reason why, will keep you motivated throughout your journey. It’s key that you understand these reasons for pursuing the goal, whatever they are. I’ve always found that the bigger the why, the more it will motivate you to achieve it.
Are you saving to get out of debt? Or for early retirement? These are of course at opposite ends of the personal finance spectrum, but neither is right or wrong. This is your goal and the reason you’re focused on it will be unique to your situation. But I can tell you, that there’s little downside to saving money and this is the right choice. So well done.
Personally, my goal right now isn’t a financial one. It’s that I’d like to hit 10,000 subscribers before January 2024. And if I can do that, I plan to give away £1,000 of money and products that have helped me on my own business and financial journey. There might even be some top merch in there also!
So if you want to help me achieve my own goal this year, please subscribe to my channel and share it with your friends and family.
Step 2 – Where to put our savings
The upside of the highest interest rates in 15 years, is that the money in our savings accounts is likely to get a decent rate of return by just sitting there doing nothing. I’ve just moved some of the pots in my Monzo account (not a sponsor) over to an instant access savings account and I’m getting a 3.70% return. Is it amazing, no. But is it better than nothing, absolutely? First Direct is offering a 7% return in their regular saver account, but you can only deposit £300 a month, on a Tuesday when the weatherman says it won’t rain.
You might consider putting your money into your Stocks and Shares ISA or into your investments to get a better return and that is fine if you’re ok with a little bit of risk. I’m not a smart investor but over the past 13 years, my investments have returned over 12% per year on average. However, a year is very much a short time frame and you are always at the mercy of swings in the markets that could affect your investments. To maximise your potential and minimise the risk, here are a couple of key principles that have served me well in my investing career:
- I don’t invest in individual stocks
- I buy a small bit of everything through index funds
- Always reinvest the dividends
- Keep fees as low as possible
- Buy and hold for the long term
Because of these principles I follow, I use Vanguard for a big proportion of my investments (not a sponsor), and I put my savings into dedicated pots that I know not to touch. You can save and invest however you want, as long as you are putting your money somewhere you’re unlikely to touch or withdraw from and it’s making us a decent interest rate, that’s all you need.
How to achieve 10k savings in a year
I like to keep things super simple and for the purpose of this article, we want guaranteed returns to achieve our 10k savings goal. If you know the expected rate of return our savings will give us, we can start to visualise and plan for it.
A year isn’t a long time to achieve compound growth, but it is long enough that our savings will work for our benefit and we’ll earn some interest. Looking at the table below, over the course of the year, regularly saving into our Monzo instant access savings account means our savings will earn some interest. This means that our £10,000 saving goal is already underway and we really only need to save £9,840.
Of course, before we decide where the money is going to come from, we need to understand how much we need to save each month to achieve our savings goal.
Taking into account the interest we’ll make on our savings, our goal each month is to save £820 and in doing so, by the end of 12 months, we’ll hit £10,008.60. So far so good!
Step 3 – Budgeting
Now saving £820 a month may feel like a little or a lot to you and it totally depends on your personal situation. But if we break this down a little bit more, it works out that we need to find and save around £27 per day.
Normally I’d tell you to look at your budget and cut it back as much as you can.
But, I’ll be honest with you, budgeting isn’t fun. Most people are happy with their quality of life and don’t want to give up their gym membership. And you know what, that’s just fine. But I challenge you to find £5 a day or £150 a month from your spending. Because most of us can trim the fat just a little without affecting our quality of life. And what’s more important? The weekly takeaway from the Chinese, or the reason you’ve already stated you want to save 10k for?
In fact, you know what, I’m telling you to look at your budget. Because you’ve decided on this goal for a reason and it is important to you.
So let’s look at some everyday things we spend money on starting with our impulse spending
- At £4 per latte, making coffee at home can save you £120 a month
- Now we’re at £700 a month needed to meet our goal
- Do you buy your lunch or snacks from the convenience store? At £6 per day, there’s another £180 saved.
- We’re now saving £300 already without breaking a sweat.
- And I’ve seen you out at the weekend buying drinks, going out for dinner and paying extortionate taxi fares home. If you spend £100 on a night out twice a month. Cut this in half and save £100
- We’re now at £400 of our £820 goal. And your waistline and your wallet are thanking you.
- Do you watch BBC Live or on iplayer? Many of you will be using streaming services only and if this is the case you don’t need a TV Licence. That’s another £12 saved per month
- There’s an easy £412 of our £820 saved
- Can you cancel a subscription? Some people I’ve seen choose to only have one subscription per month. Binge-watching everything there and then switching to a different subscription the next month. That could save you £15 easily.
- Over half our goal was achieved without breaking a sweat – £427 / £820
With just a few little and I’d argue insignificant changes, the impact of your choices is seen right away. I’ve not talked about downsizing your car or getting rid of car payments entirely. I’ve not asked you to give up all your luxuries altogether. Nor have I suggested negotiating your household bills. There are countless ways to save money on things you are already paying for and you can focus on these if you want. I’d always urge you to, but that’ll be the basis of another article.
Admittedly, cutting down our spending without getting extreme, will only get us half of the way towards our savings goals and some of you will already be budgeting. While others will have little spare due to the increased financial pressures we all face.
In these cases, something major in your life will need to change if you want to save £10k fast. We’ll likely need to earn a bit more on the side.
Step 4 – Starting a side hustle
As someone who built their own business, I honestly believe that earning extra money is often easier than saving and the potential upside is significantly more than 10k. But not everyone is ready to start a full business to replace their 9-5 and well actually that’s just fine as well.
If your current income from your job is keeping up with your current lifestyle, then earning money through a side hustle means that you can put anything extra towards your savings. Your current quality of life will remain unaffected if you’re willing to put the effort in and as you’re reading this article, I’m sure you are!
In the past 6 months, I’ve helped a Doctor set up a private practice. I’ve also helped badminton coach build out a plan for their business and a property developer increase their income, working only one day a week on their business.
I’m a bit of a nerd when it comes to side hustles. I agree that they can be incredibly tough to get going and they are not for everyone, but they can also be one of the most rewarding activities you ever engage in. Both mentally and financially.
The hardest part is often knowing what side hustle to start. It was hard until I created a huge list of 94 side hustles you can start in the evenings and at weekends. Many of these could grow to replace your full-time income as well as growing your savings. Many of them use skills you already have and that makes them super easy to grow.
I’m all about efficiency these days and because of this some of my favourite side hustles include: Selling on Amazon merch or creating books for sale on Amazon Kindle Desktop Publishing (KDP). These are products that you can create once and sell many times. However, when it comes to side hustles, there are endless opportunities and you can read the full list by clicking the link above or by subscribing to my Youtube channel as it’s one of the next videos I will be putting live.
With a little bit of planning, a bigger bit of effort and the willingness to take action, can you honestly look me in the eye and say that you can’t earn £10, £15, £20 or more a day? Didn’t think so!
It may not happen overnight, but it’s important that you stick to it and keep moving forward. As your skills, experience and knowledge grow, so will the income from your side hustle. I remember my business having its first £10k month, then £10k day. By the time we exited the business, many of our projects were priced at well over £10k. That took time and I have no doubt that years from now, you’ll look back and wish you started sooner.
And that’s all there is to it. Set your goals, make a plan and then put in the effort to achieve them. Look if it was easy everyone would be doing it. It’s not, but it’s totally worth it.
Thanks so much for watching and please don’t forget to check out Foundered Money on Youtube.