Want to save £10,000 in a single year? For many, this might be a tough goal but it’s not impossible. With the right systems in place, you can ensure you meet your goal. Over the past few years, I have been able to max out my ISA (£20,000/Year) using the methods I am going to teach you in this article.
For some people, saving £10k may be as easy as putting away some of their salary for a few months. For most people that’s not the case. If you’re reading this I’m going to assume you’re making between £30k to £60k per year. That’s who these methods are aimed at. Let’s jump in.
What Is Your Motivation For Saving £10K?
First, we need to figure out what our “why” is. Just saying, “I’m going to save £10k this year” isn’t going to work. We need to go deeper.
What are you saving £10k for? It could be a house, a wedding, or saving towards your retirement portfolio.
Once you have defined what you are saving for, ask yourself why it’s important to you. Maybe you’re looking to buy your first home and move out of your parents or marry the love of your life.
These “Whys” have weight behind them. Throughout the journey of saving £10k, you will undoubtedly have to make sacrifices along the way.
You need to be able to say to yourself “Buying a house one year from now is more important than spending £100 on a night out”. Insert your guilty pleasure spending habit here.
When you know what’s important to you, saving towards your goals becomes much easier.
You should now have a why. For me, my “Why” is simply wanting to be in a position where I can work endlessly on projects I care about, without ever having to worry about money. When I reach a certain amount of money in my investment portfolio, I unlock that ability. I don’t ever have to work on something I don’t like again. That for me, is a big enough why to make the sacrifices I have to.
Breaking Down The Goal
Now that we know why we are saving, let’s break down that goal into simpler steps. £10k sounds like a lot of money but if we break it down into smaller chunks it seems a little easier.
Yearly – £10,000
Monthly – £833
Weekly – £192
Daily – £27.40
Ultimately, we need to put away £27.40 per day or £833 per month if we want to reach our goal. Personally, I like to work on a monthly basis as that’s how I’m paid. If you get paid weekly or bi-weekly that might work better for you.
If your earning £30,000 per year, you would only be making £1987 per month after tax. That means that after saving £833 per month you would only have £1154 left over. If you live alone this is a tough situation and will require some serious budgeting. If you live with a partner who also works full time this will be more feasible.
If you earn upwards of £40k+ it becomes more feasible to put away this amount each month, even though you will still have to be diligent about where you spend.
Let’s jump in and see what steps you can take to save this money as fast as possible.
Step 1: Cutting Expenses
The first step in any savings plan is to start cutting back where you can. Let’s look at some places you can save money.
Audit Your Expenses
The first thing I like to do is completely audit my expenses. This means pulling all of my transactions from my accounts for the last 30 days. I like to put them into Excel, you may want to just print them off.
In the first run-through, you are looking for recurring transactions that you don’t need. Be strict about this. Is it a necessity or just something you want? Is it more important than your big “WHY”? I do this every few months and always find something that has snuck on there. Chances are you don’t need all three streaming services. Maybe you could listen to Spotify with ads for a few months. Are you even using that gym membership? Find and cancel everything you can.
Next up, we want to go through again and spot any patterns in your spending that aren’t necessary. Maybe it’s a daily coffee or you’re spending crazy money going out on the weekends. Here we want to find ways to cut these down. Make your own coffee instead of buying or go out 1 weekend a month instead of four.
Everyone has unnecessary spending somewhere on their statement. Find out what is yours and cut it out. If you’re serious about hitting your goal, you will have to cut back in the short term.
Get Discounts On Your Bills
Now we want to look at your bills. This is another easy way to save money monthly. Shopping around is key with recurring utility, entertainment, insurance bills, etc.
For example, most car insurance will automatically renew each year at a much higher premium. You can usually shop around and save hundreds of pounds. Figure out who the cheapest electric provider currently is. Can you get a cheaper or discounted sky package?
Either find cheaper alternatives to companies or if you are locked in with a specific company, get on the phone and see if you can negotiate a better price.
Going through each bill 1 by 1 can save you a lot of money each month. Over the year this could be a significant portion of your £10k goal.
Get Rid Of Any Debt
If you have any short-term debt such as credit cards you should pay these off as fast as possible. The only acceptable forms of debt are a mortgage and a low-interest car loan well within your budget.
These debts are accruing interest each month eating into your income. There is no point in saving money if you have high-interest debt eating away at your income each month.
Get rid of these so you can start focusing on saving rather than throwing away money on interest payments each month.
Switch To Cheaper Alternatives
Replacing things that we need with cheaper alternatives is a great way to save some money. A lot of the time you’ll get 90% of the quality for 50% or less of the price. That’s a good deal when you’re trying to save £10k.
Food
When it comes to eating, we all have to do it. However, there are a couple of things we can do to cut down on our weekly food shop.
If you currently shop at an expensive supermarket, switch to a cheaper one. For example, if you are shopping at M&S or Waitrose, you can save a lot by simply buying the same or similar goods at Aldi and Lidl.
Next up is swapping out your favorite brand-name products. For example, switch out Kellogs’s cornflakes for the store brand ones. These are significantly cheaper and a lot of the time taste very similar.
You don’t have to replace everything but if you can replace a good % of your shop with non-brand items that taste 99% as good then you can save a lot of money. If you really love something and feel it can’t be replaced by something cheaper, keep it in but replace the ones you don’t care about.
Clothes
Clothes are one thing I see people spend ridiculous amounts of money on. First off, if you don’t have £10k liquid cash, you should not be buying designer clothes. If you’re looking to save £10k, you might have to go without buying new clothes for a while. Chances are you have clothes in the house that are perfectly fine.
As much as Instagram wants you to believe you can’t wear the same outfit twice, it’s just not true. Many people’s spending problems come from trying to impress other people. If you’re looking to get ahead and hit your goals, forget about what other people think. The truth is, they aren’t even thinking about you.
Get as much use out of the clothes you have and when you buy new clothes buy reasonably cheap clothes from stores like TK Max or Primark.
Stop Eating Out
Eating out is getting more and more expensive. When my girlfriend and I get a takeaway, it’s now over £20, sometimes nearing £30. That is significantly more than cooking a tasty home-cooked meal.
If you’re eating out at a restaurant, you’re looking at £20 per person without drinks and even more if you get drinks.
Limiting the number of times you eat at restaurants or takeaways will save you a lot of money especially if you’re doing it on a weekly basis. Put their savings towards your £10k goal and treat yourself to a nice meal, once you hit your target.
Downgrade Your Car
Many people have cars that they simply can’t afford. If you’re paying £400 a month in car payments and you earn £2,000 per month after tax, you probably shouldn’t have that car. If you have equity in your car, it may be a wise decision to sell it and pay off the loan and purchase a cheaper reliable car in cash.
Of course, this depends on how much money you have sitting around already. You should be able to pick up a 5-year-old car for around £5k with reasonable mileage. Once your car is paid cash you have a huge chunk of money free monthly to put towards your savings goal.
If you can’t get a car in cash, you may want to downgrade to something more affordable on a monthly basis. Just make sure you are not paying an extortionate interest rate on a car loan.
Make Your Own Lunches
If you go to work every day and spend £10 on lunch and coffees this can be huge savings for you. How do I know? I used to do this. Back when I worked my office job I was earning about £20k per year and after I paid my transport to work and paid for lunch I may as well not have been working.
If you make a packed lunch every day you could save approximately £7 per day which over the month is about £140. Over the course of a year that is £1,680 towards your £10k goal.
Stop Smoking, Vaping & Energy Drinks
These are some of the most expensive habits out there and they’re not good for. Smoking a pack a day costs over £70 per week. That’s insane! Vapes aren’t cheap and my bad habit, energy drinks also add up over a month.
At one point I was drinking two cans of Monster per day. While this was bad for my health, it was also bad for my wallet. £3 a day is approximately £90 a month. That’s over £1000 a year on energy drinks. Essentially paying £1,000 a year to destroy my body.
I know it’s hard to cut these things out, but if your “WHY” is big enough it makes it a lot easier. All of these things are bad for you. It should be an easy choice to live a healthier life and have more money in the process.
Consider Purchases
If you planning on buying something, sleep on it for a few nights. A lot of the time, we think we want something in the moment but a few days later realise that it was a pointless purchase. If you wait 5-7 days and still feel like you need the purchase, it may be something that is worthwhile buying.
Step 2: Making Your Money Work For You
Now that you have your spending under control, we want to start getting our money working for us. Let’s take a look at some ways we can do just that.
Get A High-Interest Savings Account
Once you start saving some money, you will want to put it in a high-interest savings account. Get your money to make money. This will help you reach your goal of hitting £10k quicker. Right now interest rates are high and you can get considerable interest on savings accounts.
When trying to hit £10k as fast as possible I would recommend opening two accounts.
- First Direct – 7% Regular Saver Account – £300/Month max. This account will give you 7% on your money but you can only add £300 per month. This is where I would put the first £300 of your savings each month.
- Chip – 4.51% Easy Access Savings. For the rest of your savings each month I would put them in a Chip savings account which is currently offering 4.51% return on your savings.
Chip is an award-winning savings and investment app. They became popular with their high-interest savings account but also offer investment services and automatic saving.
You can open any savings account of your choice but these two are great options to get a great rate over the next year. You may not think the interest is much but it adds up over time and gets you closer to your savings goal.
Use Cashback Sites/Cards
No matter how much you want to save, you still have to spend money on some stuff. If you can get cashback on the money you spend, that’s a bonus. It may not be a lot but it puts money back in your pocket. There is a couple of options to get cash back.
- Chase Cashback Account – Chase offers 1% cashback on up to £1,500 of spend each month. As long as you pay at least £500 a month into the account you qualify. This is an easy £15 per month of savings on the money you’ll already be spending.
- Cashback Sites – Cashback sites like Topcashback, Jam Doughnut, and airtime rewards offer cashback on spending at stores such as Domino’s, eBay, Currys, Asos and many more. Some stores offer significant cashback on your purchases making it worth your while to sign up.
- Credit Cards – Many credit cards offer cashback however I don’t recommend credit cards for everyone. There is a lot of temptation to get into debt and end up in a bad position. Only use credit cards if you know with 100% certainty you will pay them off in full each and every month.
Step 3: Increasing Income
You can only cut back and save so much. The next lever to pull is income. While cutting expenses is limited, increasing income is unlimited. There is no ceiling to how much money you can earn. Once you have your finances in order, it’s time to start making more money. Here are a few different ways to do this.
Work Extra Hours
The first and easiest option is working more hours if this is available to you. Not every job has this opportunity but if yours does, capitalise on it. If you earn £15 an hour and can work an extra 10 hours a week, that’s already £600 per month. That’s pre-tax but will still bring you in over £400 in extra income a month. That’s £4800 of your £10k savings goal right there.
This may require you to stay on late a couple of nights per week and work weekends but it will be worth it to hit your savings goal. You may even get paid an increased overtime rate meaning you can work fewer hours to make the equivalent amount.
Get A Second Job
If you are unable to work more hours at your current job, you may want to pick up an evening or weekend job. While this isn’t ideal in the short term it can be a great way to earn some extra money when you need it. If you add all of your second job income to your savings, hitting £10k will happen much faster.
Start A Side Hustle
Starting a side hustle is a great way to do something you enjoy and make money from it. I have been working online full-time now for the past 7 years. There are so many different ways to make money. These are some of my favorites:
- Start An Etsy Store
- Review items you already own for the Amazon Influencer program
- Start publishing content (Just like this blog)
- Start a Youtube channel
- Start a service-based business (Graphics Design, Writing, Marketing)
- Freelancing with your existing skills
All of the above methods require little to no money to get started and can eventually lead to a full-time income. Some take longer than others to see results but they are all legit ways to make money online.
Personally, I would avoid trying to make money online through surveys etc. While some of these might pay you, they are not worth your time. You are much better off developing skills that can eventually turn into a full-time business. You are never going to make any considerable money doing surveys.
Anything you earn from your side hustles should go straight into your savings account.
Is Savings £10k In 1 Year Realistic?
Your current income will determine whether or not it’s realistic to save £10k in a year. If you earn £25k per year it’s going to be significantly harder to save £10k in a year than someone earning £50k a year.
If you feel like £10k is simply out of reach, try to lower your savings goal to a more reasonable target. However, if you can pick up a second job or start a successful side hustle, £10k is within reach for everyone.
Save When You Get Paid
One of the biggest mistakes people make when saving is leaving their savings until the end of the month. They think they will put the money into their savings account when everything else has been paid. Ultimately this never happens. That money is gone at the end of the month.
If you want to be consistent with your saving, treat it like a bill that comes out at the start of the month. Set up a direct debit to your savings account at the start of each month. The money comes straight out of your pay-check and into savings.
Psychologically, you will then find a way to live on the remaining money in your account. This is putting your savings goals before everything else. You also know that the rest of the money in your account can be spent guilt-free.
Track Your Savings Progress
When you are saving towards your goal you should track your progress. This could simply be keeping a spreadsheet or notebook of how much you spend each month and how much you save.
When you see the savings go up each month it motivates you to save even more money.
Ensure to monitor your budget each month and see if expenses are starting to creep in again. Oftentimes we are motivated for a month or two and then bad habits start to pop up again. Keeping an eye on your budget each month allows you to identify any unnecessary spending and cut back again.
Final Thoughts
That’s everything you need to know about saving £10k as fast as possible in the UK. You now have a plan of action to get you started. Start by cutting your expenses and minimizing how much you spend each month. Maximise the amount of money you are earning from the money you already have and then see if you can add supplemental income through a job or side hustle. Good luck with hitting your savings goal!
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