Tip #19 – How to save $10,000 without really trying. It’s really not that hard to save $10,000. It just takes time, patience, and some smarts. For some it will obviously be easier than others if you make more or have less debt than others. It will take some longer than others to save $10,000 if you have a lower salary, but there’s no reason that most of us cannot do this.
Here’s how. Save some of your money each month. Your hundred-dollar savings will turn into $1,000 then $10,000. Really, it will. Here’s how to do it. Remember that budget we talked about – the one where you have a set dollar amount for savings each month? Do it faithfully each month and your money will grow. Let’s see how long it will take. If you can save $200 each month from your paycheck then after one year you will have $2,400! Woohoo! $2400 is a good chunk of change to have. For simplicity's sake, we’ll assume that you are not going to make any interest on this money. We’ll talk about interest rates in another post. After two years of saving $200 per month you will have almost $5,000 ($4,800 to be exact). Not bad at all. After 4 years you will have $9,600. By the middle of your 5th year of saving, you will have over $10,000. And it really doesn’t take that much effort.
Now some of you may be saying you don’t have $200 to spare each month for savings. Well, you can either save less each month (save $50 or $100) or you can do something about your cost of living. Remember to write out your budget to see where your money is going. Figure out ways to spend less in each of those categories. Spend less on your groceries; eat out less; buy used; and evaluate what you buy. If you cut back on some of your spending, you should be able to put away $200 a month or at least more than you initially thought. And in less than 5 years you can have $10,000.
In Real Life (IRL) – I told you that I’m a saver by birth. Therefore, it’s not hard for me to save money. I always evaluate purchases and I hate spending too much for anything. My first job out of college, I made $19,500. Not a whole lot of money. And I worked in Washington, DC which is one of the most expensive places in the US to live. But I put money away diligently each month. I had the money to do so because I made my lunches, I shared an apartment with friends, and I shopped for bargains (this was before I bought used things). Each year, I managed to save at least $5,000 of that small salary. I’m glad I did it then because with three kids and a house, I have a lot more expenses now. Plus, it's better to save when you are younger so your savings can grow with interest. We'll talk about that in another post. But for now, evaluate your expenses and budget again and see if you can start putting away a set amount each month no matter your salary. Then be patient. We all know how fast time flies. In a few short years you will see your savings grow.