How to save £10,000 in a year

Save MoneyBy Eamon
how to save 10k in a year

While £10,000 isn’t going to transform your life, it can be the difference between poverty and setting yourself up for a life of luxury in the future. The first 10k is the most important, and nearly anyone is able to make it within 1 year. Realistically, how much money you can save depends on circumstances such as location, income, and expenses. Everyone is different, so take the points that apply to you. Before we explore the exact steps you need to take, understanding how to save 10k in a year can boil down to a few fundamentals:

  • Budget your money
  • Become more frugal
  • Increase your income
  • Buy assets, not liabilities

If you can stick to these basics principles, even some of the poorest earners in the UK can hit this target in one year. However, achieving this requires an average surplus of £833 every month.

First and most crucially, you need to get into the mindset of saving money.

Accept necessary sacrifices

The biggest mistake people make when trying to save money is to maintain their current lifestyles while doing it. But that doesn’t work, or else you wouldn’t need financial help and could continue living as you are. To grow wealth fast, make a commitment to yourself to sacrifice some short-term comfort and joy to invest in your future instead.

Budget to stay on track

You must become the man with a plan if you want to build wealth within a specific timeframe. Budgeting is like taking a life audit to help you understand where you are and what needs to be done. Write down all your typical monthly expenses + income into a budgeting spreadsheet so you can figure out which areas of living are essential costs and what can be cutback to reduce spending. Try the popular 50/30/20 rule but with a temporary adjustment. Allocate 50% of your income to savings. This is tough but certainly doable. I saved 6-7k a year on just £16,000 but at 50% you could save 10,000 on about £1,650 monthly after-tax income.

Estimated savings in 1 year = £3600+

Move in with family or friends

The most expensive bill for anyone is housing. If you’ve gone solo because you want your own space or don’t like the stigma of living with parents, seriously reconsider. Nearly everywhere outside the Western world this is completely normal, even if you can afford to live alone. In the UK, British Indians are some of the biggest achievers by median household wealth. Notably, they have a much higher tendency to stay living with their families.

Of course, some people are tied to mortgages or have dysfunctional relationships with parents so this may not be an option. But renters can house share or couch surf between friends. If you have a mortgage, you can rent the place out so it pays for itself, maybe even generate extra income, and then rent or stay somewhere much cheaper.

Some people come from big cities like London, where the average resident has some of the lowest monthly disposable income in the UK despite earning more money. If that’s your situation then it’s essential to read about how to save money in London and other expensive places.

Estimated savings in 1 year = £4800-9600+

Live cheap outside the UK

In the age of remote working, many people have the luxury to work from anywhere. Use this to your advantage and become an expat in a country with cheap cost of living. Thailand is a great choice with stunning views and a buzzing culture. You could live there for just £800 a month. But if you’re set on staying in the UK, here are the most affordable areas to live.

Estimated savings in 1 year = £4800-10,000+

Get another source of income

It’s probably not what you want to hear but it’s the most straight forward way to ensure you reach 10k in a year. Anyone without experience can land a 9 to 5 job with 18k full-time salary when enough effort is applied. Unfortunately, that alone may not cut it to hit £10,000. So, you’ll need to give up some evenings or weekends to earn a further £5,000 from a part-time job such as a waiter, bar staff or Uber driver. Total income, though, should be 23k or more to stand the best chance. A best case scenario is starting side hustle ideas that you can eventually turn into a source of income that replaces your main job, but even just as supplementary income it provides more financial security.

Estimated increase in savings in 1 year = £2500+

Buy assets and avoid liabilities

A simple life hack to decide how to spend your money is to think in terms of assets and liabilities. An asset increases in value overtime whereas a liability decreases. When you buy a car it’s going to keep devaluing, but a stock or cryptocurrency may shoot up if you pick the right one. If you already have thousands of pounds in the bank then investing could edge you closer to the 10k mark. If you buy a website and leave it then it may drop in value but if you create content to boost visitors and that leads to more sales or advertising revenue then you’re generating more money and could potentially sell it at a higher price one year later. Do your research before delving into anything new.

Estimated savings in 1 year = £20-1000

Cut back on takeaways and eating out

Cooking is long and boring and comes with a bunch of washing up. It’s much easier to get something much nicer to your door. But just one £15 order a week will set you back £765 a year. Resist the urge. Delete your food apps and meal prep to be ready for those days where you just want to stick something in the microwave. While you’re at it, replace some big name brand foods from your supermarket with a supermarket brand knock off. You’ll soon find your food shopping bill slashed by 20-50%.That’s a giant saving on a £4,000 annual expense.

Estimated savings in 1 year = £800-2000

Reduce energy bills

With energy bills set to rise, your efforts to save may be wasted if you don’t change your consumptive habits in the home. Electricity and gas could set you back several thousand pounds next year and some of the biggest offenders are your washing machine, dryers, kettles, and electric showers. If you have access to facilities with showers at the gym or work go use them instead and then wipe down with a flannel at home. Switch from tea and coffee to cold drinks or boil excess water in the kettle and store in an insulated mug for re-use throughout the day. Avoid the tumble dryer altogether and stick to the washing line. Set your heating to only turn on a few times a day and focus on trapping in the heat with closed curtains and draught-proofing rooms. Don’t leave any appliances running when they’re not being used, including unplugged electronics you’ll need to charge later.

Estimated savings in 1 year = £500

Learn to say no to others

Focus on your goal whether that’s the downpayment on your house or however you plan to spend your 10k. Naturally, you’ll get invites to grab food drinks, and all kinds of things that fill up your spare time. It can be hard turning friends, colleagues or dates down. But they’re usually understanding when they know you are working towards something. Communicate that so it’s less of a burden to say no but don’t feel bad for putting yourself first. Suggest activities that don’t require spending so much money like hiking, museums, a walk in the park or sticking on a film at home. According to research from Aquacard, men overspend by £978 a year due to social pressure compared to £715 for women. £5200 annual spend on socialising is more typical in the UK but slashing activities in half will still save thousands of pounds.

Estimated savings in 1 year = £2600+

Graph of common overspending environments in the UK

Credit: Aquacard