Whether you’re saving money for a wedding, house down payment, or just taking part in a TikTok money-saving challenge, you’ve decided to save $10,000 in a year. Depending on your income, monthly expenses, and spending habits, this might be a lofty goal.
But just because it’s difficult doesn’t mean it’s impossible, nor does it mean it’s not worth it.
Today, I’m going to walk you through several strategies to help you save $10,000 in a year. The methods below will not only help you start saving money faster—they’ll also put you on a path of more responsible money management down the road, and possibly set you up for financial freedom for the rest of your life.
Let’s get started.
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9 Ways to Save $10,000 in a Year
As you adopt more and more strategies, you’ll be able to meet your goal faster and faster.
1. Reduce Spending
If you don’t already have a budget, now is the time to create one. This is a personal finance skill everybody needs to learn.
To set up a budget, start with your income. Note how much money you have coming in every month. You might have paychecks from one or more jobs, passive income from an investment, alimony, or other income sources. Add all of these up.
Next, make a list of all of your essential expenses, such as your car payment, rent, utilities, and more. Check your bank statements to make sure you aren’t missing anything.
Once you’ve done that, consider one or more of the following strategies to reduce your spending:
Cancel or Negotiate Services
Do you have every movie streaming service available? If you don’t use them all regularly, consider canceling the ones you use less frequently—after all, you can always sign up for them again.
You might have some costs that you don’t want/need to cancel but are worth trying to negotiate lower. For example, if you switched from an in-person job to remote one and aren’t driving nearly as much, you might be able to get a cheaper rate for your car insurance because you’re not putting as many miles on your car. Or you could switch to a pay-per-mile car insurer.
Internet and cell phone providers are notorious for providing an affordable introduction price, then significantly raising prices later. Sometimes, all it takes is a phone call to convince them to extend a lower rate.
For every recurring expense, ask yourself, “Can I cancel this?” If you can’t, ask yourself, “Can I negotiate this lower or find a cheaper alternative?”
Join a “Buy Nothing” Group
Facebook is filled with “Buy Nothing” groups for various cities. If your city has one, consider joining it. Sometimes people give away large items, such as furniture they no longer need. Other times, items are smaller, such as individually wrapped food items that they tried and discovered they dislike. You can also post and ask for items you need.
Obtaining items you need from someone who’s just giving them away is a good (albeit not very consistent) way to reduce spending. But an etiquette tip: Don’t be greedy and take every available item.
Also, when the opportunity presents itself in the future, you might want to return the favor and offer something of your own free to the community, rather than donating it.
Try a Spending Freeze
Some people save money by choosing a day, a week, or even a month when they plan not to spend any money on luxuries, big or small. When they get the urge to spend money, they transfer the amount they would have spent on coffee or a movie ticket into their savings account.
Believe it or not, many people actually enjoy these types of personal challenges.
You don’t necessarily need to dive headfirst into a full no-spend month—just start with a week or even a day. Not only can a spending freeze help you save more, but it can also give you insights into just how often you indulge in non-necessities.
Use the 30-Day Savings Rule
If you struggle with impulse purchases, the 30-day savings rule is for you. According to the 30-day rule, you should wait 30 days after deciding you want a non-essential item or service before you buy it.
The idea? With that much time to think, you’ll make a better decision about whether you actually want or need the item. Maybe it’s a sweater you actually need before winter. But maybe it’s another video game when you haven’t even logged two hours in Starfield yet. In general, though, if you prevent some impulse buys, you can save more money than you would otherwise.
One last tip for if you try out the 30-day savings rule: When you consider a purchase, put an amount of cash equal to the purchase price in savings—that way, if you don’t end up making the purchase, the money is already tucked away. (And if you do, just move the money back over from savings.)
Related: How to Invest Money: 5 Steps to Start Investing w/Little Money
2. Create a Savings Plan
You already have a specific savings goal to save $10,000 in a year. Now you need to create a plan to achieve that goal.
To save $10,000 in a year, you need to save about $833.33 per month, or about $416.67 per pay period if you’re paid twice per month.
That might seem easy, challenging, or downright impossible—it depends on how much money you make and how much your essential monthly expenses are.
If you think you don’t make enough money to materially save anything, I suggest you scroll down to tip #5 (side hustles) or tip #7 (see what a savings app can do for you).
If you do make enough money, consider using a “pay yourself first” reverse budgeting strategy instead of a traditional budgeting plan. A “pay yourself first” budget puts money into your savings account before funding your discretionary spending. And considering $10,000 is a large amount of money to save in a year, you’ll probably only get there by prioritizing saving—not just putting aside whatever money is left over after recreational spending.
While you can manually transfer your money between accounts, we recommend automating your savings. Automated savings plans take willpower out of the equation—money just piles up over time. (You might need to make adjustments as your income and expenses change, but you’d have to do that with a manual plan, too.)
Related: 5 Best Money Market Funds [Protect Your Savings]
3. Pay Off High-Interest Debt
While paying off high-interest debt means you’ll temporarily have less money, in the long run, it can help you save more money.
Interest on debt accumulates until you pay the debt off. High-interest debt accumulates much more quickly, meaning you’ll rapidly owe increasingly more the longer you wait to knock it out. So, letting high-interest debt fester can quickly derail your savings goals.
Here’s an example that should drive the point home.
Kaycee has a credit card balance of $5,000, and his card’s annual percentage rate (APR) is 24.99%. Let’s take a look at how much Kaycee would save the more aggressive he is about paying off the bill:
- If Kaycee paid the minimum monthly payment of $105, he would take 233 months to clear the debt, and pay an extra $19,389 in interest, for a total payoff amount of $24,389.
- If Kaycee paid $150 per month, he would take 58 months to clear the debt, and pay an extra $3,622 in interest, for a total payoff amount of $8,622.
- If Kaycee paid $300 per month, he would take 21 months to clear the debt, and pay an extra $1,205 in interest, for a total payoff amount of $5,205.
- If Kaycee paid $500 per month, he would take 12 months to clear the debt, and pay an extra $665 in interest, for a total payoff amount of $5,665.
This is all a way of saying that quickly paying off high-interest debt can save you literally tens of thousands of dollars—dollars that could be going toward your savings.
Related: 31 Millennial Spending Habits & Income Statistics to Know
4. Use the Best Account for Your Savings Goal
Different savings goals work best with different types of accounts. When choosing where to store your savings, consider whether it’s a short-, medium-, or long-term goal.
Checking Account
Your checking account should be reserved for money you are likely to spend very soon—between one day and two months. This account likely experiences a lot of transactions. It is not an ideal account for saving money as it’s too easy to spend money earmarked for savings. You need a separate savings account.
Related: Best Teen Checking Accounts
High-Yield Savings Account
High-yield savings accounts are an excellent place to save money you might need in the short or medium term—anywhere from one day to a year. The money in a high-yield savings account earns a significantly higher APY than money in traditional savings accounts; but, like with regular savings accounts, the rate will change over time.
You’re allowed a limited number of transactions each month, so it’s not as “liquid” as a checking account, but you can still easily access the money should you need it.
A high-yield savings account is a popular place to store an emergency fund, as well as save for short- and medium-term goals. Other accounts are more ideal for longer-term goals.
Save With Step Banking
Step, made popular by its unique “hybrid” Step Visa Card, has expanded its offerings to include a powerful high-yield savings tool.
Users earn 5% annually—compounded and paid monthly—on up to $250,000 saved in their Savings Goals, calculated using the average daily balance in your Savings Goals. Like with your average savings account, Step’s savings yield can change depending on movements in the Federal Funds Rate, but if that happens, Step will give you 30 days’ notice before it happens.
To qualify, the user must have a direct deposit of at least $500 per month, and the benefit extends for as long as the direct deposits continue. (Other perks of making qualifying direct deposits? Bonus points on dining, food delivery, charitable donations, specific merchants—and you can get paid up to two days early.)
And remember: When you sign up with Step, you also get their Step Visa Card—a spending card that functions like a debit card, but also boasts some of the features of a Visa credit card—including the ability to build your (or your child’s) credit history. You can’t spend money you don’t have, eliminating the fear of overdrafting. The card can be used to withdraw money fee-free at more than 30,000 ATMs, and it’s protected by Visa’s Fraud Protection and Zero Liability guarantee.
Users age 13 and older can also buy and sell stocks, ETFs, and Bitcoin. Sign up for high-yield savings with Step today.
- Earn 5% annually with Step, where you can save, spend, invest, and even build your credit history.
- Step offers a high yield on up to $250,000 stored in Savings Goals with qualifying direct deposits.* Interest is compounded and paid monthly, and calculated using the average daily balance in your Savings Goals.
- While the savings rate can change, Step will provide a 30-day notice before it does.
- Buy and sell fractional shares of stocks, ETFs, and Bitcoin for as low as $1, and earn cash and crypto rewards when you use your Step Visa Card at participating merchants.
- Send and receive money instantly, spend with Apple and Google Pay, and track your card's balance from the Step App.
- Banking services, provided by Evolve Bank & Trust, are FDIC-insured for up to $250,000.
- High yield on money held in Savings Goals
- Helps build credit
- Free investment account for stocks, ETFs, and Bitcoin
- Fractional investing for as low as $1
- FDIC insurance
- High-yield savings only available with qualifying monthly direct deposit*
- Can't directly deposit checks into a Step account
Related: Best Savings Account Alternatives [9 Other Ways to Save]
Money Market Accounts
A money market account is similar to a high-yield savings account, but they’re not exactly the same.
Both are interest-bearing accounts with a variable interest rate. However, money market accounts typically come with a debit card and allow you to write checks, which are features usually not offered by high-yield savings accounts. On the flip side, high-yield savings accounts tend to pay a higher interest rate than money market accounts. Additionally, a money market account is more likely to have monthly fees, though there are plenty of fee-free options available today.
Related: Best Money Market Account Alternatives
Certificates of Deposit
A certificate of deposit (CD) differs from a high-yield savings account and money market account in that its interest rate is fixed, rather than variable, and that rate tends to be higher than both HYSAs and money market accounts.
The trade-off? The money stored in a certificate of deposit is locked up for a predetermined amount of time—typically between three months and five years.
If your savings goal extends past the CD’s maturity date, it’s a great option for your savings.
However, CDs are poor for short-term savings goals and emergency funds, because you can’t access the money before maturity without paying a penalty.
You could, however, consider creating a CD ladder so you frequently have new money becoming available. A CD ladder is an investment strategy where you stagger your CDs depending on their maturity dates. As they mature, your money becomes unlocked—you can then reinvest it in another CD, put it into shorter-term savings, or use it for other purposes.
Related: Best CD Alternatives to Capture Interest With Low Risk
Investment Account
Investment accounts are best for long-term savings. If you need the money in less than five years, we don’t recommend this option.
However, if your plan is to save $10,000 toward a long-term goal, such as retirement savings, an investment account is a great place to stack your money. Investing in the stock market offers much higher earning potential than any of the other savings vehicles mentioned.
But they also have greater risk, especially in the short term, because markets don’t always head higher. In a bear market, you could very well lose money. But investors generally make money over the long term. What’s important to remember is that time in the market is more important than what the market is currently doing.
Related: Best Investment Apps for Beginners
5. Get Your 401(k) Match
You can actually get free money to invest from your employer, too.
Many employers with a 401(k) plan offer some sort of company match.The amount contributed each year generally represents a percentage of your salary. For example, if you make $50,000 a year and your employer offers a 4% match, you would contribute 4% of your salary ($2,000) into a tax-advantaged 401(k) account, and your employer would match that amount ($2,000), representing a total contribution of $4,000 per year. This money gets to grow, tax-deferred, in the market until you hit retirement age and can start drawing down the balance.
Some great aspects of this free money:
- You get a 100% return on your contributions instantly, offering a risk-free return on your contributions.
- This match generally isn’t taxed in the year you contribute, only when you withdraw money in retirement.
- Because you’re required to keep the money in your 401(k) for the long-term, your money has a higher likelihood of continuing to grow if invested in suitable investments for longer periods of time.
The final benefit to contributing to a traditional 401(k) plan? You can reduce your income subject to taxes in the year of contribution, providing you with a powerful way to reduce the taxes you pay today. For example, if you contributed $2,000 toward your 401(k) and you made $50,000, you’d save $440 on your $50,000 income as you’d be in the 22% tax bracket as a single filer (22% * $2,000).
Put simply: The 401(k) match (and contributing to a 401(k) in general) can help you make a lot of progress toward saving $10,000 per year.
Related: Best Rollover IRA Accounts [Where to Roll Over Your 401(k)]
6. Start a Side Hustle (or a few)
The more money you make, the more you have available to save, so if you have available time, consider starting a side hustle to earn more money.
Even if it’s just a few hours a week, a few hundred dollars more a month could make all the difference toward your goal. And oftentimes, side gigs can even be fun. You just need to find one that fits your personality, schedule, and time constraints.
Many side hustle options come with completely flexible hours, so you can fit in some work whenever you have a little free time. Plus, after some initial work, some side hustles can earn you passive income.
In-Person Side Hustles
I’m not going to go over a comprehensive list of in-person side hustles, but rather give you a few ideas to get you started. Within your neighborhood, you might offer cleaning services, landscaping, childcare, snow removal, and much more. Driving people around and making deliveries are two of the most popular side hustles if you have reliable transportation.
With the advent of app work and the gig economy, it’s even easier to find a flexible, in-person side hustle. All you need to do is download an app to get started.
Try to think of paid jobs you can do that don’t change up your routine too much. For example, if you love exercise, you could teach workout classes a few times a week at a local community center and earn money while you get fit. Or if you love watching local sports, you could occasionally work as a referee.
Online Side Hustles
Many people earn an extra income without even leaving their homes. Consider your skills and how much extra money you need to earn. If you’re just looking for a way to earn a little extra cash each month, you might consider taking online surveys, watching advertisements, or getting paid to play games.
Those who need to earn more substantial funds may consider doing transcription work, teaching English online, writing, or working as a virtual assistant. In general, freelance work lets you choose your own hours, which means you can easily fit in hours whenever you aren’t busy with your main job. You can get started with platforms like Fiverr and Upwork to get started, or ask your local network if they know of anyone in need of your services. Posting on LinkedIn can be another great way to find clients.
Some online side hustles can even earn you a passive income. For instance, you might create an online course or sell another digital item, like an Etsy printable. Just remember that it’ll take upfront work before you start receiving a passive income.
Related: 50+ Best Money-Making Apps That Pay You Real Money
7. Automate Your Savings
Putting savings on autopilot makes it much easier to save. Transferring away your hard-earned money is mentally tough. Plus, if you’re forgetful, you may not set aside as much money as you want.
Fortunately, there are ways to automatically save. Once everything is set up, you’re saving without any extra thought or effort. One way to automate your savings is to set up recurring transfers from your checking account into a savings account.
Automate your savings with Bloom
- Available: Sign up here
- Price: Free (no monthly fees)1
- Platforms: Mobile app (Apple iOS, Android)
Fidelity Bloom® is a unique free mobile app and debit card that comes with two brokerage accounts—one for saving, one for spending—and pays you to save. Fidelity Bloom® aims to simplify your finances by separating your savings from your day-to-day spending money. The app also helps you build better financial habits by educating you about your spending and motivating you to save more.
When you download Fidelity Bloom®, you’re opening two brokerage accounts: Fidelity Bloom® Spend and Fidelity Bloom® Save. Spend is an account for your day-to-day spending, while Save helps you grow your savings. The accounts have no monthly fees, nor are you required to make a minimum deposit to open them.
Fidelity Bloom Spend
The Spend account is linked to a Fidelity Bloom® debit card that can be used wherever Visa cards are accepted. The debit card has a flat 10-cent cash-back reward on every purchase—a small nominal amount, but one that translates into a high amount on small purchases. (For instance, 10 cents on a $10 purchase is effectively a 1% cash-back reward, which is generous for a debit card.)
Fidelity Bloom® also offers cash-back shopping with more than 1,000 popular retailers. You can use this feature through the app, or through your browser. Desktop/laptop users also have access to the Fidelity Bloom® Cash-Back Rewards Browser Extension—a Chrome extension that alerts you to potential rewards when you’re visiting a participating site, and that displays reward rates while you’re searching in Google.
Your Fidelity Bloom® debit card also comes with customizable round-ups that allow you to round up purchases by either adding a set dollar amount ($1 to $10) or a percentage of the purchase price (1% to 10%). Any time you use your Spend card, your round-up amount will be deposited into your Save account.
Fidelity Bloom Save
The Fidelity Bloom® Save account helps you keep your savings separate from your spending money. But it also goes one step further by helping you build your savings. Fidelity Bloom® will automatically match 10% on up to $300 saved annually in Fidelity Bloom® Save accounts, good for a potential maximum yearly reward of $30.
Other Features
- Gift card exchange. Have a gift card sitting around with $10 or more in unused funds? Fidelity, through third-party provider CardCash, allows you to convert that gift card into cash that’s deposited into your Save account.
- Potentially earn yield on your funds. Uninvested cash you deposit into your Fidelity Bloom® accounts is invested in one of three money market mutual funds—a low-risk way to help earn additional yield.2
- Direct deposit. Your employer can send wages directly to one of your Fidelity Bloom® accounts.
- Recurring transfers. Put your savings on autopilot by setting up recurring automatic transfers from your Spend account to your Save account.
- Money lessons and activities. Fidelity Bloom’s® “Challenges” teach you research-based concepts and skills that help you change your saving and spending habits.
One small technical note that users should be aware of: While Fidelity Bloom® Save and Fidelity Bloom® Spend act like checking and savings accounts, they’re actually brokerage accounts. Rather than Federal Deposit Insurance Corporation (FDIC) insurance that you’d get with a traditional bank account, you receive Securities Investor Protection Corporation (SIPC) coverage. Fidelity Bloom® accounts are covered for up to $500,000 of securities, including up to $250,000 in cash.
Read more in our Fidelity Bloom® review.
- Fidelity Bloom® is a free mobile app and debit card that helps you organize your finances by separating your savings from your day-to-day spending money—and pays you to save.
- The Fidelity Bloom® Spend account is linked to a debit card usable wherever Visa is accepted. Enjoy a flat 10-cent cash-back award on every purchase, additional cash-back offers with more than 1,000 popular retailers, and customizable round-ups.
- Fidelity Bloom® offers a 10% account match on up to $300 deposited annually to your Fidelity Save® Account, good for a maximum yearly award of $30. Also, all uninvested cash in both accounts is placed in a money market mutual fund, giving it the potential to earn additional yield.²
- Other features include direct deposit, recurring transfers to your Save account, and depositing unused gift card balances into your Save account.
- 10% savings match on up to $300 deposited annually
- Helps grow deposits by investing uninvested funds in money market mutual funds
- Flat cash-back reward generous for smaller, frequent purchases
- Direct deposit
- Cash-back shopping
- SIPC coverage
- Flat cash-back reward less generous for larger, more infrequent purchases
- No ATM reimbursement
Related: 19 Best Investment Apps and Platforms [Free + Paid]
8. Use Cash-Back & Roundup Apps
Cash-back apps give you money or other rewards every time you make an eligible purchase. Now, you shouldn’t spend extra money just to get more cash back. Remember: Your goal is to save $10,000 in a year—not to spend extra money. But if you use a cash-back app for your regular purchases, you’re passively saving money that could be put toward your goals. Also, some cash-back apps have generous sign-up bonuses.
Round-up apps can also help you save money every time you shop. When you’re using the associated card with a round-up app, the app rounds up every purchase you make to the next full dollar. Then, it sets that money aside into another account—usually a savings account that might or might not pay interest, though sometimes it’s an investment account.
I know it’s only a few cents for each transaction, but they can really add up.
Let’s say you use your roundup card at least twice a day, five days a week. And let’s say every transaction you make rounds up 50 cents on average. That’s $5 a week.
Well, multiply $5 a week by 52 weeks, and you’re saving roughly $260 a year.
Not bad, right?
Related: Best Quicken Alternatives to Manage Your Money
Get help finding deals with Capital One Shopping
- Available: Sign up here
- Platforms: Web, mobile app (iOS, Android)
The Capital One Shopping app can help save you money while shopping online. There’s no need for you to search for deals and clip coupons. The app applies the best available deals at checkout, potentially giving you some jaw-dropping prices. Plus, the service offers rewards you can redeem for free gift cards.
The Capital One Shopping app always compares prices between Amazon and other retailers, helping you potentially pay a lower price. Users can also put items on a watchlist, and the app will notify them when the item goes on sale (or if the price otherwise drops).
The app is free, it works with more than 100,000 stores, and it doesn’t require you to be a Capital One credit card holder to use it.
While the app is convenient, some people may prefer to do their online shopping on a web browser. After downloading the app, you can add Capital One Shopping to Safari as a browser extension and get rewarded there too.
- Capital One Shopping searches for discounts and promo codes while you shop, and it can automatically apply any deals it finds at jaw-dropping prices to your cart.
- Want an item but it's too expensive right now? If you're searching on Amazon, Capital One Shopping can identify whether that item is cheaper elsewhere. And if it's not, you can put the item on a watchlist; the app will alert you when there's a price drop.
- In addition to potentially earning savings, you may be able to accumulate shopping rewards that you can spend on e-gift cards.
- Works with more than 100,000 stores.
- Does not require you to be a Capital One cardholder to use.
- Minimum cash-out: $5.
- Age restrictions: Must be at least 18 years old to participate.
- Easily earn savings for shopping
- Offers e-gift card rewards
- Convenient Chrome extension
- Limited gift card selection
- Long time (up to 60 days) for rewards to appear
Related: 8 Best Personal Capital Alternatives
9. Talk to a Tax Professional
Not everybody needs to discuss their taxes with a professional, but for many people, speaking to a tax professional could result in a larger tax refund or smaller tax burden. If you are self-employed, have a side hustle, own investments, or recently experienced a major life event, such as marriage or divorce, you may benefit from getting help on your taxes.
Through the IRS’s Volunteer Income Tax Assistance (VITA) program, you may even be able to get basic tax return preparation for free. All volunteers must pass tax law training that meets or exceeds IRS standards. To qualify for assistance, you need to fit one of the following criteria:
- Earn $60,000 or less
- Have a disability
- Be a limited English-speaking taxpayer
There’s also the free guided tax filing service available from the IRS. To qualify for this program, you’ll need an adjusted gross income of $73,000 or less.
In full transparency, I’d look silly not admitting that trying to save $10,000 on a salary of $60,000 (or even $73,000) or less is extremely difficult. Many people face circumstances—medical bills, dependents, and more—that make this goal nearly (if not completely) impossible. But anecdotally, some people can manage to scrape together $10,000 in annual savings from salaries of $60,000 (or $73,000) or less, and VITA can help reach this goal. At the very least, if you’re making less than $60,000, VITA can save you something.
On top of VITA and free guided tax filing, local organizations might offer free help as well.
If you don’t qualify for any free tax assistance, it still might be worth the price to consult with a tax professional. Many people end up saving money when they use a tax professional because their refunds increase substantially. Tax software cannot get as specific into your financial situation as a tax preparer can, and you might benefit from having a human look over your financial documents.
Related: 7 Best Wealth + Net Worth Tracker Apps [View All Your Assets]
How to Save $10,000 in a Year: FAQs
Is it possible to save $10,000 in a year?
Whether you can save $10,000 in a year is largely dependent on your financial situation and obligations.
Whether this is a realistic goal for you partially depends on your income. Obviously, you can’t set aside $10,000 in a year if you don’t make that much annually or make just slightly more. In this situation, you could only save enough if you got a new job or started a side hustle (or two) to earn some extra income.
For people with high enough incomes, or those with minimal expenses, it’s definitely possible to save $10,000 in a year, but that doesn’t mean it’s easy to save that much money. You may have to follow a strict monthly budget, curb spending, and use automatic savings tools to trick yourself into saving additional money to hit such a lofty goal.
What is the fastest way to save $10,000?
At the risk of oversimplifying, the fastest way to save $10,000 is to increase your earnings and decrease your spending habits. As you make more money, you’ll be able to save more money. Likewise, the more you can curb your spending, the faster you can save money.
To save money quickly, most people need a carefully planned budget. Look at your monthly budget to see how much you can save and try to automate some of those savings. You may also take advantage of automatic savings apps that offer roundups, cash back, savings matches, and more to hit your goal.
How long does it take to save $10,000?
The amount of time it takes to save $10,000 varies vastly by person. Some people can save $10,000 in a year, while others may take significantly longer to save that same amount. Consider using reverse budgeting to determine how long it will take you to reach your savings goal. Reverse budgeting is another name for the “pay yourself first” strategy, where you prioritize saving ahead of any expenses and spending.
Why is saving money hard to do?
It can be difficult to save money for several reasons. Low-income earners, especially those with credit card debt or student loan debt, might not have enough money each pay period to pay monthly bills, pay down debt, and save money for the future.
Those without a budget might struggle saving money because they simply might not know how much money they have available. It’s important to have a budget and savings goals. Plus, it can be mentally challenging to part with fun money and turn it into savings money. And it’s easy to simply forget to save money if you don’t have a plan in place.
Should I store $10,000 in a checking account or savings account?
A traditional bank account—whether that’s a checking account or a traditional savings account—is not a great place to store $10,000 unless you need that much money to be available for frequent transactions, or you want it easily accessible for emergencies.
Most checking accounts don’t earn any interest and traditional savings accounts only earn a small yield. Instead, store your $10,000 in more generous interest-bearing accounts, such as money market accounts or high-yield savings accounts. If the money is for long-term savings goals, such as retirement savings, consider investing it in the stock market.
Why is it important to make an emergency fund your first priority?
Before saving for a vacation, luxury item, or even a home, you should create an emergency fund. You never know when your car will break down, you’ll have a medical emergency, you’ll lose your job, or another large, unexpected expense will pop up. Generally speaking, emergency funds should cover three to six months’ worth of expenses, although some people recommend having a year’s worth of expenses saved up.
When an emergency strikes, you need to have enough money on hand to cover it. If you don’t, you may have to use credit cards or take on other debt to pay for everything. Then, you need to pay back the debt along with the interest, which in the case of a credit card, is a high rate.
Having emergency funds can provide you with peace of mind. An event like getting laid off at work or needing medical intervention is stressful enough on its own. You don’t also want to be worried about how to pay for everything. Reducing your stress level is invaluable.
Related:
- 11 Best Alternative Investments [Options to Consider]
- How to Get Free Money Now [15 Ways to Earn Money]
- The 13 Best Investment Apps for Beginners
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