How to save 10000 in 6 months. To save $10,000 in 6 months, you must first know how much you’ll need to save in a month.
The formula is:
10,000/6 = 1,667.
To save $10,000 in 6 months, you must save $1,667 each month of the 6 months period.
Looking at your income, is it realistic to pursue this savings project? The short answer is Yes. More explanation is: it depends on your income, your expenses, and most importantly, your budget.
Let’s do a quick estimate.
If you use the 60-30-10 rule budget, you will need a $2780 income to save $10,000 in 6 months.
(The 60-30-10 rule says 60% of your income is kept as savings. More about it here.)
If you use the 50-30-20 rule budget, or the 70-20-10 budgeting rule, you will need $8350 monthly income to save $10,000 in 6 months.
(in the above rules, you only save 20% of your income)
The point is, if your monthly income falls between $2780 and $8500, and you save between 20% to 60% of it, you can save $10,000 in 6 months. The savings strategy you use will determine your success.
In the above estimates, we based our assumptions largely on the income. But income might not always be consistent. Aside from salary earners, your monthly income will not always be the same each month.
Now let’s focus on our expenses and see how to save $10,000 in 6 months, irrespective of our income.
5 TIPS TO SAVE $10,000 IN 6 MONTHS
1. CUT BACK ON EXPENSES
There are many factors affecting your income. Most of these are not in your control. But one thing that is sure in your power is your expenses. So, cut back on expenses. Identify areas where you can reduce your spending.
For example, if you eat out a lot, consider cooking at home more often. If you can find ways to save on groceries, transportation, entertainment, and other everyday expenses, you will have more money to put away each month.
How can you do this?
The following suggestions can help. Most importantly, they are meant to trigger your creativity to come up with even more effective ways to reduce your expenses.
- Quit harmful habits.
According to the Centers for Disease Control and Prevention, smoking costs the United States $381 billion dollars each year. That is $31.8 billion each month.
And the US loses $249 billion annually to excess alcohol use, that is 20.7 billion monthly.
Now do the math. How much is your share in this total cost? By quitting harmful habits you’ll be closing a major expense outlet in your budget.
- Cut down on recreation
Cutting down on weekend park visits. And family outings can save you to ton. Of course, you don’t have to kill joy, but some balanced cut downs can increase your savings.
To get a clearer picture of how much is spent on recreation each year in the US (just a case study), let’s talk some funny stats.
Do you love statistics? Yes, stats are lovable when you’re not part of the count.
But quit the remorse, let’s talk stats.
Do you believe this! The top 10 US cities spent an average of $282.17 per resident in 2021 alone!
But this is not the shocker. We took the average. But talking of the leading city, San Francisco. The city spent $442.27 per resident on parks and recreation.
This is shocking because we counted the 4.7 million residents in the city and took the average, which diluted the real figure per the ‘real culprits head count.” If we were to do a true figure, you will be shocked.
So a fraction of San Franciscans spent about:
4,700,000 * 442.27 = $2,078,669,000
They spent about $2 billion in 2021 alone on park and recreation and the entire population to help reduce the average account per head count. That’s a huge amount for sleeping on grass and a tent alone!
Now the point is clear, cutting back on recreation can save you a ton.
- Buy frequently used items in bulk.
Buying in bulk costs more than buying in retail. True. But when you take a cost per item cost on bulk purchases, it’s usually far cheaper than buying retail. Actually, buying wholesale saves you the extra cost that could have gone down retailers’ pocket as profit.
Here are some sites to make bulk purchases:
2. DIVERSIFY YOUR INCOME SOURCES
If there is any lesson we can learn from the Covid-19 pandemic, it is that income stream is guaranteed.
Change in political atmosphere, or even another pandemic can paralyse a once profitable income.
It is important that you create a second or even third source of income. Diversifying is the key.
But in the context of this article, diversifying your income will also create multiple inlets. If your main income source takes care of your needs and wants, your other income might be reserved fully for savings.
Investing in a PAMM forex account is a fine way to diversify.
- S & P index fund
3. TRY THE “SPENDING REINING”
Kudos to the cowboys out there. Reining is a horse sport, where the rider guides the horses through a precise pattern of circles, spins and stops.
For this to be done successfully,
- The horse and the riders need to be in tune.
- The horse should be willingly controlled with little or no noticeable resistance.
- The horse makes a set of runs and comes to a sudden stop (the sliding top).
What has this got to do with saving $10,000 or in fact any amount in a month?
- Your spending must be intentional. Never buy any item without planning.
- Like the horse, your spending should be controlled with little resistance. You should have the willpower to make spending decisions. You decide what to buy, when to buy and what quantity to buy.
- Apply the “run-stop-run” technique. Try spending on important things for some time. This should also include a balanced spending on some of your wants. Things that you like but don’t really need. Then go on a break (a spending sliding stop) for a stretch of time. Fight the impulse to make purchases, for about a week or so.
This intermittent spending and holding can save you a ton. In time you’ll get used to the process of going without purchases for some. When you see how much you’re able to save on those spending fast, you’ll be more likely to extend those spending breaks.
4. AUTOMATE YOUR SPENDING
Aeroplane builders did it. They automated flying; gave it a cool name: “autopilot”. Tesla did it. It built auto driving cars. It stole the “auto-pilot” too. Now we have two pilots, one on air, the other on land.
But how about building an “auto spender”. One that makes purchases for you. Pay recurring bills for you. Pay your mortgages and rents for you. Wouldn’t that be cool!
But it’s not only cool, it’s also real. Automating your spending is as simple as it sounds. It means setting up your recurring purchases to be paid automatically. Do you pay light bills? Set them to be paid automatically.
Bills are not the only things that can be automated.
- School bills
- Loan repayments
These can all be set to be paid to the receiving account automatically at a given time.
Paying loans on time, for example, helps to prevent late repayment and the penalty fees that come with it. This saves you the extra fee.
Setting auto-payments removes the duty of spending from your hands. This helps to prevent spending more than you bargained for.
Have you gone online to pay for subscriptions, and end up finding yourself on eBay or Amazon. Probably you paid your subscription, but also got cut by advertisers’ trap, another “mouth watering discount”. You end up buying that cool gadget that you saw on ads or even more. Six weeks from now, you realize you never needed it in the first place.
5. KEEP A DIARY
What does keeping a diary have to do with saving $10,000 in 6 months? Everything.
Write down your
- What worked
- What didn’t
If you keep a written track of your savings. You’ll be able to determine if you’re on track, if you can meet your target. You’ll see adjustments that needs to be made. If your diary says you’re doing fine. You’ll be more determined to keep going.
There is little better incentive to save, than seeing how much you have saved up. Keeping a diary is just how to do so.
That being said, writing down your progress along the way, is a glucose shot to keep going.
We’ve discussed 4 tips to save a target savings goal. The key is applicable whether the goal is $10,000 or $100,000 dollars.
The truth is, there is no magic formula. Saving is hard work. And like most hard works, it needs discipline, patience and endurance.
- Know your target.
- Determine your income.
- Divide your target savings by the number of months you have to meet the target. (6 in this case)
- Understand the different budgeting techniques available and determine which is best for you, and will help you reach your target the quickest.
- Strive for the long term. Saving and budgeting is a marathon race and not a 100 metre sprint. So, implement a strategy you can in the long run.
- Be balanced. A little fun in life is good for your health. Do not sacrifice every good thing in your life to meet a budget. And,
- Keep a diary.
This article is definitely not exhaustive. What else can you do to save $10,000 in 6 months? We’ll appreciate your comment in the comments section below.