4 Simple Steps to Save $10K a Year

Here's how to reorganize your finances to bank over five digits in just one year without feeling deprived

By Timothy R. Schulte
CTW Features

Ten thousand dollars is a lot of money. It could be a large portion of a new car, part of a down payment on a home, a big chunk out of student-loan debt or a sturdy stepping-stone on the path to retirement.

But as large as the number looks, $10,000 also is a realistic annual savings goal. And it doesn’t require an enormous salary or fancy financial products – just some smart planning and self-discipline.

“There’s no magic-bullet formula,” says Bambi Holzer, president of Bambi Holzer Financial, a division of Brookstreet Securities, Beverly Hills, Calif. However, Holzer outlines four steps that can help you can help you make the most of your money. Take a look.

1. Assess what you’re spending

A smart savings plan starts with a clear audit of expenses. “Assess what you’re spending, what – if anything – you’re saving and what you’re putting on credit cards [adding more debt],” says Holzer. Take a bank statement, checkbook or credit card bill, whichever logs your expenses, and highlight the essential items: rent, groceries, medicine, car payment, etc. For individuals, this may be a shorter process because there’s no shared income or expenses. For couples, it will require looking at what each brings in and each spends.

2. Adjust your expenses

Write down your essential expenses – the ones you highlighted. Then take a look at the non-highlighted ones: the premium cable package, the daily latte runs, the dinners out, going to the movies. Go through those expenses and look at what you can do less of and what you can change. Skip the fancy steakhouse for a more affordable dinner, or cook it yourself. It’ll cost $20 for two people to go see a movie, but they could watch one at home for about $5 – or stay in and catch up on your TiVo from your pared-back cable package. Medium coffee instead of the large. A phone package that allots you ample minutes for your talking needs, not one that gives you unlimited. It’s all discretionary, says Holzer, also the author of “Financial Bliss: A Couple’s Guide to Merging Money Styles and Building a Rich Life Together” (Amacom, 2007).

Determine what you’re saving from your adjustments. Unless you actually save it – literally write the amount down and transfer it to a separate account or savings plan – it’s just psychological. It’s important to move the money so you can physically see your savings.

3. Have a money talk

Whether by yourself or with your spouse or significant other, have a conversation about money. Talk about what’s important with your money. Don’t make it like a diet, says Holzer – deprivation will lead to failure. And remember to put in what Holzer calls “mad” money to be used for something pleasant: for example, going out with buddies for wings or buying a pair of shoes. Just like the other “you” expenses, you want to keep them in moderation. For example, take a shorter or more local vacation rather than flying off to an exotic destination for a week. “Give yourself some perks,” Holzer says.

4. Go beyond saving

“Determine how you can save beyond your normal expenses,” says Holzer. Ask yourself how much you actually have that you could put into forced savings, like a 401(k) plan at work or an automatic monthly transfer to a savings account. If it’s done automatically, you don’t miss it, and compounding and earning interest can add up significantly, says Holzer. A little here and there can add up.

“Ten dollars a day, that’s $3,650 a year … without it being too onerous,” she says.

Have a goal in mind, and pride yourself by looking at the results each day. The progress will have a strong emotional impact and, literally, make your life richer.

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