When it comes to an ambitious goal like saving $10,000 in a year, you have three basic options:
- Play defense
- Play offense
- Or you can play defense and offense
This post is going to explore one method for cutting your spending and two for increasing your income. You’ll have the best chance of saving $10,000 in a year if you attempt all three. Let’s start with defense.
Cut Your Fixed Costs
The best way to think about saving money is to front-load the work by lowering your monthly bills. Once your bills are lower, you’ll save money every month without breaking a sweat.
Here’s the approach I use.
First, make a list of all the bills that you pay every month. This can include things such as:
- Car insurance
- Cell Phone
- Gym Membership
- Cable/Netflix/Streaming Services
- Streaming Audio (Spotify, Pandora, etc.)
- Food Delivery
- Monthly Mystery Boxes of Goods
- Credit Cards
- Student Loans
Then, for each bill, run through the following questions:
- Can I cancel it altogether?
- Can I get a similar service from a cheaper competitor?
- Can I downgrade my service to save money?
- Can I bundle with another service to save money?
- Can I change my payment schedule to save money?
- Can I negotiate this down?
Not every question will apply to every bill. For instance, you have the potential to save money on your phone bill by switching to a competitor, but maybe one internet company has a monopoly in your area. You can cancel Spotify, but you can’t legally cancel your car insurance.
For all the stuff that’s not necessary, if in doubt, cancel the service. You can always make a new decision later if you miss it when it’s gone.
I go through this process in much more detail in the post Quick Wins The Simple Way: The Fast Path to Frugality. In that post I share what’s worked for me and several of the best options for reducing each kind of bill.
Start a Side Hustle
The beauty of a side hustle is that you can play to your strengths. You can play the arbitrage game and buy stuff cheap in one place and sell it for more somewhere else. You can sell your artwork on Etsy.
I’m a writer and so one option I like is the freelance writing side hustle. To become a freelance writer, you need two things:
- To build a portfolio
- A place to find clients
Building a Portfolio
Here’s the key phrase to remember: Practice in public.
You need to get your work out in front of people. Once real humans come in contact with their work, you can start getting feedback on your work. This can be the direct feedback of criticism or the soft feedback of your stats page.
The best approach is to pick a platform and to start writing consistently. For writers, I really like Medium and Quora, but platforms like LinkedIn and Twitter can work if you know what you’re doing.
- Medium is great because you can sign up for free and earn royalties on your writing as you build up a portfolio
- Quora is powerful because you can answer questions posted by real humans. You’ll never run out of content ideas
Whatever you choose, the point is to practice, improve your craft, and slowly accumulate a collection of work you can show to potential clients.
There are lots of places you can search:
- Ask your network of connections on social media
- Craigslist Jobs
- My Personal Favorite: The ProBlogger Job Board
One key when looking for work is to apply as widely as possible to anyplace where you might be a good fit.
Another key is to let your job hunt refine your writing process. For instance, if your a personal finance writer and notice that more clients are looking for people who specialize in investing than saving, you should build your portfolio accordingly.
Full Post: How to Start Freelancing With No Experience
Negotiate a Raise
Landing a raise isn’t easy, but once you pull it off the extra cash just flows in automatically every paycheck. You’ll have to make sure you don’t immediately spend it. If you can do that, this is a great approach.
The best place to start is by setting a meeting with your boss and asking what it would take to get a raise.
You’ll want to make sure that you’ve done your homework. Come prepared with a proposal of how you could improve your department or address your boss’s pain points.
You want to have this handy so when your boss doesn’t know where to take the conversation you can say “I actually have some ideas..” and pull out your proposal with a dramatic flourish.
Try to come up with a set of criteria that you and your boss agree would merit a raise. You want it to be crystal clear if you hot your targets. And you want to put it in writing by sending a follow-up email.
It’s important to be polite but assertive and to control the conversation. For instance, you want to be careful not to ask any questions that are easy to say “no” to. For instance, instead of asking “can I have a $10,000 raise?” it would be better to ask “what would I need to do to deserve a $10,000 raise?”
After your initial conversation, you’ll have to work hard to make it happen. But if getting raises was easy everyone would do it.
Be sure to see these posts for more negotiating tips:
The more strategies you use, the less each needs to generate. If you use all three strategies mentioned here, you only need to average $3,333 for each one. If you land an $8,000 raise, each of the other two strategies only needs to produce $1,000.
Saving $10,000 is a nice little accomplishment. It makes a very nice emergency fund which can provide you with a margin of safety. There’s nothing special about that fifth digit, but when it comes to motivation it makes a lot of difference.