How to save $10,000

Do you ever hear news reports that say things like, “The cost of living is expected to rise by $100 per week,” and think,

“Well where am I supposed to magically find all this money?”

You’re not the only one.

Recent research from Finder hints that millions of Aussies - up to 45% - have less than $1,000 in savings in total.

And whether you currently have a little – or a lot – of savings, there’s always a reason to build up some more.

Not the least so that you’re prepared for different scenarios such as emergencies, great escapes, and long-term investing.

And we always think you should aim as high as you can – even $10,000-in-a-year-or-two high.

So here are some ways to approach saving up a huge chunk of money.

Set a daily goal

Generally, saving $10,000 in a year means you need to save $30 each day, and saving $10,000 in two years means you need to save $15 each day.

The above figures are examples of how committing to a small, daily savings deposit can be a good first step to take on a larger savings goal (and not intended as financial advice).

There are a few reasons why.

One study showed that people are way more likely to commit to a savings goal when deposits are framed as costing $5 per day, rather than $150 per month, even though the total amount saved will be the same.

Take it from Deakin Uni, which argues that smaller goals give you both frequent wins and minimise procrastination.

Smaller goals add up.

Even the $5 per day that you might not have otherwise noticed can add up to $1,825 by the end of a year – and then you only have to find another $8,175 to reach your $10,000 goal.

Find a hiding spot

“Only $8,175.”

Yeah. We know. That’s still heaps.

The next thing you’ll want to do is find a good spot to stash your savings.

You could pick a money box or a shoebox, so you feel rich every time you see it – but then if somebody breaks in they could take it all in one go.

(Plus, you’ll eventually have to schlep it to the bank, which can be a bit of a pain.)

Some other options to consider could include term deposits and high-interest savings accounts.

Term deposits are special bank accounts that lock your money away for a specific time period, to earn a generally higher-than-average interest rate than standard savings and transaction accounts can give.

The trick is, if you need your money out sooner than agreed, you’ll generally have to pay a prepayment fee which can end up being quite hefty.

High-interest savings accounts are bank accounts that let you save your money and earn interest with an interest rate that’s generally higher than a standard savings or transaction account.

They’re not all created equal: you may need to complete different activities to ensure you get the full advertised interest rate, such as growing your balance from one month to the next, or ensuring you’ve deposited a high enough amount of money.

(There’s a community-driven savings accounts leaderboard you can find online that compares heaps of Aussie bank accounts and their rates. We’re not at all affiliated with it but some of us have found it handy.)

Either way, once you find that perfect place to stash your savings, you may want to consider setting up a little bit of friction to make it even harder to get to your money unless you really need it.

Some people have found success with keeping their savings accounts in separate banks to their transaction or bills accounts, or renaming their accounts to remind them of their savings goal/s.

Stop doing sums in your head

You know how you find $20 in an old jacket and treat it like it’s free money because you weren’t expecting it?

Or how cash can be easier to spend because it’s already taken out of your bank account, so there’s no online record of where you spend it?

Behaviours like this are known as ‘mental accounting’, which is when you treat money differently depending on how you make it, and what you spend it on.

It’s how you get into situations like overspending on holiday, or when you’re out with your mates.

You feel like you can justify it. It’s not just you, it’s human nature.

Behavioural Economics researcher Richard Thaler found that humans are more likely to:

Care more about whether they think a product is priced fairly, than what it actually costs;
Change their behaviour depending on how often they check their bank accounts;
Track money decisions based on mental categories that can be arbitrary, and include features such as the origin, purpose, size, payment method, and location of the transaction.

Ways to get around it include creating and sticking to a budget; keeping your goals in mind; and remembering that every dollar is worth the same amount, and can get you closer to or further away from your goals no matter where it comes from, or what you spend it on.

The $1,000 question

We borrowed this question from a money subreddit because we thought it was transformative.

“If someone paid me X (however much it cost) to not buy it would I take it?”

It’s a way of looking at your finances that can help you figure out if it’s actually worth spending your money.

For example: If somebody paid you $5.50 to make your own cafe latte with ingredients you already have – or to simply skip it – would you take it? (Then don’t buy the coffee.)

If somebody paid you $500 to give your best friend’s wedding a miss, and not be her bridesmaid, would you take it? (Probably not.)

If somebody paid you $30 to skip Uber Eats and shop your pantry for dinner instead, would you take it? (There’s that $30 in daily savings you were looking for.)

Don’t just resist, redirect

It’s not enough to just not spend your money.

Once you’ve decided to stop paying the gym membership you weren’t using anyway (if someone paid me $27 to stay home each week, would I? I would pay them. #IntrovertLyf) the only way you’re actually going to save that money is to save that money. Don’t spend it on something else.

Don’t just resist, redirect. Instead of expecting a weekly $27 direct debit – you could consider redirecting it to your savings account.

When you resist your third pair of sneakers – you could consider paying that $300 into your savings account.

When you decide you don’t really need to see that 90s reunion tour – go to karaoke with your friends instead, and save the difference in your savings account (just a suggestion.)

Other ways to find or save money

Check out the Aussie websites that help you find and save money
Take inspo from our list of 50 ways to save money
Consider renting instead of buying, and saving or investing the difference
Set up some money hacks, such as paying yourself to watch Netflix

Keep in mind

While these are general ideas that can help you build up your savings, it’s not financial advice. To get personal financial advice, we recommend speaking with a financial professional, such as a financial planner or an accountant. It is important to consider the benefits and risks associated with the financial decisions you make.