Buzz
Starting from nothing can be overwhelming, especially as a beginner in saving or investing. With experts advising you to save 20% of your income and double your salary by the age of 35, while you're juggling rent and student loan payments, saving anything can seem out of reach.
Just like breaking down debt repayment into smaller steps or creating mini-goals for larger achievements, taking small steps towards your financial targets can help you reach them quicker than you expect. If you're just starting out, focus on saving your first $10,000 before diving into more complex strategies or concerns like investing in crypto.
This idea came to me after reading Bridget Casey's blog, Money After Graduation, a personal finance blog by the Canadian writer. Casey suggests that $10,000 is 'attainable but still large. Secure, but not quite comfortable. It shows progress, but not completeness.' In other words, it’s a significant but achievable goal.
So how do you make this happen? Start by understanding why saving and investing matter to you. Whether it's for security, the freedom to leave a job you dislike, or simply the satisfaction of building a financial cushion, identifying your motivation will be crucial when challenges arise (and they inevitably will).
Remember, building that $10,000 won’t happen overnight. It’ll take consistent effort over a few years. You’ll start with smaller amounts like $100, $500, then $1,000, and keep building. But always keep that $10,000 goal in mind, as it can help you resist unnecessary spending. As I mentioned earlier this week, prioritizing that figure may prevent you from splurging.
Here’s how to get started:
Create a separate high-interest savings or investment account. Look for online banks offering the best rates. As Casey advises, keep this money in a dedicated space to avoid temptation to spend it.
Plan your saving schedule. Take your take-home pay and expenses into account. What amount can you save each paycheck without affecting your ability to pay bills? Write down your plan in a notebook or use an app to track it. (Personally, I keep my timeline on a bulletin board in my apartment, and I mark off each 'save' on the spot.) Casey suggests it takes about $834 a month to reach $10,000 in one year. If that feels too high, extend your timeline.
Set up automatic transfers from your paycheck. Then, forget about them. When I first started working, I set up automatic 401(k) contributions and didn’t check them for a year. When I did, I was amazed at how much had accumulated. Similarly, I’ve had weekly automatic transfers from my checking to savings for years, and the results have been fantastic.
Use an app like Qapital to boost your savings. Set up rules or let the app handle your auto-transfers. You can also find more expert tips on saving money here.
Save unexpected cash. While paying off debt is important, consider putting a portion of any extra cash, like tax returns or birthday money, toward your savings goal.
Celebrate small milestones. When you reach your first $100 or $1,000, take a moment to acknowledge your progress. These are big wins! Casey suggests making an extra contribution to celebrate, but a little treat for yourself works too.
As Casey notes, reaching the $10,000 milestone shifts your financial perspective. It’s when you start accumulating wealth rather than just building savings.
If you've managed to save $10,000 on an average income, it’s likely taken more than a year, so you’re no stranger to financial discipline. You’ve probably seen your savings grow thanks to interest and dividends. This amount represents what you chose not to spend, and it helps you understand just how much those things weren’t necessary, motivating you to keep saving in the future.
Reaching this goal provides a great foundation for taking on riskier financial moves, such as investing in a stock you find interesting. With a solid base in place, you can experiment with new strategies without putting your entire financial security at risk.
Hitting the $10,000 mark won't be a walk in the park, but it's a strong target that can motivate you to save just a little more each month.
