With an unpredictable stock market and shaky inflation, a well-funded savings account is one of the best moves you can make for your finances.

What that looks like could be different for everyone, but one common, recommended goal is $10,000 in a savings plan. It’s not so large to seem unattainable but not so small that it doesn’t meet reasonable financial goals – like saving for a big vacation, down payment, or building a rainy day fund.

But when it gets down to the nitty-gritty, how do you save $10,000? And what if you wanted to do so in one year?

Breaking down the goal

As the saying goes, “The only way to eat an elephant is one bite at a time.”

Whether your savings goal is $1,000 or $10,000, you’ve got to take it one dollar at a time. You do that by breaking it down into smaller chunks.

Instead of thinking about saving $10,000 in a year, try focusing on saving $27.40 per day – what’s also known as the “27.40 rule” because $27.40 multiplied by 365 equals $10,001.

If you break this down into savings per day, week, and month, here’s what you’re looking at in terms of numbers:

• Per day: $27

• Per week: $192

• Per month: $833

Those numbers could slightly change depending on the number of days and weeks in the month. But you get the idea.

Is $27 per day currently doable in your budget? If not, what do you need to do to get there? More on that later.

What’s the ‘why’ behind your savings?

If you want to save $10,000 but don’t have a purpose behind it, you’re unlikely to succeed.

Your purpose will be what drives you on those days when you just want to scrap it all and go on a shopping binge.

So, what’s your purpose? Some examples might be:

• Build an emergency fund

• Save for a down payment on a car

• Jumpstart your kid’s college funds

• Improve your overall financial security

• Save for bucket list vacation

You get the idea. The bottom line is a $10,000 savings fund isn’t something you can knock out in a shorter amount of time, like a $1,000 fund.

Having a purpose, with some determination behind it, will help you get there.

6 steps to saving $10,000 in a year

Let’s get down to the practical. Here are some ways you can really put together $10,000 in savings by the end of the year.

1. Evaluate your income and monthly expenses.

Before you can get started, you need to know your baseline. And how much you make in a year combined with how much you spend is just that.

First, you need to make sure $10,000 is a reasonable amount. If that’s a third of your yearly income, you might want to readjust – maybe $5,000 is a better goal.

Next is making sure you know everything that’s coming in and out of your checking account. That’s your income (and your partner’s if you’re part of a couple) and every expense you incur monthly, quarterly, and annually.

Record all the fixed expenses in your monthly budget. That’s things like rent or mortgage payment, car payment and health, home, and car insurance costs. For variable expenses – those that may change monthly, like dining out, power bill and so on – read over your bank and credit card statements to get a monthly average. If you’re spending $200 a month, on average, dining out, then that’s an area where you could potentially cut back.

Read more: Fixed vs. variable expenses: Key differences and how to budget for each

Once you have a clear picture of what’s going in and coming out of your bank account, you can proceed to the next step.

2. Make a budget.

You’ve got all the information you need. It’s time to make the game plan.

One of the easier-to-follow budgets is a zero-based budget. In this system, you take your income minus your expenses to equal zero every month. It means every penny you make should be allocated to a category in your budget.

You should have predetermined how much you plan on spending at the grocery store for the month, how much you’ll spend on entertainment options, how much you put toward gas and transportation, and so on.

Once you’ve covered all your necessary expenses – the car payment, the credit card payment, and so on – that’s when you can start putting extra money toward savings. And that’s where you’ll notice how much momentum you can gain by cutting back spending in certain areas to reallocate that money to your $10,000 goal.

3. Identify where to cut back.

Here’s where the hard part kicks in. Since it can be impossible to trim your biggest expenses, since they tend to be necessities like rent, you might have to nip around the edges.

Is it time to part ways with that gym membership you’ve only used once in the last six months? Maybe you can let go of one of your multiple streaming service subscriptions, or switch to a cheaper cell phone plan. You could try going out once a week for dinner instead of twice, or resolve to place fewer Amazon orders. These are the temporary sacrifices you’ll need to make to push your income away from expenses and into savings.

A quick Google search and you can find many apps and services available that will track all of your subscriptions. From there, you can pick the ones least important to you as a way of getting this process started.

Remember, you’ll have both fixed and variable expenses to deal with. Your mortgage payment is fixed because it doesn’t change every month. Expenses like your power bill and gas bill are variable because they usually fluctuate from month to month.

As you’re reviewing your expenses, really think about what is a “want” and what is a “need.” The power bill and the rent payments are needs. Dining out two to three times a week is a want.

4. Step up your income

Just like you’ll need to cut back in certain areas, you also might need to step it up in certain areas. Adding to your income is just another temporary sacrifice you can make while trying to save money.

You may consider a side gig as a rideshare driver with Uber or Lyft. You might take a part-time job a few evenings a week or on weekends. Maybe you have a side hobby you’ve wanted to monetize – now is the time!

Also, if you’re married, remember this is a team effort. If there is anything your partner can do to help, and they are on board, then have those discussions. Maybe your partner can monetize their hobby.

Another option is simply exploring passive income opportunities. Do you travel a lot? Could you rent out your home occasionally? Do you have any dividend stocks you can take advantage of?

Your options are limitless here. Just get creative and think about a few ways you can make a little extra money to supplement your usual income. And, remember, this isn’t forever.

5. Decide where to put the money.

Deciding where to put the $10,000 you’re working so hard to save will depend largely on what you plan to do with the money.

If you’re trying to build up your reserve funds or save for a specific goal like a big trip, the money should be easy to get to but not necessarily an account you’ll use daily. In other words, this money isn’t tied up in a retirement account or real estate equity. It’s liquid in financial terms.

Good savings account options include:

• High-yield savings account (HYSA): Also referred to as a high-interest savings account, this account pays much better interest than typical savings. As of November 2023, some of the best-earning HYSAs range from 4.3% to more than 5% APY. These accounts typically don’t have restrictions, like monthly fees or minimum balances, but they also don’t usually come with debit cards.

• Money market account (MMA): MMAs work similarly to HYSAs in that they provide a solid home for savings that is available without penalty when needed but isn’t for day-to-day use. Money market account interest is typically lower than with HYSAs, and MMAs may also require a minimum balance and limit your monthly transactions.

• Certificates of deposit (CDs): A CD is a type of savings vehicle that earns interest on a fixed amount of money over a fixed period of time – typically between three months and five years. They’re different from a savings account because the money can’t be accessed during the fixed period. But the best CDs also usually have higher interest rates than savings accounts.

Compare your options at different banks and choose the account that makes the most sense for you and your savings goals.

6. Automate your savings

Once you’ve got your plan down, one of the best ways to build your savings is by making your deposits automatic.

No thought required. You set up the plan – whether weekly, bi-weekly, or monthly – and let it work for you in the background while you carry on with your other financial goals.

How much should you save to get to $10,000 in a year?

Start with our early breakdown of $27 per day, $192 per week, and $833 per month. That should give you a baseline to determine how you set up your automated savings routine.

It’s okay if you can’t start putting away $800 immediately. The goal here is to just get moving. Put away what you can into savings while you make budget adjustments and figure out what expenses you can cut back on.

Just remember the dates you set up and the frequency. Automatic means automatic. So if $500 comes out on the 15th of every month, don’t get surprised when that $500 has been moved over to your savings. Leave yourself enough money to cover your expenses every month.

More advice for meeting your savings goals

Saving money takes discipline, so staying focused and motivated will help you find your way to that $10,000.

Track your process on a regular basis – at least monthly – and don’t beat yourself up if your savings plan doesn’t work out perfectly. Life happens, and the whole purpose of savings is to give yourself a cushion.

If it takes a year and a half to reach your goal, that’s okay! You’ll get there — so be sure to celebrate the milestones you hit.