Article How to save £10,000 in a year

Saving £10,000 this year really may be possible. With the right approach, some inspiration and lots of discipline, you could make that dream a reality. We know this is a large amount of money, especially in times like these. If saving £10,000 seems too difficult, don't be put off – you could still set a target that’s more suitable to your circumstances – whether that’s £500 or £5,000 for example.

Committing to an ambitious goal takes time and effort. You might need to develop new financial habits and give some thought to mindset factors, but if you’re able to stick to a plan, you'll probably be surprised how much money you could save. If saving is one of your top goals for this year, here are some things to think about so that you can put away as much as you can.

This article isn’t financial advice, and if you’re in any doubt about what’s best for you, we’d recommend speaking to a professional financial adviser.

7 steps to save up to £10,000 in a year

1. Budget and track your expenses
2. Try cutting unnecessary spending
3. Try a spending fast
4. Keep your travel costs low
5. Shop around for the best deals
6. Boost your incomings
7. Automate your saving

1. Budget and track your expenses

To create a smart budget, it helps to know what you’re currently spending money on. Little daily expenses – or costs you weren’t even aware of – can add up over time. So, tracking your expenses could be a valuable exercise to help you decide which of your purchases are necessary, and which can be cut.

There are budgeting and spending apps that can help you. For example, some apps can break down your spending into categories to help you visualise where your money is going. Others let you allocate money into different ‘spending pots’ for the month.

The crucial thing is to make budgeting a permanent change to your money mindset. It’s about being aware of your spending, prioritising what’s necessary and what brings you the most joy and sticking to the plan.

2. Try cutting unnecessary spending

We all do it – sign up for subscriptions or memberships that we forget about or don’t really need. This is one of the easiest ways to get money back in your pocket. The first thing to do is check your standing orders and direct debits, be honest about what you need and what you don't.

Let's break it down. The average gym membership is typically £40 a month – that's £480 a year.¹ TV packages set you back around £30 a month – that's £360 a year.² These could be swapped for free options, such as running or playing football and using free TV services, like Freeview.

The average household also spends £600 a year on paid-for subscriptions such as music and video streaming services, with approximately £170 of this going towards unused services.³ Even for services you do use – could you sacrifice this for a while to save money, or find a free alternative?

Lots of little adjustments like this can really add up. For example, the average price for a regular latte in the UK is £3.25.⁴ If you go for a coffee three times a week this adds up to £507 a year on coffee – or £1,186 if a takeaway coffee is a daily habit. By making your coffee at home instead, it could save you a significant amount in the long run.

Potential saving from examples: £2,626

3. Try a spending fast

A good way to jump-start your savings is to try a spending fast. Simply categorise your shopping habits into certain groups. By planning ahead, you can separate your spending needs from your spending wants. By identifying what categories you can give up, consider stopping your spending for a certain period of time.

For example, the average person spends £126.60 a year on new clothing and a further £300 on expenses such as restaurants, hotels and takeaways.⁵ These are popular areas to try a spending fast on – you could give up buying new clothes for half the year and stop eating out for the other half which could save you £213.30.

Potential saving: £213.30

4. Keep your travel costs low

The pandemic gave most of us the chance to work from home, something that has stuck with many of us even after lockdown was lifted. The benefit is reduced travel costs. For example, a season ticket from Didcot Parkway to London Paddington costs £5,756 (for travel on any permitted route). Elsewhere, a season ticket to travel from Leeds to Manchester Piccadilly would cost you £2,848 a year, while a regular commute from Glasgow Queen Street to Edinburgh Waverly would be £4,432.⁶ Taking an average of all these prices, and depending on where you live, you could potentially save £4,345.33 a year by continuing to work remotely.

Working from home full-time (if this works with your company’s guidelines) would mean this money stays in your pocket. But of course, you do need to offset that against any increases in your home energy bills. The government offers some energy saving tips in their help for households campaign.

If driving was part of your commute to the office, you may find you that you now use your car less. That's an opportunity for some households to downsize from two (or more) cars to one, or even moving to a car share scheme. Members of Liftshare, a car sharing community, save an average of £1,000 a year.⁷

Remote and hybrid working might not be right or possible for everyone. If you’re office based, remember that working in an office could also have many other non-financial benefits – such as more face-to-face interaction, easier collaboration with colleagues, better knowledge sharing and maintaining a healthy work-life balance just to name a few.

Potential saving: £5,345.33

5. Shop around for better rates and deals

Whether it’s switching energy providers, swapping to a cheaper supermarket or finding a better deal on insurance, shopping around could save you money.

When interest rates rise – as they have at time of writing – the rates on savings accounts often rise too. While the savings market is competitive, it could be worth shopping around for the best place to save your money. Different types of accounts offer varying levels of interest. MoneyHelper has lots of information on different types of saving accounts to help you understand what might be right for you.

If you have a credit card, you could consider using 0% balance transfer options to cut the interest on any existing debt and lower the cost of borrowing. The typical UK credit card debt per household is £2,290.⁸ The average annual credit card interest rate is 21.85%, so by moving your balance to a 0% card, you could save around £500.36 a year on interest.⁹ Bear in mind that these types of credit cards often come with a balance transfer fee and that the interest rate, promotional period and credit limit you’re offered will depend on your individual circumstances. MoneyHelper, which is a free and impartial service, explains this in a bit more detail – visit  Should you transfer your credit card balance?

Potential savings: £500.36

6. Boost your incomings

It’s not all about saving. You can also make extra cash in a number of ways. If you happen to be good at anything useful to others, such as DIY or gardening, you could trade that skill for something you need in the sharing economy. For instance, if you’re interested in arts and crafts, you could sell some of the things you make.

You could also simply offer your time for things, such as dog walking. You can sign up to be a dog walker on websites like Rover. Hourly rates vary depending on where you live, but the average is £20.¹⁰ Let’s say you do this once a week – this adds up to £1,040 a year.

Make sure you check your contract with your employer before taking on extra work to ensure you’re not breaching any regulations that could impact your main job.

Potential saving through additional income: £1,040

7. Automate your saving

Automated saving isn’t a new concept. You might already do this in some way, such as through contributions paid from your earnings into your workplace pension. Automation can remove the need for you to make a choice between spending or saving.

Some saving apps now provide alternate options for automated saving. Many offer the chance to round up your spending to the nearest pound and save the extra. For example, if you pay £3.25 for a latte on your bank card, 75p would be put into your savings account. Taking an average of 30 transactions a week with an average round up of about 28p, you could save an additional £8.40 a week – £436.80 a year – without even noticing.¹¹

Potential saving from roundups: £436.80

Stick with it

By working smarter to create savings and extra income, you might be surprised how much you can have in your pocket at the end of the year. The examples listed would give you over £10,000 in additional savings a year, and this is just scratching the surface of the many ways you could improve your finances. The key is to keep tracking your progress to help you stick to your savings goal.