Saving $30,000 in a year is a lot. It takes a well-thought-out plan and some hard decisions to reach that level of saving. However, it’s within your reach, as I’ll show later in this article.
Here’s the short answer:
To save $30,000 in one year, you need to spend $2,500 less than you earn every month. The most effective way is to make frugal decisions on your most significant fixed expenses.
Saving as much as $30K a year is not for everyone. If you’re trying to figure out how much you should save per year, read this article instead:
How Much Should YOU Save Per Year? (Examples and Charts)
In the rest of the article, I’ll get into the details and nuances of how YOU can achieve this.
I’ll give you what I think is the number one way to improve your finances, and finally, save $30,000 per year.
How YOU Can Save $30,000 In One Year
To make things more practical, we’re gonna break it down month by month.
$30,000/year = $2,500/month
In other words, if you save $2,500 every month, you’ll have stacked up $30K in one year.
Therefore, we can rephrase the original goal of saving $30K/year to saving $2.5K/month.
That’s a lot of money… But it’s far from impossible. The general advice you’ll see floating around is to save 20% of your income. Unless you’re making $150,000 annually, $30K way over that.
Suggested reading: Is Saving 20% Of Your Income Enough?
I’ll show you, in three simple steps, how to save $30K within a year.
Actually, once you’ve done the work each step requires, you’ll save $30K every year until you undo them!
Step one and two is all about mapping out where you currently stand, financially speaking. Step three is about gapping the distance from where you are to where you want to go (saving $30K/year).
#1: Calculate Your Average Monthly Expenses
Calculating your expenses is similar to making a budget, but not quite the same.
Budgeting is planning for the future, while calculating expenses focuses on the past and present.
This is the basic philosophy behind the steps:
First, we figure out where you are, and then, figure out what to do about it.
Suggested reading: Is Saving 40% Of Your Income Good?
Let’s try to figure out how much, and how, you are spending your money. Follow the steps given below:
- Get a list of your expenses for the last three months. We’ll take the average of three months because it varies a bit from month to month. Lists like this can often be found in your online bank account. If you don’t know how to figure this out, you should start tracking your spending by saving receipts and logging them weekly.
- Sort all the expenses into “categories”. By categories I mean stuff like “housing”, “transportation”, “food”, etc. When budgeting, we’ll call these categories “items”.
- Add all the expenses in each category together. For example, if you had ten different expenses of $14 each on the “transportation” category in the last three months, add it all together and write “$140” as your total expense for transportation. At the end of this, you should have the total amount spent in the last three months in all the different categories.
- Divide all the “total expenses” for each category by three. Remember, we got the expenses from the last three months. We need to divide it by three to get the average monthly expense.
- Add it all together. This will show you your average monthly expenses, based on the last three months.
After completing the five steps listed above, you will know the following:
- How much money you on average spend on each of the categories per month.
- How much money you on average spend in total every month.
I like to sort these facts and numbers into a table. Here’s an example of what I would make (with random numbers):
|Housing (rent, electricity, water, etc.)||$900|
|Transportation (Car, bus, Uber, etc.)||$500|
|Food (Groceries, eating out, beer, etc.)||$400|
|Insurance (Health insurance, life insurance, etc.)||$250|
|Clothes (Pants, jackets, shirts, etc.)||$75|
|Personal care (Gym, makeup, supplements, etc.||$100|
|Subscriptions (Netflix, Spotify, Disney+, phone subscription, etc.)||$65|
|Hobbies (Guitar strings, wheels to longboard, books, etc.)||$75|
|Entertainment (TV packs, bowling, football games, etc.)||$100|
|Miscellaneous (Birthday parties, Christmas gifts, and “other stuff”)||$35|
If you’re scared by how much money you spend every month, read one of these articles:
- Living On $1,800 A Month: Budget, Lifestyle And More
- Yes, You Can Live On $2,000 A Month! Here’s How & Where:
With your spending habits illuminated, let’s move on:
#2: Calculate Your Average Monthly Income
Income can be more than just your salary. For todays purpose, all money that comes into your account counts as “income”.
It’s also important to get the monthly average income. This means you should include “once a year stuff” like money gifts you might get on Christmas, or Birthdays, a potential tax refund, etc. Just remember to divide it by twelve to get the monthly average!
Just like in step #1, I like to organize this in a table.
Below you’ll see an example, once again with random numbers:
|Source||Income (monthly average)|
(A normal salary)
(From ads and my newsletter)
Christmas and Birthday gifts combined divided by 12)
If you’re struggling to find all your income sources, you might want to ask you bank for bank statements. If you can, log into your bank’s website, search for all times when money is going into your account(s), and figure out where it comes from.
Once you’ve made something similar to the table above, you’re ready for the final step!
#3: Make A Budget
Now that you know your monthly expenses and income, you’re ready for the final step: making a budget.
Given that you follow this budget, you will ensure that $30,000 in savings accumulate within one year.
Follow these three steps:
- Take your monthly average income and subtract your monthly average expenses. This tells you how much money you have left (or overspend) every month on average. This is your “baseline” monthly savings/debt growth.
- Make a budget such that your total expenses are $2,500 lower than your total income. Do this by manipulating the different expenses in the list of expenses you made in step #2 when calculating your monthly expenses. Make some hard decisions, and cut down wherever you’re able to do so. More tips on this in the next section!
- Stick to the budget! If you follow the budget for 12 months, you’re guaranteed to save $30,000 in one year! (given your income doesn’t decrease, or other important factors change!)
To summarize, this is what you need to do:
Make a budget that is $2,500 below your monthly income and follow that budget like an obsessed person for 12 months.
As promised, here’s an example of a budget that’ll save $30K in a year:
|Source (Income and Expenses)||Amount|
|Income – Expenses||$2,500|
If you’re too far away from the target, you can consider reading one of these articles instead:
- How To Save $8,000 In One Year
- How To Save $2,000 In One Year
- Yes, Saving $1,500 A Month ($18K/year) Is Good! (and how to do it)
If you’re not that far away, or just really want to reach $30K/year, the next section will help you get there:
Best Way To Reach $30,000 In Savings In One Year:
When most people try saving more money, they opt for “easy” targets and low-hanging fruit. This isn’t just lazy, but also ineffective.
You have to be willing to make sacrifices if you want to save as much as $30,000 in one year. You’re not getting there by slashing your Netflix subscription…
Cutting out the small things makes a small impact on your finances.
The hands-down best way to go about it, in my experience, is like this:
- Figure out the three items/categories, in order, you spend the most on. Usually, it’s housing, transportation and food, in that order.
- Cut down on the biggest things, in a permanent manner. For example, moving into a cheaper apartment makes you save lots of money (because housing is a huge expense), and you’ll save the money EVERY MONTH without having to do any additional work in the following months.
- Do NOT spend the saved money on other things. Automate your savings such that your disposable income, your “fun money”, is the same as before you cut down on housing/transportation/food.
I’ll show you an example of a single person with “typical” expenses, cutting down on “the big stuff” to illustrate how much you can save:
|Item||Yearly Expense||Cut by (percent)||Amount Saved|
This hypothetical person saved almost eleven thousand dollars every year by focusing on the big stuff. Here’s how he did it:
He found a 25% cheaper apartment/house to live in, that was much closer to work. This saved him 25% on housing, and 70% of his transportation expenses. He also learned to cook three-five dinners, and saved 20% on food-related expenses like eating out.
I personally did this, and it turned my finances upside down!
I saved 40% of my income by moving into a cheaper apartment closer to work.
The apartment was only 20% cheaper, but since housing was such a huge expense, 20% amounted to several thousands of dollars every year.
In addition, living closer to work made transportation much cheaper (almost free) because I didn’t have to drive to work and back every day! In fact, I sold my car and bought a bike. A huge money saver, and good for my health as well. On rainy/snowy days I took the bus.
An additional benefit of this move is that it’s hard to undo:
It takes a lot of work to move back to the old apartment, or something similar to it. For this reason, I didn’t have to in any more work, stay disciplined month after month, or even think about it. The 40% was automatically saved every month/year!
To summarize, here’s the basic philosophy you need to adopt to save $30,000 in one year:
Make frugal decisions regarding the “big things” that are hard to undo.
To get more details on this, read my article about saving money despite paying high bills.
Another Way To Reach $30,000 Per Year In Savings
If your budget is already tight, you can instead focus on increasing your income.
I’ve tried a bunch of different things, ranging from e-commerce, dropshipping, direct sales (mlm type of thing), selling stuff on the street (legal “stuff”, of course, with permission from both the police and the property owners!), but nothing seemed to work as well as I was told, or though it would.
The only three things I’ve personally had consistent success with, are the following:
- Moonlighting. (getting an additional part-time job working evnigns or nights)
- Increase your salary. (asking for a raise or finding a new job)
- Start a blog-like website like this one. (In my opinion, it’s the number one way to earn money online, hands down.)
If the final suggestions sparks some interest, here’s the basics idea behind the business:
Create a simple website and write a bunch of HELPFUL articles answering questions people ask on google. This brings traffic to your site. Put ads on your site, and that traffic earns you money!
That’s it. It’s not more complicated than that. The fact that you’re reading this is proof that it works!
The key is to really try an make the content valuable, and not just some generic BS. To make sure you put your heart into it, you should write about something you actually care about.
I know a bunch about finance and investing, and love to keep learning about it. Therefore, that’s what I write about.
However, you can write about almost anything.
Here’s what you need to do in order to “make it” in this business:
Brainstorm ideas of niches you know a little bit about, or you find really interesting. Hobbies are usually what people go for. Create a simple WrodPress website. Write 30-50 articles of roughly 1000-2000 words answering questions people write in the google search bar. Put some ads on your site. That’s it!
If you do this right, and spend roughly 10-20 hours per week on it, you’ll likely earn anywhere from $250-$1000 every month within a year.
That’s $3,000 – $12,000 of additional income every year, bringing you much closer to the goal of saving $30,000 in a year.
And the best part: It is passive income!
After the articles are written, you just need to maintain the website, which takes roughly 1-2 hours per week. The articles bring in money whether you keep working or not.
This is the right way to think about this kind of business: You don’t work to get paid. You work to increase your pay.
If you’re seriously considering this, I would HIGHLY recommend checking out these three YouTubers (in ranked order):
- Income School (I would never have succeeded without this channel)
- Passive Income Geek (Real “down-to-earth” Danish guy with practical and thorough advice)
- Passive Income Unlocked (A team of people giving tips and tricks to “make it” in this business)
- Jasper Pieterse (Just a regular dude documenting his journey in this kind of business. Good inspiration!)
I am NOT affiliated with any of them, and I make no money if you check them out. I just like their content and want to share it.
These are the ones that showed me the way. They all have courses and such, but I never paid for any guidance. However, I kind of regret it as it would have made the journey much shorter and easier.
This is a great video by Income School, telling you basically everything you need to know:
Conclusion: How To Save $30,000 In One Year:
To save $30,000 in one year, you need to limit your expenses to $2,500 less than your monthly average income. The easiest way to achieve this is to make frugal decisions on your largest fixed expenses.
The number one way to consistently save more money is to move into a cheaper apartment closer to where you spend most of your time. For me, this was work and friends. This simple move enabled me to save 40% of my income, every month and every year.
The concrete steps to follow are:
- Calculate your monthly expenses.
- Calculate your average monthly income.
- Make a budget with total expenses $2,500 below your average monthly income.
- Stick to the budget.
I wish you the best!