How to save $10,000 in 5 years – in just 6 steps (2024)

Saving doesn’t have to be complicated, and if you put aside a little bit each time you get paid, you could have as much as $10,000 in your savings account in five years time.

While $10,000 isn’t enough to get you a home loan, it’s a decent lump sum for a car loan or enough to help you build an emergency savings fund.

To have $10,000 in five years, you’ll need to save $2,000 each year, which is about $167 each month.

That could be an achievable amount for you with the right strategies in place, as $167 is about the equivalent of:

• A month’s worth of takeaway coffee
• Two weeks worth of takeaway
  
• A monthly gym membership
  

But you don’t have to cut out all your favourite things to save yourself some money – below we’ve listed some ways to save money to reach your goal.

1. Put your money to work for you

You want to make the money you already have count for more, and you can start by looking at your current savings account and determining what your current interest rate is.

From there, compare high interest savings accounts to make sure you’re getting a competitive rate – at the time of writing, a savings account interest rate of at least 5% p.a. is considered to be high earning.

Once it’s set up, make sure that you regularly transfer a portion of your salary into your savings account so that the amount of interest you earn keeps growing.

If you’re unsure how much of your income you should save, start somewhere small and achievable such as 10-15% of your salary.

If that goes well, you could progress to the ‘50-30-20 rule’, which is when you split your income into necessary expenses (50%), wants (30%) and the rest into your savings account (20%).

You might also want to consider getting your salary paid directly into your savings account, and dividing up your spending from there.

Want somewhere to start your search? We have a guide to the best savings accounts according to Mozo’s Experts Choice Awards, or you can see a selection below.

2. Reevaluate your providers

Once you’re set up with an electricity, phone or internet provider, it’s easy to become complacent and not search for better options down the line, and the provider who offered the best deals two or three years ago might not be the one with the best-value plan today.

That’s why it’s important to reevaluate your bills every 18-24 months to ensure you’re not overpaying for a service.

Start with an audit of your utility providers to see if you’re paying too much:

• Compare energy plans: Energy providers can often change up their plans and pricing, so make sure you’re getting a good deal by comparing your recent power bills to the current market.
• Compare phone plans: If we combine both postpaid and prepaid mobile usage, Australians use 12.7GB of mobile data each month on average. Look at your phone bill to see if you’re using up most of your data allowance each month – if not, it might be time to switch to a cheaper plan.
• Compare NBN plans: NBN providers often offer an introductory discount when you first sign up, and it often lasts for 6 months. These discounts are great ways to save money, just ensure the regular price is still competitive once it reverts back.

Insurance may be another expense you have where you can save money – you should compare car insurance when it comes time to renew, along with any other policies you have such as home and contents insurance.

3. Use electricity wisely

Heating and cooling your home makes up the biggest portion of household energy use, so if you’re looking to reduce your bill there are ways to help improve the energy efficiency of your home:

• Limit use of heating and cooling where possible, and in summer, use fans rather than air conditioners if you can.
• When using air conditioners and heaters, shut the doors and windows of the rooms you aren’t using. This way, you’ll only warm up or cool down the spaces you’re in.
• When heating a room, close the blinds or curtains of the space to stop heat from leaking out of the glass windows. Closing blinds and curtains can also help keep your home cooler in summer by blocking out harsh sunlight.
• Use moderate temperatures when using your air conditioner. In summer, it’s generally recommended that your air con is no more than 8°C cooler than the outdoor temperature.
• In winter, it’s best not to go any more than 8°C warmer than the outside temperature.

You should also monitor how you use your appliances, such as:

• If your energy provider offers off-peak electricity rates, consider using this billing method. You could potentially save money by using appliances such as your dishwasher and washing machine outside of the peak usage period.
• Only do your laundry when you have a full load of washing, and select a cold wash if you can.
• Appliances such as TVs, game consoles and microwaves often default to standby mode when not in use, but they are still using energy if they are connected to a power outlet. Switch them off at the powerpoint to stop them draining energy.
• Use energy efficient light bulbs and appliances.

4. Cut back on eating out and takeaway

Getting takeaway can make life a bit easier, but reducing the number of times you buy food from a restaurant or cafe can save you money in the long run. But in order to get the best value for money when buying groceries and cooking at home, you need to plan ahead.

Write out a list of the items you need before heading to the shops, and plan out some meals for the week if you can. You’ll also benefit from looking online, comparing prices of what you want to buy and noting where it’s on special.

For example, you might find your preferred brand of tea is on special at one supermarket, while the laundry detergent you want has a better discount available at another.

This might mean you have to go to more than one supermarket – which won’t be within everybody’s capability – but if the option is available to you it could be worthwhile.

Other ways you can stretch money for groceries a little further is by doing meal prep and buying pantry staples in bulk.

If you struggle with cooking, consider subscribing to a food delivery box that offers easy-to-make meals and leaves you with leftovers for the next day.

5. Reduce your subscriptions and memberships

In an era with several streaming services, it’s easy to accidentally sign up for one too many. If you aren’t using a streaming platform, consider cancelling the service until there’s something you’d like to watch.

By reducing your streaming services from say, five down to two, you’ll be pleasantly surprised at the extra money in your bank account.

You could also reconsider any other subscriptions and memberships you have, such as food delivery services or gym memberships. If you’re unsure exactly what you’re subscribed to, it’s time to look over your bank statements from the last few months to see what can be cut.

6. Buy second hand

Instead of buying brand new appliances or furniture, consider buying second hand items. Websites such as Facebook Marketplace and Gumtree have all sorts of home goods at a fraction of the original price, and if you’re willing to spend the time searching, you’ll be able to find items in excellent condition.

Buying second hand can be a great option for adults who are moving into their own place for the first time and still want to grow their savings.

Compare savings accounts- last updated 31 May 2024

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