How To Save $10,000


Here is a straightforward plan to help you save $10,000. Use it to boost your own savings and meet your financial goals!

$10,000 is a perfect savings goal. It’s a beautiful number. It’s a large amount of money without being unattainable. It’s the idea starting point for your first “big” savings mission. But like most great ideas, the execution is hard part. It’s one thing to want to save $10,000, but how do you actually go about doing it?

Earlier, I was setting some saving goals for 2013 and struggling to get the math to work out. I’m a full-time student and my income from freelance writing is variable. In 2014, I’ll be in school January through April and again September through December, but I’ll be working May through August (and there’s rumours that the the bulk of my second year MBA classes are in the evening to permit us to work September through December too but I’m not sure of that schedule yet). I might or might not find additional scholarship funding to help with my school costs. I’m expecting a fat income tax refund in February/March because of tuition credits and my 2013 RRSP contributions.


If you are using Numbers on a Mac, you can download the spreadsheet template used in this post by clicking here.


So naturally I turned to spreadsheet programs to work out my life, and I decided the process was helpful enough for me that it might help MAG readers also trying to work out their financial goals and plans.

How to Save $10,000

STEP 1: Choose a Savings Goal – $10,000

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My goal is NOT $10,000 – I just selected to save $10,000 because it’s a nice big round number. Since I’ve already accumulated savings, my goal is something different and involves building off financial assets I already have. However, for this post I thought it would make more sense to lay out a plan starting from $0.

Additionally, $10,000 is a such a feel good number. Everyone likes to save $10,000.

STEP 2: Select a Timeline – 2 years

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Be careful with this one. It’s easy to get overly-ambitious when you’re drunk on the sheer excitement of having an additional five-figures added to your net worth. You have to be able to separate what you want from what you can accomplish. Everyone would like to save $10,000 in 3 months, but don’t set your timeline to 3 months if your income isn’t high enough to actually get it done. You’ll just end up failing and then you’ll be sad about it, and you’ll come back and blame me and I will be very confused and start to feel guilty, like I had betrayed you somehow, and it won’t end well for anybody.

2 years is a nice timeline. It’s 24 months. It means only $5,000 of savings per year. You can do that.

STEP 3: Decide Where You Want To Save The Money

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Ha! Bet you thought I was going to say “determine how much you need to save each month”, but that is actually Step 4. Step 3 is deciding where to put the money. Why? Because not all savings accounts are created equal. If you’re Canadian, you absolutely must be taking advantage of a Tax Free Savings Account. You should also be saving for retirement in an RRSP if your income is greater than $50,000. If you’ve maxed out your TFSA and RRSPs, you can open an unregistered account for other savings.

Essential savings you should have include an Emergency Fund and Retirement savings, so that’s what I chose to use in this example. I suggest keeping your Emergency Fund in a TFSA and Retirement savings in an RRSP.

STEP 3 PART 2: Decide How You Want To Invest The Money

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New savers might not be aware that you can hold different kinds of investment vehicles in registered accounts like TFSAs and RRSPs. These vary in risk, return, and accessibility. For the sake of simplicity  I executed this example with only savings accounts, but if you wanted my personal opinion on the matter I would suggest keeping your Emergency Fund in a savings account but investing your RRSP in an index mutual fund. If you’re a more advanced investor, you should be investing in stocks/ETFs within both your TFSA and RRSP.

STEP 4: Determine How Much You Need To Save Each Month

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This is straightforward math: save $10,000 / 24 months = $417 per month.

BUT! If you’re gawking at $417/mo thinking that’s impossible, there are some loopholes. I started this post explaining how variable my income is, but despite the spotty forecast, there’s a few things I know for sure: I will get an income tax refund in excess of $2,000 before March 2014 and for the months of May through August of 2014 I will be working full-time. I can start making guesses for 2015 too (ie. as of May 2015 I will be working full-time) but as a general rule I try not to guess my income more than a year in advance because there’s a myriad of circumstances that can affect it. It’s much easier to simply take stock of my progress at the end of 2014 and then update the plan for the following year. I encourage you to do the same, otherwise if you’re imagining a big fat raise or inheritance (you awful person, you) in 2015, you’ll be too tempted to slack off in 2014. However, build a table for 2 years anyway so you can always see your end goal and continuously update your progress as you go.

Screen Shot 2013-12-08 at 11.41.10 AMSo at this point you can do two different things:

  1. Set goals for each account: ie. “I want to save $5,000 in my emergency fund and $4,000 for retirement and $1,000 in other savings”.
  2. Set contributions for each account and just let the money pile up.

For simplicity’s sake, we’ll go with the second one.

Now, if you want to pretend the magic of compounding doesn’t exist, you might be tempted to do something like this:

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Which is cool, but as stated before, $417 is a lot to leave your bank account every month, especially if you’re a starving student such as myself. There is a way to make this number less. We know the power of compounding should let us get away with lower contributions, so let’s round down our Savings contributions from $66.67/mo to $50/mo based on optimism and math.

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Let’s go ahead and make our first deposits in January 2014.

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And our second deposit in February 2014.

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Now something cool has happened: we’ve contributed $800 but we actually have $800.46 in our accounts. Yay interest! The easiest way to calculate compounding interest on your savings in order to make accurate forecasts is to build the formula into your table. There is actually a formula that you can use — I know it exists because I learned it in my Accounting class — but if you like math and spend a lot of time working with spreadsheets, you will be able to deduce it into something like this:

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For those unfamiliar with spreadsheets, using the dollar signs around cell names is a way of “anchoring” those values when you extend the formula to other cells. For example, by writing “$B$2”, I’m telling the spreadsheet to use that value for my contributions when I drag the formula to other cells. Otherwise, for my next cell it would use the cell below the one I indicated which isn’t right. If this doesn’t make any sense at all, I’m sorry, just mess around until you get it.

Don’t forget!: the interest rate is 1.40% annually, but it’s compounded monthly which is why you have to divide it by 12. Also make sure you adjust the formula in each cell for the interest rate for that account — as you can see, the interest rate on the RRSP savings account is lower than that of the TFSA.

You can then autofill the rest of the table and witness some compounding interest magic:

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We see a problem right away: we’re trying to save $10,000 in two years, but we haven’t hit the halfway mark after 1 year. Go ahead and autofill the rest of the table anyway so you can see how much you’re going to come up short:

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We’re $272 short of our goal after two years, and that’s even after putting away $400 a month! This is ridiculous! Screw this!

First, stop being so mad, $9,700 is a lot of money! Second calm down and think of times you might be able to add a little more to the accounts. For me, this is when I get my income tax refund in March and when I work full-time next summer. I never like to over-estimate too much, so let’s low-ball this and assume you’re going to get a $1,000 income tax refund in March, and this will let you put an extra $750 in your TFSA and $250 to your RRSP. Go ahead and add this income to these cells in March:

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I’m manually adding $750 to my March 2014 contributions

The table will change automatically. Something marvellous has happened:

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We’ve now beat our goal by $750! Right on! So you can think that is awesome and keep it, or you can say, “I really don’t want to contribute $400/mo to these accounts” and use this opportunity to reduce it. Let’s cut our extra savings down to $20/mo.

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The table will automatically update.

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Yay! Now we exceed our goal by $23 and we only have to pay $370/mo in savings instead of $417!

Now let’s pretend we’re in the future and it is February 1, 2014. After a month has passed, I like to delete the formula from the cell of that month and enter a hard number. This ensures that if there are changes to my contributions or interest rates, it will only affect future cells and not my past progress. This is important because you can’t change the past without a time turner and serious magical consequences that will stretch through the ages and across the universe. I always change the font colour to black to indicate that it is a number and not a formula.

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And that’s how you save $10,000 and keep track of every minute of it.

I hope you found this helpful because it took a really long time to write..


  1. Erica

    This is a great post, would you be willing to share this template?

    • Bridget (Author)

      Sure! Let me make some edits and I’ll upload one for both Excel and Numbers =)

      • Erica

        Thank you I appreciate it. By the way love your blog, I find your posts include great financial planning pieces (such as this one) coupled with personal funny posts!

  2. Awesome post. Love the pretty spreadsheet!

    Minor nitpicky note. Wouldn’t the monthly compounding rate be slightly less than yearly_apy / 12? For example, if my interest rate is 1.40%, the above would recommend diving that yearly APY to get a monthly rate of approx 0.1167%. Whereas, really, my monthly compounded rate should be:

    monthly_rate ^ 12 = yearly_rate
    monthly_rate ^ 12 = 1.014
    monthly_rate = 1.00116 (0.1160%)

    Therefore monthly interest is actually slightly less than yearly_apy / 12.

    The difference also becomes greater as yearly APY increases. So, for instance, extrapolating monthly returns on the stock market might actually see a bigger “delta” (or difference) and the effects of this difference, as you know, becomes greater over time (a compounding effect!).

    Alternatively, I could just be completely mistaken on how monthly compounding works on bank accounts, in which case, please feel free to ignore all of the above.

    • Bridget (Author)

      No, this math looks right but I doubtful the difference would be significant enough to seriously change the results — particularly for an amount as small as $10,000.

    • NCM

      The math in the post is fine – after compounding, the interest received in a year is higher than the ‘advertised’ APY.

  3. This is all kinds of helpful! Thank you for including the formula you used, it was a piece of cake to recreate this on my own!

  4. Dude, this is amazeballs. I’d done up to the beginning of Step 4 (figuring out how much to save each month in 2014) but didn’t think of creating a savings chart like this. Thanks for sharing! (And I’ll be sharing this post A LOT going forward – everyone needs to get their eyes on it.)

    • Bridget (Author)

      Yay!! Glad you like it (it really did take like 2 hours… taking so many screen shots argh)

  5. PC Financial until end of Jan 2014 is offering 2.35% interest on chequing accounts or savings accounts. No need for RRSP or TFSA until at least 2014 Feb.

  6. This is exactly what I do 🙂 I have it forecasted forward roughly (I do the APY/12, so it isn’t perfect, but it gets me close enough), and then I put in the actual number when I get through that month.

    This is a great tutorial for people who aren’t spreadsheet weirdos! 🙂

  7. Amazing! I actually have a nearly identical spreadsheet sitting in my google docs, exept it shows a little more detail like total interest and monthly contributions and interest. It’s so important to project forward in the future so you’ll know where you’ll end up!

    Excellent, super detailed post. 🙂

  8. selena

    I’d love an excel copy. Thank you for taking the time to share 🙂

  9. Yes, I have a two year plan to off someone in 2015 in order to gain an inheritance. #jokes
    This post suggests to me that a lot fewer people spend time playing with rates of return in excel than I thought! #addict

  10. I appreciate the effort it took to get this post together. 🙂 $10k is my goal for August 30, 2013! Totally doable but my other savings/retirement goals need some love, haven’t been able to figure out yet how to hit my targets there so I have to increase my income.

  11. Ioni

    Do you have an excel spreadsheet template? looks very cool!

  12. Great spreadsheet. Did you ever post the template?

  13. Reio

    I love this idea to reach $10,000 in 2 Years, however for me, I realized the other day that as of March 2, 2016…. I will be exactly 27 months away from turn 30, as I will turn 30 on June 2, 2018!! So I’ve decided by my 30th birthday I will have $10,000 saved up! This means I will be saving a whopping $370.37 for 27 months to reach this goal! I know this will be very do able as when I used to save money back a year ago, I was throwing $350 into savings however long story short, I ended up digging into that savings after losing a job! So I know saving $370 or so a month won’t be hard and I will thank myself come 30! 🙂 I also decided that my next goal after $10,000 will be having $100,000 by my 40th birthday! How I love goals!! Mostly savings ones! <3