When it comes to savings goals, getting the first $10,000 is key. It’s attainable but still large. Secure, but not quite comfortable. It shows progress, but not completeness.
Saving your first $10,000 is the crossover point from scrambling to wealth-building. When you clear this hurdle, not only will you feel accomplished and successful, you’ll have $10,000 saved!
Personally, I think the first $10,000 was a small tipping point for me when it came to saving. This is a bit weird to say, since I can’t remember exactly when achieving that milestone actually happened (though I’m sure I blogged about it somewhere in the archives).
But getting my savings account to be measurable in five-figures instead of four was a big deal. Maybe because I knew I’d stay in the five-figure range for a long time. After all: you only stay in four-figures for 9 thousand-dollar increments, but you’re stuck in five-figures for a whopping 89.
How to Save Your First $10,000
Saving your first $10K is actually easier than you might think.
Step 1: Set up a dedicated, high-interest savings account for your first $10,000
You want your savings to be separate from your spending. The easiest way to do that is to set up a dedicated savings account, preferably at a different bank than you use for your everyday banking.
Currently, the best interest rates for savings accounts can be found at:
- EQ Bank – 2.30% interest
- Wealthsimple – 1.95% interest
- Tangerine Bank – 3.00% interest (bonus rate, their regular rate is 1.25%)
To supercharge your savings, choose a high-interest savings account. You want an interest rate of at least 1.50%. It might not seem like very much, but free money is always helpful. Every dollar you earn in interest is one less dollar you have to save!
Need more guidance to get saving? Check out:
- EQ Bank Review: High Interest For the Savvy Saver
- The 4 Best High-Interest Savings Accounts in Canada
- The 5 Bank Accounts Everybody Needs
Step 2: Determine your timeline
Depending on what you’re saving your first $10,000 for, you might have a very specific schedule. If it’s for retirement, you might take it slow and save your first $10,000 in 3 to 5 years. If it’s to buy a home, you might want to save your first $10,000 in 1 to 2 years.
Step 3: Calculate your weekly or monthly contribution amount
Once you know how quickly you want to save your first $10,000, you need to divide your $10,000 by that monthly, bi-weekly, or weekly saving schedule. If you want to save your first $10,000 in 1 year, you’ll have to be disciplined.
You need to save about $834/mo for a year to save $10,000.
If that sounds like too much, stretch it out to 2 years. I even give you the how-to in my Millennial Money Spreadsheets.
You can choose to save on a monthly, bi-weekly, or weekly basis. Saving more frequently can seem easier because the amount is smaller. It will also let your savings compound faster with interest, so you might hit your goal sooner. One of the best savings schedules is every 2 weeks since that’s how most people are paid!
Step 4: Automate your savings
To ensure you don’t deviate from your savings plan, one of the best things you can do is automate your savings to your savings account.
If you’re saving on a bi-weekly basis to coincide with payday, set up an automatic transfer in your online banking to move your money from your chequing account to your savings account every payday or the day after. This ensures you always have money for the transfer so it will be easier to stick to your goal!
If you really like things small and steady, try Koho. With Koho, you can work towards a savings goal on a daily basis. By setting aside a small amount every day, you hardly notice it — but it makes a big difference! Want to learn more? Check out my Koho Review: Spend Less, Save More, Budget Better.
Step 5: Boost your savings with unexpected extra cash
If you get an unexpected tax refund, or even if grandma sneaks $20 into your birthday card, put it in your savings account instead of spending it. Over time, little amounts can really add up so don’t scoff at even putting as little as $5 extra towards your goal. Every little bit counts!
One of my favorite ways is to use both cash-back and roundups from Koho. Koho is a spending and saving tool that works like a pre-paid credit card, and gives you 0.5% cash-back on everything you spend. It also has a feature that lets you round up purchases to the nearest $1, $5, or $10 and sets that aside for you. You can then
Step 6: Sit back and watch your savings grow
Once your bank account is set up and your transfers automated, your plan is in motion. There’s nothing left to do but watch that bank balance grow! To celebrate your progress, consider marking milestones like your first $1,000 or the halfway point at $5,000 with something special… like an extra contribution to the account.
You’ll reach your first $10,000 savings goal in no time!
When you’re in the five-figure savings club, you’re rubbing shoulders with people who actually have what can be vaguely described as wealth.
The first $10,000 is a big deal because it’s when you’re money starts to feel like it has some weight to throw around.
It’s probably more than you earn in one month, or even two or three. It’s enough to be decimated back to a zero net worth in your typical run-of-the-mill emergency. It’s enough that you can look at semi-expensive things and think “I could buy three of those”. Ten thousand dollars is resilient and sexy and just a little bit powerful.
After you get your first $10,000, every subsequent $1,000 will seem to come easier.
Or at least that’s how that’s felt to me. Consequently, I have somewhat of a mixed love affair with ten thousand dollars. I like the idea of a $10,000 emergency fund. I celebrated when I first hit $10,000 in stocks. I breathed a sigh of relief when I saved my first $10,000 in my retirement savings. Even now when I log into my bank account I like to see the sum at around $10,000 — over that and I need to move money to different investment vehicles, under and I slow down my spending until it builds back up.
There’s just something about $10,000.
$10,000 at 3% interest rate will earn you a return of $300 per year.
This is probably just enough for you to notice the boost. You’ll start tumbling towards $20,000 before you even know what’s happening. $30,000 will practically save itself. $40,000 will come and go by so quickly you might not even notice it. And so on. You don’t believe me, but I’m telling you the truth. They don’t call compound interest the most powerful force in the universe for nothing.
I’m confident your mindset will shift, too, once you put your first ten-grand in the bank. Why? Because it changes the way all the money feels after it.
Eventually, it stops feeling like “saving” and starts feeling like just throwing money on top of a pile.
One of the best things about getting to your first $10,000 is then you know how to save $10,000. It instantly becomes less intimidating. If you’ve banked your first $10,000 on an average salary, it’s probably taken you more than a year, so you’re no stranger to discipline when it comes to your finances. You’ve also watched it grow a bit on its own with interest and dividends. It represents the things you didn’t buy, and thus you understand more than ever how much they were things you didn’t need, and that empowers you to keep saving going forward.
As a result, you’re ready to do it again. And again. And again. Until you hit your first $100,000, and then that will become your new benchmark.
You know what they say: the first $100,000 is the hardest! That is, after the first $10,000.