One of the best ways to achieve any goal is to set a target. In some cases, setting a very ambitious goal can be a great way to achieve great results. Even if you don’t end up meeting the set goal, if we even get close, you’ll have achieved way more than if you set yourself an easily achievable goal. Having said all of that, there’s no use setting a goal that is impossible to achieve. So, is saving 100k a year even possible? Let’s find out…
How to Set a Goal
Goal setting is a key skill if you want to achieve great things in your life. Whether it’s a fitness goal, career goal or even a goal in your personal life, goals need to be carefully set if they are going to be effective in helping you improve your life.
So, how should you go about goal setting, in general?
In almost all cases, how likely a goal is to be met comes down to how well-defined it is. That definition can mean different things to different people. The metrics that need defining will also vary depending on the nature of what you are looking to achieve.
In most cases, a goal needs to be made as specific as possible. This principle means that having a goal of ‘save more money’ is unlikely to yield results. However, ‘save 100k’ is a much more specific goal by which your success can be accurately measured against. It’s also a far better motivator.
the next most important principle for effective goal setting is having a timescale attached to it. As with our example above, if the goal was simply to ‘save 100k’, there wouldn’t be much urgency. After all, if it doesn’t have a time constraint then it wouldn’t matter if it took you one year or 30 to reach your goal, right? So, as you probably guessed, adding a time constraint on this specific goal of saving 100k will make it far more urgent, and likely to spur you into action. ‘Save 100k in one year’ is both specific and has a time constraint added to it. Based on these two principles our goal is looking pretty good so far.
The third most important principle of good goal setting is that the goal you are setting (that means the specific details of the goal and the timeline) must be realistic. So, again taking our example, is saving 100k in one year realistic? Let’s find out…
Is saving 100k in one year realistic?
Let’s start with whether it’s even possible. Let’s say you have a salary above 200k. This means you are likely to take home something in the region of 130k each year once you’ve accounted for taxes etc. Now, given that many people live very comfortably on a salary of 30k per year, even before taxes, this should show us fairly comprehensively that saving 100k in a year is definitely possible.
With this being the case, we then need to get into how realistic it is.
How realistic this is for you is likely to depend on your own personal circumstances. For example, if you manage to earn that 200k salary working remotely then you have plenty of freedom to choose where you live. This means that you can choose to live in a rural town where 30k will give you a very comfortable life indeed. However, if you earn your living as a lawyer or investment banker, you are likely to need to work in a city-based office most days. This means that you will incur all the living costs associated with city living. If this is the case, you are likely to struggle to live on 30k per year, and will therefore struggle to save 100k in a year.
Another key factor in determining whether it’s realistic for you to save 100k in a year is how many dependents you have. If you are relatively young and live on your own (with no children), you are very flexible. You can choose to live in a cheap apartment, eat cheap food and limit your expenses to only the base minimum. However, if you have a family to support, the money you earn will quickly disappear as you have to pay for everything they need to live a happy and healthy life. You are also likely to need to move to a more expensive area in order to ensure that you are close to good hospitals and schools for them. Put simply, if you have any children to support, saving 100k per year is going to require significantly more income than if you live alone with no dependents.
So, based on what we’ve discussed here, the best scenario, if you are looking to save 100k in a year, is to live alone, with no dependents, and for you to have a high-paying job that allows you to work remotely. Unless you are able to tick all of these boxes, saving this amount of money in such a short space of time is going to be very challenging.
What are the other options?
The first thing to consider when setting yourself a goal like this is whether it NEEDS to be in one year. What are you saving for? If that 100k is simply for your retirement savings, does it really need to be achieved in one year?
Taking longer to save 100K
The easiest and most realistic alternative is to just adjust your goal and saving expectations. Most people will take over 10 years to save this sort of amount. Aiming to do it in one year is a very ambitious goal. However, even if you were to double the time it took to save it, you’d still have $100k in two years, which would be a great achievement.
If you are reading this article you are probably in a rush to achieve this level of savings. Perhaps you are approaching retirement, or maybe you’ve got a large purchase you want to make in the near future (a house, perhaps). If this is the case, you may feel that waiting an extra year or more is not an option for you. however, if it is an option, you should certainly consider it.
One other important factor when thinking about the timescale for putting together your 100k savings fund is that it’s likely to have a negative impact on your health, social life and other areas of your life. Even if you achieve your goal, there are some things that you can’t put a price on, and may not be recoverable once you’ve hit that important goal. If you can extend the period over which you put together your savings, you are likely to not only be happier while doing it, but you will also be healthier.
Starting a Side Hustle
Side hustles are more popular than they ever have been. The widespread wealth of online information about building side hustles and the tools given to everyone by the internet means that there’s never been a better time to start your own side business.
When most people think about a side hustle they often think about the most recent influencer they’ve seen boasting about how they quit their job and are now making $20k/month by selling digital products. While these outliers do exist, you don’t have to be at this level for it to make a significant difference to your life and earnings.
If we are talking about a side hustle in relation to your ability to adding 100k to your retirement savings in just one year the numbers are actually quite encouraging.
If we take a conservative example of you earning $80k per year after tax, this gives us a solid base to work from. Let’s say that you make savings in your daily life which allows you to save 25% of your salary each month. This means that at the end of the year you will have saved 20K from your salary alone. This leaves 80k left to reach your savings goal.
80k divided by 12 months is $6666 per month. Broken down, this equates to just over $200 per day. When you break it down to this you have a number of clear options that will allow you to work towards that goal, without having to eat into your salary too much.
For example, $200 per day could be made up with any of the following:
- 4 hours work at $50 per hour
- 2 hours work at $100 per hour
- 4 digital product sales of $50
- 8 digital product sales of $25
- 20 digital product sales of $10
As with most goals. When they are looked at in their entirety, they are daunting and intimidating. However, when they are broken down into manageable chunks, they seem far more achievable. In the examples above, selling 20 digital products each day for the low cost of $10 is very doable. And in order to sell a digital product for $10 it doesn’t need to be very complex at all.
What are you saving for?
This is a crucial factor in determining whether choosing to save money in this way is a good idea or not. For example; are you saving to clear student loan debt, credit card debt or to bolster your retirement account? Perhaps it’s for an emergency fund, or to save to buy a house? Whatever the answer is, this should be the guiding principle in determining how you save that money.
Ultimately, how you go about dealing with all of these problems is going to depend on what else is going on in your personal finance. For example, if you have outstanding debts that you are paying interest on, you will be able to save more money by clearing those debts first. Conversely, if you already have good investment strategies in place for your money, investing any savings into that might pay you more than you pay the banks in interest. For example, it’s not always the most sensible idea to pay more on your mortgage payment if you have an option to invest, as your investments may return more than the interest you would have paid on that amount.
How much risk is OK?
The truth is, most people who want to save 100k in a year would have to undertake a significant amount of risk in order to achieve that goal. Whether it’s financial risk or risks to your health, saving this amount of money in such a short window of time is always going to put pressure on other areas of your life.
I feel it’s important to outline the areas that people often undertake higher than normal risks in order to reach their goals, so you can avoid them, or at least be well informed.
People will often see investment and financial trading as good options for earning high amounts of money in short spaces of time. If you spend much time on TikTok, you will find no shortage of rags-to-riches stories from seemingly successful traders.
Unfortunately, this image is often far from the truth. Of course, there’s plenty more money to be made from the financial markets and stock market, but also significant losses. Everyone hopes that they are going to be that person to ‘beats the markets’, but the truth is that no one can do this over an extended period of time. Unless you approach trading in a very professional and structured way, at some point you are likely to make significant losses.
If you do decide to go down this route, please make sure you do plenty of your own research and start in a very safe and controlled way.
Gambling is the easiest way to lose money. When you trade or invest other people make money through transactions or as a percentage of your earnings. When you gamble the old saying is always true, ‘the house always wins’.
Perhaps you really understand sports. Perhaps you are really good at assessing the risk involved in casino games. It doesn’t matter. The system is rigged in the favour of the house. Skill-based games such as poker are slightly different, but the risks are still incredibly high.
This might seem like a strange topic, but perhaps the biggest risk to anyone trying to save this amount of money in this short amount of time is the risk to themselves. to achieve this goal you will have to work much harder than usual, and you’ll also have to save. This means your own personal resources and health are going to be reduced considerably. In many cases, this will have a significant long-term effect on your health, relationships and happiness. The risks to your own physical and mental health will, in most cases, be far too high.
Is it possible to save 100k in a year? Technically, yes, of course, it is. Is it recommended to do it in this way; probably not.
If you feel that you have the setup and resources to save this amount of money in a year AND do it in a way that doesn’t incur too much risk and allows you to maintain your physical and mental health then we wish you the best of luck.