So you want to take a step into building a more frugal lifestyle? Good for you! Financial freedom is a terrific goal – but it’s not something that just happens overnight.
Money saving challenges are a creative way to incorporate a little more fun into sticking to a budget and savings plan. But will it help you become more frugal? It depends.
Here’s what you should know before starting a money saving challenge. Use this to help you stay on track and conquer your goals.
What are the most popular money saving challenges?
There are a lot of different money saving challenges out there, and part of your success will depend on which one you pick. Here are a few of the most popular challenges and how they work:
The 52-Week Money Saving Challenge
In this challenge, you commit to saving a certain amount of money each week. This amount will gradually escalate as the year goes on. You start by saving $1 in week one, then $2 in week two, $3 in week three, and so on for a full year.
By the end of the 52-week money saving challenge, you’ll have saved $1,378. This just goes to show that every little bit adds up!
This is a great challenge for anyone who wants to build a habit of saving but doesn’t want to start with a large amount. It’s also a great challenge for someone who wants to save up for something specific. That $1,378 can easily become an emergency fund, a plane ticket, a new bike, or something else you’ve wanted, but didn’t have room in your budget to purchase.
Note: Make sure you set up a savings account where you can keep the money you save. I recommend using a high yield savings account from CIT Bank. The account has one of the best interest rates available right now.
The Reverse 52-week Money Saving Challenge
This is exactly like the first challenge, but instead of starting with $1, you start with $52. Then each week, you’ll decrease the amount. This challenge will also allow you to save $1,378. This version is a great choice for someone looking for a jump start, or if you’re just too impatient to wait a full year to get up to a sizable amount into savings.
The Bi-weekly Money Saving Challenge
Many people are paid every other week, which amounts to 26 paychecks per year. Rather than making it a habit to save each week, the bi-weekly challenge allows you to save every other week. It then becomes the first thing you set aside after every paycheck.
You can do this challenge by setting aside a certain amount from every paycheck or gradually increasing your savings each time you get paid. If you save $50 from every check for a year, you’ll have $1,300 at the end of the challenge.
The best part about this money saving challenge is that it can be flexible to your needs. It can be predicted based on your budget or slowly ramp up your savings over time.
The No-Spend Money Saving Challenge
No-spend money challenges are designed to help you avoid spending on everything except the bare essentials. You might start by doing a no-spend week, where you eliminate spending on restaurants, entertainment, clothing, coffee – everything but the basics.
If you want to take it even further, you can extend your no-spend challenge to a couple weeks or even a full month. You’ll be surprised how much you can save with this challenge. The key is to make sure you move your extra cash to savings, where you won’t be tempted to spend it after the challenge is over.
What do I need to start a money saving challenge?
Truthfully, you only need two things – a plan, and a goal! But there are a few tools that can help you be successful along the way. Anything you can use to automate your savings will help you stay on track without having to put in any extra work.
If you choose to do the bi-weekly challenge, it’s best if you can set up a direct deposit for a portion of your pay to be deposited into a different account. This way you won’t be tempted to spend what you’re supposed to be saving.
What’s the Key to Following Through on a Money Saving Challenge?
Science suggests that writing down your goals makes it easier to stick to them. That being said you can start tracking your progress. I would suggest a money spending journal or a more customizable bullet journal.
And of course, it would be a mistake not to consider the other factors that will help you conquer your money saving challenge. The most important tool you can use – during a money saving challenge or at any time in your life – is a budget.
Use an app like Persona Capital to make a budget, get insights into your spending, and track your net worth. You might be surprised to find what cuts you can make!
So will a money saving challenge actually go frugal?
The answer is…yes!
Start by picking the right money saving challenge for you. Make the choice based on your spending habits, paycheck frequency, and saving goals. Then keep yourself accountable by writing down your goals and using the right tools to help you stick with the challenge.
In the end, you’ll have a nice chunk of cash saved up, and hopefully a few more frugal financial habits that will help you continue your path toward financial freedom…or whatever your next big goal may be!
An additional resource to save even more
I have become a huge fan of using the Acorns app. Every transaction I make gets rounded up and the additional amount is deposited into a diversified investment portfolio. The best part is you can sign up for Acorns in just five minutes.
