5 Financial Challenges to Help You Save More
Challenges are all the rage. Just head to a video search, type in the word “challenge” and you’ll find all manner of results, from ice bucket plunges to 30-day fitness challenges. Online trends aside, setting a financial challenge can actually help you reach your goals faster. How?
First, challenges enable you to form healthy saving habits. In a study led by health psychology researcher Philippa Lally, scientists determined that it takes an average of 66 days to form a new habit. So, if you set up a three-month financial challenge for yourself, there’s a good likelihood that you’ll continue saving even after your challenge is over!
Second, having a plan in place makes it more likely that you’ll achieve larger goals. You can use financial challenges to help you pay down debt, grow your emergency fund or put money aside to buy a home.
So, what type of challenge should you set for yourself? Here are some popular methods to get you started:
1. 52-Week Money Challenge:
Start with a low-dollar deposit on week one and increase your deposit amount each week.
There are several versions of this easy-to-begin method out there, including “double your deposit” challenges to save $5,000 or even $10,000 in a single year!
The simplest variety starts with putting aside $1 in Week One, $2 in Week Two, $3 in Week Three, etc. Easy, right? After just one year, you’ll have saved $1,378! The con is that near the year’s end, you’re expected to put aside about $50 a week, which may not be doable for everyone. Check out this handy Money Challenge Chart for the weekly amounts.
2. The $5 Challenge:
Every time you receive a $5 bill as change, put it in a savings jar.
This method is flexible because you can limit it to five-spots or also include one dollar bills. The obvious downside is that it requires you to use cash rather than plastic — and you never know how much or how little you’ll end up saving.
3. Dollar-a-Day Challenge:
Save a single dollar every day for a year.
This one is almost too easy, and you only end up with $365 in your account. It isn’t great for achieving larger financial goals, but the dollar-a-day challenge works great as a teaching tool for kids or as a painless way to set aside a little extra for unexpected expenses or small splurges.
4. Save the Change:
Every time you make a purchase, round it up to the next dollar and put the change into a savings jar or account.
There are two common versions of this challenge: The first rounds up every purchase to the nearest dollar and puts the spare change in savings. This works especially well if you make a lot of daily purchases. (Some financial institutions offer this as a checking-to-savings account option, but even if yours doesn’t, this is an easy challenge to set up.)
The second version requires you to put ALL of the change you receive back on any cash purchase into savings. So, if you give the cashier a $20 bill for your $4 coffee, the remaining $16 you get back goes straight into your savings account.
5. Automated Savings Deposits:
Set up your accounts so that a specified dollar amount goes directly into savings each month.
Though not technically a challenge, many smart savers have a portion of their paychecks directly deposited into savings. It’s easy to set up, plus there’s no risk of you forgetting to move the money over.
No matter which method (or methods) you choose, setting a financial challenge for yourself is a great way to stay motivated and save up for a goal. At the end of your challenge period, you’ll feel proud of your accomplishment. Then, you can either use the cash for your big goal, or keep it in savings and move on to the next challenge!
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