Money Challenges to Help You Meet Your Savings Goals
As 2021 kicks off, you might have promised yourself that this would be the year you finally built up that savings account. New Year’s resolutions are often made with the best intentions, but many times they’re hard to follow through on. Why? Well, typically resolutions are too broad (lose weight, tone up, save money), which makes them hard to follow through on.
However, when you have a solid plan and set goal, it’s much easier to follow through on your resolutions. If saving money was at the top of your list this year, I highly recommend checking out a money challenge to help you save more money over a set period of time.
What is a money-saving challenge?
A money-saving challenge is a popular way to commit to saving money over a set period of time. Some challenges might last a week or two, others for a month, while others last the entire year. The ultimate goal is to develop healthy savings habits, learn more about items and services you might have been overspending on, and take control of your finances.
What I love most about money-saving challenges is that they’re often easy to complete, share on social media, and stay committed to. They’re also a great way to motivate yourself financially. If you’re feeling the urge to spend, there are often groups of like-minded individuals completing these challenges alongside you that can offer encouragement and advice.
How a money challenge can benefit you
Money challenges allow you to motivate yourself to work toward a goal — saving money. But, by setting rules and flexibility, you’re able to adapt challenges to fit your lifestyle.
In addition, these challenges allow you to set specific goals or milestones that you can celebrate. Maybe you’re in need of a new car, planning a family vacation, or looking to finally pay down that last credit card bill. Whatever financial goal you need to accomplish, a money-saving challenge can help.
Of course, not every money-saving challenge is catered to every lifestyle, so it’s important you pick the challenge that feels right for you. I’ll walk you through 10 of the top money-saving challenges below.
7 Money-Saving Challenges and How They Work
1. The No-Spend Challenge
The No-spend challenge is one that just about everyone can complete with a little patience and diligence. A no-spend challenge refers to a period of time when you’re not allowed to spend any money on non-essential purchases. Here are the basic rules.
What you’re allowed to spend money on:
- Rent/mortgage
- Insurance
- Utilities
- Cell phone bill
- Groceries
- Medical bills
- Gas/transportation
You should not spend money on:
- Restaurants/takeout
- Apps/subscriptions
- Uber/Lyft
- Grocery store extras
- Clothing
- Jewelry
- Books
- Video games
- Home decor
- Other optional shopping
- Trips/vacations/etc
- Etc.
This challenge is designed to help you save money by examining what’s really important in your life while curbing overspending. Usually, most people participate in one no-spend month, but some start with no-spend weeks or push it further with multiple no-spend months.
Tips for Success: I recommend choosing a month (or week) to start out. Make sure you pick a month least likely to encourage purchases (like months with birthdays, events, or holidays). Then, tell your friends and family about the challenge to help hold yourself accountable. You can even post about it on social media.
The most important tip of all — if you fall off the wagon, don’t quit. If you splurged on sushi or a happy hour drink with coworkers, acknowledge your error, remind yourself of why you’re not spending money right now, and continue on.
2. The 52-week saving challenge
This money savings challenge is one of the most popular ones. The premise is simple: start saving $1 on the first week, $2 the following week, $3 on the third week, and so on. This savings challenge allows you to really ease into saving money, while watching your savings account grow as you save more and more.
By the end of the challenge, you should have saved $1,378, which is great for anyone new to saving. Want to save even more? You can double the amount saved each week and you’ll end up saving $2,756 by the end of the challenge. Here’s what doubling the amount saved will look like each week:
| Week | Savings | Week | Savings | Week | Savings | Week | Savings |
|---|---|---|---|---|---|---|---|
| Week 1 | $2 | Week 14 | $28 | Week 27 | $54 | Week 40 | $80 |
| Week 2 | $4 | Week 15 | $30 | Week 28 | $56 | Week 41 | $82 |
| Week 3 | $6 | Week 16 | $32 | Week 29 | $58 | Week 42 | $84 |
| Week 4 | $8 | Week 17 | $34 | Week 30 | $60 | Week 43 | $86 |
| Week 5 | $10 | Week 18 | $36 | Week 31 | $62 | Week 44 | $88 |
| Week 6 | $12 | Week 19 | $38 | Week 32 | $64 | Week 45 | $90 |
| Week 7 | $14 | Week 20 | $40 | Week 33 | $66 | Week 46 | $92 |
| Week 8 | $16 | Week 21 | $42 | Week 34 | $68 | Week 47 | $94 |
| Week 9 | $18 | Week 22 | $44 | Week 35 | $70 | Week 48 | $96 |
| Week 10 | $20 | Week 23 | $46 | Week 36 | $72 | Week 49 | $98 |
| Week 11 | $22 | Week 24 | $48 | Week 37 | $74 | Week 50 | $100 |
| Week 12 | $24 | Week 25 | $50 | Week 38 | $76 | Week 51 | $102 |
| Week 13 | $26 | Week 26 | $52 | Week 39 | $78 | Week 52 | $104 |
This is a great savings challenge for anyone struggling to put money away and looking to develop healthy savings habits.
Tips for Success: Make sure you plan ahead for weeks when the savings will be more aggressive. If parting with $104 a week isn’t doable, you can even start saving more in advance to help. The goal is to commit to savings, rather than following the numbers and sequence perfectly.
3. The 365 Day Savings Challenge
Many of us develop habits more quickly when we’re practicing them every day. The 365-day savings challenge encourages you to actively save money daily, without breaking your bank account. You’ll start off on Day 1 by saving just $0.05, then save $0.10 on Day 2, $0.15 on Day 3, and so on. By the end of the year, you’ll have saved $3,339.
You can mark how much you’ll be required to move each day on a digital or physical calendar to help you remember. Then, check it off once you’ve added the money to your savings account.
Of course, you don’t have to transfer money from your checking account to a savings account daily, if that’s too much work. Instead, add up the total you’ll need for the week and transfer it all at once. However, I do encourage you to at least look at your bank account daily, in order to take a look at how your savings account is growing and to encourage the savings habit.
Tips for Success: As the amounts get higher, try to stick with them. If you can’t, feel free to save only what you can. The outcome of any money challenge should be focusing on building healthy savings habits, rather than being perfect.
4. The Weather Savings Challenge
This money savings challenge is a more unique one that might appeal to anyone who finds personal finance to be a little dry. In this challenge, you’ll pick a day of the week, and check the high for that day. Whatever the number, that’s what you’ll move into your savings accounts.
This will work particularly well if you live in a warmer climate since temperatures won’t fluctuate much. However, if you’re further north or located somewhere with fairly chilly winters, you can either enjoy the small savings break during colder months, or opt to move money to savings two or three times a week in colder months.
For instance, if you transfer money on Wednesdays and the high is 13 degrees Fahrenheit, you might also decide to move money on Thursday and Friday. So, if the highs are 14 and 20, respectively, you’ll save $47 that week, instead of $13.
Tips for Success: If you want to stick with more consistent or higher temperatures, instead of following your city’s highs, choose a warmer city like Tampa or Phoenix and track their temperatures weekly. You can do the opposite (choose a city with cold winters), if you’re not able to save this aggressively.
If the temperature high is a negative number like -10 degrees Fahrenheight, don’t pay yourself back! Instead, move $10 into savings.
5. The Meal Planning Challenge
Do you eat out at work more days than you care to admit? Are you guilty of ordering dinner more days a week than you cook? The meal planning challenge is an excellent way to step up your culinary game while helping you save money on food each week.
You’ll start this challenge by choosing five days a week for meal prep. This usually includes lunch and dinner, but can also include breakfast, depending on your lifestyle. How you meal prep is completely up to you. Some people like to prep specific meals in appropriately sized containers, while others like to make some staples like chicken, meats or tofu, rice, beans, potatoes, and other sides that can be thrown together to make simple meals.
This challenge will not only help you save more money, but it can also help you meet your diet and fitness goals as well. Budgeting your meal prep funds ahead of time will also ensure you meet your financial goals.
Tips for Success: Feel free to customize this challenge to fit your schedule. For instance, if Fridays are typically traveling days at your job, eating out might be necessary. If you aren’t ready to commit to a full week of meals, start with three days a week and increase from there. The goal is to slowly build this habit in a way that works best for your lifestyle.
6. The Spare Change Challenge
This challenge might seem outdated if you rarely use cash, but hear me out. If you do use cash, the idea is to take your spare change and put it into a savings jar. However, since many of us don’t use change, the idea is to transfer your leftover change into a savings account every time you make a purchase or pay a bill.
For instance, if you pay $47.35 for your cell phone bill, you’ll essentially round up to $48. Pay the cell phone company $47.35 and pay yourself $.0.65. Follow this method for every transaction to watch your savings add up, without ever really missing this money in your checking account.
If you think this sounds too tedious, there are ways to automate this process. Apps like Qoins will automatically round up your purchases and move the space change into a savings account. Acorns has a similar process but will move your spare change into an investment portfolio. Likewise, there are also bank accounts that offer spare change options including Chime, Qapital, and Bank of America Keep the Change (Bank of America will invest your spare change for you; the other two move your change into savings).
Tips for Success: If you don’t want to rely on a paid app or switch banking accounts to participate in this challenge, you can automate the process with a little upfront work. Track your spending each week for one or two months by rounding up all expenses and finding out how much you should transfer to savings. Once you have a few weeks' or months’ worth of data, you can create savings rules to move this amount to your savings account with automatic transfers each month, week, or whenever you get paid.
7. The coffee challenge
If you’re anything like me, your daily cup of Joe is a sacred part of your morning routine. An easy way to save money is by eliminating the cost of buying coffee at Starbucks or your local coffee shop by making your own brew at home. Every time you make your own coffee, add the typical cost of buying a cup to your savings account.
Since I like my coffee black (no fancy frappuccinos here!) I would typically add $2.50 - $4.00 to my bank account every time I opt to make my coffee at home instead. If you love flavored lattes, try experimenting with handheld coffee foamers and flavored creamers to get the same taste at home. It’s much cheaper and will help you slowly grow your savings.
Tips for Success: What I love about this challenge is that it’s extremely flexible. If you want to really boost your savings, try not visiting the coffee shop for one month and watch your savings grow. If you’d like to save, but still want to support a small coffee shop, try doing this during the week and save the weekends for coffee shop visits.
How to manage your savings
Once you’ve found a challenge or two that fits your lifestyle and your money starts growing, what exactly should you do with it? There are a few options you should consider depending on your financial goals.
Start an emergency fund
Everyone should have some sort of emergency fund, just in case. I generally recommend having $1,000 in this fund to start, and then growing this fund to cover 3-6 months’ worth of living expenses. This will protect you if you lose your job, have emergency high-cost expenses pop up (like car trouble or medical bills). I’m also a big fan of keeping these funds in high-yield savings accounts, so you’ll accrue more interest on your money over time.
Invest in your retirement
You’ll want to start investing in your retirement savings as early as you can. However, I do recommend funding an emergency savings account first. Once that’s done, start adding money regularly to a 401k, Roth IRA, Traditional IRA, brokerage accounts, or other retirement accounts. It’s important to add as much money as you can afford as soon as possible in order to yield the highest figures, thanks to years of compounding interest.
If your employer offers a 401k or IRA with employer contributions, I highly recommend you take advantage of this benefit as soon as possible to boost your retirement savings.
Pay off debt
This might be controversial, but I highly recommend starting an emergency fund and contributing to retirement accounts before worrying about paying down debt. You should, however, keep paying at least your minimum (or more if you can afford it) in the meantime.
When paying down debt, I recommend paying off credit card debt first, then any higher-interest loans, followed by student loans. While student loans are often the most daunting, they typically have lower interest rates. If you have private student loans with high-interest rates, then I’d suggest paying them down at the same time as your credit cards.
Not sure where to start? There are different methods designed to help. The snowball method, for instance, has you pay off the small balances first. This allows you to pay off more accounts faster, which can be great motivation when there seems to be no end in sight. Once a card or debt is paid off, move that payment amount to the next one, and so forth.
You can also tackle the debt with the highest interest rate first or reverse the snowball method to tackle the largest debts first. The most important factor is paying as much as you can over the minimum payment each month.
As a bonus, as your debt decreases, your credit score should start going up, which can help you greatly when applying for a mortgage, new car, or other credit accounts.
Create short-term saving goals
Funding short-term financial goals can be rewarding and fun. Start by determining any goals you have, such as funding a down payment for a home, saving for a dream vacation, or even creating a wedding fund. Calculate the number you’d like to reach and then begin saving with any of the above challenges. Having a milestone insight can be an extremely motivating path to success.
Begin investing
Investing is either something you're interested in or not. And if you’re interested in it, you might feel like you need a financial advisor or professional to help you get started. The truth is, anyone can invest, and even those who aren’t interested in the stock market should fund some type of investment account.
If you want to actively invest, I encourage you to read as much as you can about the stock market and how to diversify your portfolio. Then, open an account on TD Ameritrade or E*TRADE to get started.
You can also download apps like Acorns, Robinhood, or Ellevest (this one's for women only) and allow professionals to do the work for you.
Let’s say you were to save your money in a high-yield savings account with 1% APY (this is a standard average APY), versus investing in the stock market with an estimated 8% rate of return (which is lower than average).
If you initially save $3,000 and add $250 to your savings account monthly, after ten years you would have $34,844.10 ($1,844.10 earned in interest). If you were to invest instead, you’d have $52, 395 ($19,395 earned in interest).
Investing can be riskier, but with solid financial planning, it will yield much greater financial rewards.
The bottom line
A savings challenge is a great way to help boost the money in your savings account while helping you learn smart financial habits. When you pay attention to where your money is going and reign in overspending, you learn what’s most important to your lifestyle and where you should spend your money. Money-saving challenges are a great way to kickstart your savings habits and help you develop into a more conscientious saver in the future.
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