New money saving challenges pop up every year and 2023 is no different. But while gamifying tasks like budgeting and saving money can make reaching your goals fun, they seem to lose their steam after a few days or weeks. Leaving many to wonder: Do money-saving challenges actually work? And how can I actually stick to one that might work for me? So we asked Jen Hemphill, financial counselor and host of "Her Dinero Matters" podcast, for the answers. Plus, which challenges you may want to test out.
Be honest. Could a money saving challenge actually work for me?
Short answer: Yes. Hemphill says money saving challenges work because they combine simple actions with accountability. Making the task more achievable. But they wind up being a short-term solution because "people get busy," she explains. "The buzz of the 'new year, new me' and resolutions fizzle down."
The way to make things work is to start by clearly defining your money goal. Are you trying to save up for your dream vacation to Bora Bora? Are you looking to cut down on how much you spend on going out to eat each month? Once you establish that, you can figure out a money challenge that works for you.
So what money saving challenge should I try?
Here are some popular money saving challenges you may want to consider, depending on your goals:
The 52-Week Money Challenge
Who should try it: This one’s a good option for anyone who is ready to go from living paycheck-to-paycheck to saving some cash.
How it works: Increase your savings by $1 each week. So on week one, you put $1 into your savings account. On week two, the amount goes up to $2. You keep that pattern going up until week 52. By then, you’d have a total of $1,378 saved for your money goal.
The Envelope-Saving Challenge
Who should try it: If you like cash stuffing and you have the time to be really thoughtful with your finances, you’ll have fun with this money saving challenge.
How it works: All you need is 100 envelopes, a pen, and some cash to get started. Step one: Number your envelopes 1-100 (these labels will tell you how much to put in each envelope). Step two: Every day, randomly choose a different envelope and add the amount listed on the envelope. Ex: If you pick up the one labeled 79, you’ll put $79 into it. After the 100-day mark, you’ll have about $5,000 saved up.
The No-Spend Challenge
Who should try it: Aspiring budget pros.
How it works: The no-spend challenge is pretty self-explanatory: You only spend on the absolute essentials. Like rent, groceries, or utilities. Not sure what to include? Take a look at your monthly spending and list the things you need to spend on. If giving up your daily Starbucks seems daunting but also doesn't feel like an 'essential,' there's another option for you: You can add personal 'must-haves' to the list of things you can spend money on. That may include laundry service or weekly takeout. It may take you a bit longer to reach your budgeting goal, but it can still happen.
Any tips for sticking with a challenge long-term?
Hemphill emphasized keeping your 'why' in focus. Hint: Your dream home isn't going to buy itself. Remembering your ‘why’ will be a solid motivator to keep you working toward your money goals.
Also, don’t beat yourself up if you fall off the wagon. Hemphill told us that even if the day-to-day responsibilities get in your way, you still have a chance to make it past week four of your 52-week challenge.
She also left us with two final tips to make this more enjoyable: “Do the challenge with friends, family, or co-workers (like a book club) so you can have accountability.” And don’t forget to reward yourself for the quick wins, like extra dessert or a small Amazon purchase your first month in.
Money saving challenges may seem like all the rage when a new year strikes. But they won't do much if you can't actually stick to them. That's why it's so important to find a goal and a money saving challenge that works toward what you want.
Subscribe to Skimm Money
Your source for the biggest financial headlines and trends, and how they affect your wallet.