If you are someone who always plans to save but never follows through with it, then the 52-Week Money Challenge could change your finances forever.
How do you complete this challenge and why do so many people rave about it? It’s simple and easy to follow. And because so many people give it a try–especially in January of each year–you can easily connect with others who are trying to bolster their own savings. Here’s what you need to know.
Why You Need to Save
Did you know that nearly half of all Americans could not come up with an extra $400 in the event of an emergency? That’s what a 2013 survey by the Federal Reserve discovered. A shocking 47% of respondents said they would either have to sell something they owned or ask for help from loved ones in order to cover the unexpected expense.
If your car broke down or you had to go to the emergency room, would you be able to cover it without worrying? Ideally, the money that you save in this challenge will be your “rainy day” fund. However, if you’re one of the 53% of households who already have a healthy savings account, then this challenge can help you save up for a specific purchase such as a vacation.
What Is the Challenge?
If someone told you to put 10% of your paycheck in savings, you might balk. But if they told you to put a single dollar in the account, you’d probably do it without thinking. This challenge is built on the idea of gradually increasing your savings every week.
In the first week, you’ll deposit a dollar. The second week, you’ll save two dollars. You’ll keep adding an extra dollar every week until you reach the end of the year-long challenge. In the final week, you’ll deposit $52.
How Much Will You Save?
The answer to this question is $1,378. If you follow the challenge exactly, increasing your savings deposit each week by one dollar, you’ll have a total pot of just under $1400. Depending on your current situation, that might sound like a lot of money or an unachievable goal. Read on to find out how to get started and stick with it.
You Don’t Have to Wait for the New Year
Although the most popular time of year to start saving is the first week of the year, you can kick off the challenge at any time. People are most successful, though, when they start at the beginning of a month instead of an arbitrary day. However, the best time to start is as soon as possible! If you feel excited about taking on the challenge, then don’t wait.
Where to Stash Your Savings
The best place to deposit your savings is a high-yield, no-fee savings account. Unlike regular savings accounts, you could see a nice little boost to your total at the end of the year. You can find many options for these accounts online, but remember to look for one without fees and with a $1 minimum deposit.
If that doesn’t work for you, then a regular savings account is fine. Just make sure that you can avoid the temptation to dip into the account! I don’t advise keeping your money in a box or jar at home–it’s too easy to “borrow” from it and not protected against potential theft or damage.
Why People Fail the Challenge
People stumble in the 52-Week Money Challenge for the same reasons that human beings struggle with anything in life. Something comes up and you lose momentum. You get bored or distracted and never pick it back up again. It feels too hard, so you quit.
Most of those reasons for quitting come down to motivation and organization. You’ll find tips to overcome both of those hurdles below. There’s one other issue, however, that might not be so easily solved.
By the time you reach the last quarter of the year, you may find that it is increasingly difficult to come up with the higher dollar amounts outlined in the challenge. If that’s the case, then don’t feel bad about capping your deposits at an amount that’s easier for you to maintain.
For example, you might find that $25 a week is as much as your budget can stand. Stick with $25 for the rest of the year. You’ll have a little less in the account at the end of the challenge, but it’ll still be more than if you’d given up.
How to Stay Motivated
If you’ve ever tried to stick to any kind of long-term challenge, then you know that sooner or later, the enthusiasm wears off. Things get difficult, or life gets in the way. For many of us, it seems like we are just looking for an excuse to quit.
The right motivation can help you get past any stumbling blocks. Finding your “why” is key to figuring out the best way to motivate yourself. Are you saving money for a specific goal? Then that’s an obvious reason to keep going even when you want to stop. Do you want to provide more security for your family or escape the worry that comes with not having a safety net? Those are both excellent reasons to complete the challenge.
Before you begin, take some time to think about how a weekly savings habit could have a positive impact on your life. Write down two or three specific reasons why you want to succeed in this challenge. Refer to them whenever you feel stuck or frustrated over the coming year.
Get Friends and Family Involved
We’ve talked about internal motivation, but getting friends and family on board with the 52-Week Money Challenge can be hugely helpful. This encouragement might take three different forms:
- Cheering Section: Having someone (or several someones) giving you positive feedback can make you feel good about what you’re doing.
- Accountability Buddies: If your loved ones know that you’re doing the challenge, they can check up on you.
- Friendly Competition: Human beings often find competition to be a powerful motivator. The key here is friendly competition.
This challenge can also be a fantastic family bonding exercise and a way to build financial responsibility in your children. Older kids can start their own savings, while younger kids can learn by watching you.
Find Online Support
If you don’t want to get friends and family involved for any reason, you still don’t have to go it alone. Instead, look into online groups of like-minded savers. These are easiest to find around New Year’s, but you will find Facebook groups and online forums offering support and encouragement for this challenge all throughout the year.
For many of us, the biggest challenge in building bad habits isn’t a lack of resources or willpower. It’s plain ol’ forgetfulness. You know best how to keep yourself organized and on track, but here are a few suggestions.
First and easiest, create a recurring reminder on your phone. It’ll send a notification at the same time of day every week. You could also create a repeating appointment in an online calendar. Of course, you can always use a paper calendar with the weekly deposit date circled. The point is to set up a reminder that works for you and stick to the same day of the week for the entire challenge.
Automate Your Deposits
If you’re like me, then all the calendar items and phone reminders in the world won’t make a difference if you’re distracted or busy. That’s where setting up an automated deposit can help. Many banks have savings challenges that you can join, but you can also manually set up an automatic deposit.
Rather than changing your direct deposit from work, which can be time-consuming and tricky, create an auto-draft from checking into savings. Or, if you are using a third-party savings app, set it up to withdraw the week’s deposit at a set time.
Track Your Progress
For the first few months of savings, the dollar figure in your account might not look very exciting. This is a slow challenge that requires patience and consistent effort. Creating a way to track your progress other than dollars can help with motivation.
I recommend using the “Don’t Break the Chain” method popularized by Jerry Seinfeld. Get a calendar and mark every week that you successfully complete the challenge. Personally, I like to use glittery gold star stickers, but you can just cross off the week with a marker. As you build momentum with the challenge, you’ll become less and less likely to stumble because you don’t want to break the chain of successful weeks.
The Secret Power of Saving
Want to know a secret? The real point of the 52-Week Money Challenge isn’t just to put $1378 in your bank account.
While the money should give you a little peace of mind, the real goal of the challenge is to build a savings habit. Once you are used to the idea of depositing money into a savings account on a certain day every week, you’ll do it without thinking. Of course, you probably won’t keep up December levels of deposits in the long term, but finding a weekly savings level that works for you and your budget can cement this life-long habit.
What to Do Next
Once you’ve finished the challenge, what should you do? If you were saving for a particular goal or purchase–and you already have an established emergency fund–then go ahead and treat yourself. However, if your challenge savings account is supposed to be your emergency fund, then respect the hard work and discipline you showed throughout the year by resisting the urge to spend it all immediately.
Some people find that they want to continue the challenge, either by starting over at $1 or creating a new increment to keep pushing themselves toward new financial goals. You might also transfer the year’s savings into a money market account or purchase a CD to keep the funds secure and let them earn money for you.
No matter what you do, pat yourself on the back! You deserve to feel good about your accomplishment.