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Many people feel like their finances are spiraling out of control. If you’re among them, maybe you’re spending frivolously, or not focusing on longer-term financial goals such as starting an emergency fund or retirement account.
It’s frustrating to be in a situation where you’re not in control of your finances, but there are solutions. Many of the best techniques for getting on track are ones that start small with realistic and attainable goals, no matter what your paycheck is.
One option for people who want to give themselves a financial makeover in a way that’s not too overwhelming is the 52-Week Money Challenge.
The 52-Week Money Challenge
Many Americans have no money saved and are living paycheck-to-paycheck. When you’re already stretched thin financially, it can feel like you’re never going to be in a position to save an emergency fund. That’s what the 52-Week Money Challenge tries to solve.
This method of saving money requires very little funds to start. The goal is that by the end of the challenge, you’ve saved nearly $1,400 in a year.
You start by saving $1 during the first week of the challenge. Then, the next week you save $2 and following that $3, and so on until you’ve made it to the 52-week point. Once you’ve reached the end of the challenge, you’re saving over $50 a week. This is a great money-saving technique, but there are some caveats to keep in mind to make it work well for you.
Remembering to Set Aside the Money
When you’re starting out, it can be tough to remember to set aside the money each week, especially because it’s such a small amount at first. Create a calendar to remind you to put aside the money each week. You can also set a reminder on your phone. You can also put the money on display in a jar to serve as a reminder. A lot of people find that keeping a jar in their kitchen is the best way to help them remember to save.
Automated Transfers is another option that’s more technology-driven and may work better for some people. With an automated plan with your bank, you transfer the set amount each week from your checking account to a savings account. This can be better than putting the physical money in a jar because savings accounts can earn modest interest. If you’re worried you might be tempted to spend the money you put in savings, go with an online-only bank. Another tip: don’t get a debit card with the account.
If you start the 52-Week Money Challenge at the start of the calendar year, you’ll save around $50 a week by December. However, the holidays can be expensive with gifts and activities. You might want to go in reverse and start with depositing $52 at first, depending on your spending habits and plans for the year. For example, start saving the most in the beginning, and then work backward on the plan until you reach the end of the year, when you’ll contribute only $1 per week. You’ll save the same amount of money, but it might be a better way for you to manage it.
Have a Goal for What You Save
The 52-Week Challenge is like a game, which is why it works so well for many people. The human brain is wired to work well when goals are involved. You can even outline a specific goal for the money you save, such as building an emergency fund or saving up for a major expense like a new apartment or a down payment for a home. If you define your goal, you’re more likely to stick with your savings plan.
Try to Save More
If you have more money to put toward your savings goal, definitely do it. The 52-Week Money Challenge isn’t just about following the set amounts. It’s about making saving money a priority and helping you follow through. If you can start with $5 a day, then do that. You can save extra on any week. Don’t feel limited.
The 52-Week Money Challenge is a fun, flexible way to get into the habit of saving money and it works well for a lot of people, regardless of their income.
Author: Ashley Sutphin