Nobody would disagree that saving money is an excellent financial decision. Yet most struggle to keep their income. The main reasons are the lack of motivation and definite process. Money-saving challenges give you both encouragement and a clear path to attain saving goals.
The money-saving challenge is a creative savings idea to kickstart building funds. The purpose of saving money could be for a downpayment of a house, car payment, credit card debt reduction, or building a nest egg.
The saving money challenge turns a monotonous method of stashing cash into an exciting budgeting practice.
According to research, 60% of Americans don’t have enough savings to cover a $2,000 emergency cost. 70% of Americans live paycheck to paycheck, and a mere 5% of Americans have savings over $10,000.
While the stats are shocking, they are also crying for help. We’re heading to a minefield and a step away from disaster. We depend on our job so much that we can not afford to lose a paycheck. The importance of saving money is undeniably essential.
Benefits of Money-Saving Challenges
Building a cash cushion is always a wise thing to do. Taking charge of your finances improves money confidence. It gives you freedom of choice.
You don’t have to hold back on meaningful purchases. However, everyone should refrain from impulsive spending.
Money challenge gives a dull saving responsibility a new edge. We, all humans, respond to challenges differently compared to advice. Budget challenge introduces deadlines and milestones to encourage cash saving.
The following are some of the critical benefits of money-saving challenge:
Activates Saving Habit
The most challenging part of saving money is getting started with the process. Saving is not a priority for most people because they don’t realize the implications of failure to save money until the last moment. People have been living without savings; therefore, it is difficult to see the necessity.
The Money Savings challenge will activate the saving mentality. People are more likely to start the process when competing with others or themselves.
Once they get started and continue with the process, they’re likely to stay on the course.
Adds Cash Cushion
The minimum required rainy day fund or an emergency fund is not the same for everyone. Also, emergencies are unpredictable. Therefore, it is always better to have enough, if not more, cash cushion.
The savings challenges help build a buffer for your emergency fund. It provides a backup should your contingency fund is stretched thin.
Helps Take Control of Finances
The saving challenge works better for those who don’t have a handle on money. Some people learn it very early, while others have trouble managing money.
Money challenges help you gain control of your finances. If you follow through with the challenge guidelines, you’ll streamline your budgets without having to understand complex financial management techniques.
The best way to carry out the money challenge is to try it with your spouse. It creates a healthy competition to capitalize on the savings and achieve long-term financial goals.
Best Money Saving Challenges
I will discuss the five money challenges that are easy and will optimize returns. You can find hundreds of similar challenges and variations on the internet.
These five saving challenges are the best based on their simplicity, effectiveness, and ease of getting started.
#1 The 100 Envelope Challenge
The challenge starts with 100 envelopes. That’s where the challenge got its name. It takes 100 days to complete it, and therefore, some also call it a 100-day envelope challenge.
The money challenge is very famous on social media platforms, mostly TikTok, with the hashtag #100envelopechallenge.
How Does the 100 Envelope Challenge Work?
You need 100 envelopes for the challenge. Label the envelopes from 1-to 100, shuffle them and store them in a basket.
To begin the challenge, you’ll pick a random envelope each day. You’ll place cash equal to the envelope number and save it separately from the empty ones.
If you continue the process with all the envelopes, you’ll have $5,050. You will save over 5 thousand dollars in less than three and half months. The best part is you never have to come up with more than 100 dollars on any day.
Wondering how much you’d save if you repeat the process till the end of the year? You’ll have saved more than $15,000 by doing this single challenge.
#2 The 52-Week Savings Challenge
Even though this money challenge runs for the whole year, it is a very effective way to set aside money for the future. The money challenge is a slow yet steady process of building cash balance. The best part is you don’t have to come up with more than 52 dollars in a week.
How Does the 52-Week Savings Challenge Work?
For example, in week 1, you’ll save one dollar, two dollars in week 2, etc. In week 52, you’ll deposit 52 dollars in the account.
You’ll save 1,378 dollars in a year. It does not sound like a lot of money, but the effort to accumulate it is insanely minimal. Neither did it require aggressive budget-cutting. Therefore, the 52-week money challenge is highly feasible.
Most of us are paid either weekly or bi-weekly. It might be beneficial to tweak the 52-week challenge into a weekly or biweekly saving plan. It would be easier to save a portion of our paycheck when we receive it.
#3 The No Spend Challenge
No spend challenge is a proactive way of limiting spending habits. It helps control your impulsive purchase decisions and improves your money mindset.
The plan is to go on a shopping strike for specific days. It could be for a week, month, or year.
The areas where you tend to spend more money should be your priority for no spending challenge. You could pick spending on personal items, groceries, makeup kits, or home decor.
The best way to ensure the completion of the no-spend challenge is to start with a short period; a week or a month. You can increase the duration once you adapt to the process.
No spend challenge is more effective when done with a spouse or group. Kids can also be a part of the challenge to educate them about the importance of financial planning. All family members can start this challenge collectively.
#4 The No Eating Out Challenge
The U.S. Bureau of Labor Statistics report shows that American consumers love eating out, spending over $2,000 annually in 2020. The number could be much higher had there not been COVID-19 restrictions. People order food multiple times a week.
No eating out challenge helps curb expenses on outside food. The challenge will encourage people to eat home-cooked meals, which are healthy and cost-effective.
However, Preparing food takes time, and not everyone has the luxury of time to pack their lunch. Therefore, you can be flexible with this challenge. You can start with every other week and continue making it a weekly or monthly habit.
#5 The Dollar Saving Challenge
It is the most simple saving challenge that you can start immediately. The main objective here is not about the total amount but about getting accustomed to saving. Saving a dollar a day may not sound all exciting, but you’ll have $365 in a year. You’d not have had access to this amount had you not saved a dollar a day.
You can stash away one dollar in your box/safe or electronically transfer it to your online savings account every day. High-yielding online savings accounts with automatic transfer serve better for the challenge.
Your online account may not have an automatic daily transfer option, but you can set up a weekly $7 transfer. If you prefer handling cash, it works as well.
Other Saving Challenges
Many other money-saving challenges include kick bad habit challenge, spare change challenge, holiday helper fund, or penny savings challenge. Most are based on either specific requirements of an individual or a slight variation of the above money challenges.
Once you get into the habit of saving money, you can be creative and start a challenge tailored to your needs and requirements. The purpose is to build an extra cash balance to supplement your existing accounts. It does not matter what you call them. They all serve towards making better financial decisions.
It is tough to get into the habit of saving money. Even if we get started, it is challenging to stay on course long term. The money challenges help you stay focused. It will keep you motivated to save extra money that you never thought possible.
So what are you waiting for? Let’s pick a money-saving challenge and start building wealth.
This article originally appeared on Wealth of Geeks.