When you hear of a challenge, your mind might not automatically jump to money. But choosing to take a savings challenge can transform your financial situation for the better. Building more protection for your credit score is just one of many ways that a savings challenge can improve your finances.
We’ll take a closer look at the top savings challenges. As you read through, consider how you might implement these challenges into your own financial life.
A savings challenge is a budgeting activity that encourages you to meet a certain financial goal. As you participate in a challenge, the goal is to grow your savings over time. Whether you push for a major savings goal or start small, you may build the habit of saving with the help of a savings challenge.
The ultimate goal of any savings challenge is to build up your savings. Hopefully, you’ll have more cash on hand at the end of a savings challenge.
Building a buffer of funds can help you avoid relying too heavily on credit. If an unexpected expense comes your way, you can tap into savings instead of reaching for a credit card. The ability to avoid high-interest debt can be a major win for your finances and your credit score.
When you don’t rely too heavily on your credit card, you have an opportunity to manage your credit responsibly.
Even if you already have an excellent credit score, a savings challenge can still help you improve your financial position. Savings are the cornerstone of a stable financial future. With the help of a savings challenge, you can actively pursue building savings for your future.
There is no shortage of savings challenge opportunities. Below you’ll find some of the top savings challenges to help you build up savings of your own.
The no-spend challenge is exactly what it sounds like. It involves cutting out your spending on all non-essential purchases. However, this challenge is very customizable to your needs.
Some essentials you can continue to spend on include housing, debt repayment, other bills, and groceries. But everything else is cut from your spending. For example, you would avoid eating out, making entertainment purchases, or buying physical items that aren’t strictly necessary.
The beauty of this challenge is that you can implement the rules for as long as you’d like. You might create a no-spend day, week, month, or year. Of course, you’ll likely save more if you stick to the challenge for a longer period of time.
While sticking to the no-spend challenge for an entire year is more difficult, it’s not impossible. If you are looking for inspiration, consider reading Cait Flanders’ The Year of Less. Within her book, the author chronicles her journey of sticking with the no-spend challenge for an entire year.
Don’t be afraid to start small with this challenge and work up to larger periods of time. For example, you might start with a day and eventually go for a whole month without spending on discretionary purchases.
The round-up savings challenge involves funneling your spare change into a savings fund. Every time you make a purchase, you’ll round up to the nearest dollar and save the change. For example, if you spend $1.97 on a candy bar, you’ll direct 3 cents into your savings account.
If you are spending in cash, this is as easy as sticking the change into a jar. But if you are spending with a plastic card, you might have the option to turn on a round-up savings feature. Some financial institutions make it easy to direct your spare change into a separate account. Working with an app like Acorns would accomplish the same goal.
Although the savings might feel small, they can add up over time. The point of this challenge is that the small savings shouldn’t pinch your budget too much. But eventually, you might end up with a substantial change jar.
Eating food outside of our homes, through take-out or dine-in restaurant experiences, can add up quickly. In 2021, the Bureau of Labor Statistics reported that the average American household spent $3,030 on food away from home in a year. That breaks down to $252 per month. Imagine what else you could do with those funds!
The eat-at-home challenge pushes you to stick to eating at home. Although cooking is often more time-consuming than picking up takeout, you stand to save a significant amount of money. As you institute this challenge, consider starting with a week and working your way up to an entire month. Personally, my household uses this challenge to recalibrate our food spending every couple of months. After sticking with the challenge, you might find that you actually prefer your own cooking sometimes.
The 52-week savings challenge offers a useful way to get your feet wet with savings. You’ll start the process by saving $1 in week one. In the second week, you’ll save $2. By the 52nd week, you’ll save $52 for the week. At the end of the challenge, you’ll have saved $1,378.
The 52-week savings challenge can help you add some cushion to your finances. Plus, you’ll build the habit of saving a bit every single week.
The 26-week savings challenge is a variation of the 52-week savings challenge. Instead of setting aside savings every single week, you’ll save money each time you receive your bi-weekly paycheck.
Since you are only saving every other week, you’ll start by saving $3 in week one. From that point, you’ll increase your savings by $3 per week. For example, in week two, you’ll save $6, and in week four, you’ll save $12. In the final week, you’ll save $75.
At the end of week 26, you’ll have saved $1,053. The nice part about this challenge is that you’ll build up your savings habit slowly. And even at the peak of your savings challenge, you’ll need to save less than $100 to stay on track.
The 30-day savings challenge is a customizable option to build up to a savings goal within a month. Essentially, you’ll set a target savings goal. With your savings goal in place, you’ll sprint toward it for the entire month.
The amount you choose will vary based on your situation. For example, you might plan to save $500 in a month or even $1,000 in a month. It’s best to set a realistic but motivating goal.
Although you don’t have to meet specific goals every single day, it can be helpful to break down your big goal into daily goals. For example, if you plan to save $1,000 in a month, you’ll need to save an average of $33 per day.
As you save, you might need to get creative to hit your goal. In some cases, you might have room in your budget to cut out discretionary spending. But for others, you might need to boost your income in form of a side hustle or sell things around your house.
The mistake jar challenge involves putting a dollar into a jar every time you make a specific mistake. You’ve likely heard of similar jar challenges. For example, you might have your kids place a dollar in the jar when they use inappropriate words.
But you can turn the mistake jar challenge into a learning tool about money. If you wish you had a dollar for every time you went over budget, the mistake jar challenge represents a perfect opportunity.
You can tailor the mistake jar challenge to your specific money mistakes. For example, if you want to make bringing your lunch a habit, you could put a dollar in the jar every time you forget to pack a lunch.
Depending on your slip-ups, the money in this jar will mount. But the goal of the challenge is to help you build better money habits that will save you a significant amount of money over the long term.
The minimalist movement has been gaining popularity in recent years. The essence of the movement is an intentional effort to consume less. Although this will likely result in less clutter around your house, adopting this mindset can also push your finances in the right direction.
Consider giving the minimalist lifestyle a try for a month or two. The challenge is to avoid spending on anything that you don’t truly need. Depending on your situation, this might involve shopping second-hand, seeking out free activities, and eating more at home.
On the flip side, clearing out your clutter might also give your finances a boost. If you have high-value items collecting dust around your home, you can sell them to increase your savings.
You have questions about savings challenges. We have answers.
If you want to undergo a savings challenge, there are lots of options out there. But you can make customizations to amp up your specific savings challenges. For example, with the mistake jar challenge, you’ll need to decide which mistakes require an offering to the jar.
Everyone has a different take on saving money. But the basics of saving money involve spending less than you earn. As a saver, you’ll need to look for ways to increase the gap between your income and your spending. You can do this by cutting back on expenses or increasing your income.
A savings challenge offers several benefits. Not only can it help you build up savings in the short term, but it can also help you build out savings habits for the long term.
As you build up a financial cushion, you put yourself in a better position to protect your credit score. When life throws an unexpected cost your way, you can rely on your savings instead of reaching for your credit card.