Although I am still not done with all my Christmas shopping, I am already thinking about 2017. A new year brings new opportunities for growth, and I’m hoping for financial growth. One of my favorite ways to kick-start savings each year is a money challenge. In 2017, I will be giving the 365 day money challenge a try.
What is the 365 day money challenge?
The 365 money challenge is a clever tool to encourage consistent saving. Not just this, but it helps to change your mindset to pay yourself first. Traditionally, the challenge calls for saving a penny a day, increasing in the amount you set aside each day.
For example, one the first day, you will save one cent. Day two, two cents will be included. Three pennies will be saved on the third day and so on.
A couple years ago, I started the 52 Week Money Challenge, but this year, I want to give this one a try.
How much can you save?
The penny version of the 365 day money challenge will increase your savings by $668, but you can drive up this amount by saving more. And actually, that is what I plan on doing. Currently, every year I save $1,378 with the 52 week challenge. Committing to $1 every single day may be a little much; however, by simply dedicating a starting point of five cents a day, I can save an extra $3,339.75 in 2017.
It’s crazy to think how much a nickel per day adds up, but the truth is in the numbers. Here is what the pattern will look like:
- Day 1: $0.05
- Day 2: $0.10
- Day 3: $0.15
- Day 4: $0.20
- Day 5: $0.25
- Day 6: $0.30
- Day 7: $0.35
- Day 8: $0.40
- Day 9: $0.45
- Day 10: $0.50
By the end of the first 10 days, I’d only be putting aside $3.20. But, by the end of the challenge, it will amount to $18.40 set aside that day. It all quickly adds up, though, with $23.70 saved in your first month.
It takes 19 days to increase by another dollar, but in the eleventh month, you’ll put aside $349.50, not including what was already saved. See how that five cents can really add up in this 365 day money challenge? If you are still having a hard time envisioning this, our friends over at SavingAdvice.com placed it all out on the chart pictured, which is how I initially heard about this particular way to do the challenge in the first place.
You can stick with the penny a day challenge or you can shoot for an added nickel per day like me. If you are interested in pursuing this yourself, you can download a template here.
The importance of money challenges
Left to our own devices, we tend to forget about (or ignore) building up a financial cushion. According to the Federal Reserve’s 2014 economic report on U.S. households, many Americans could not even cover a $400 emergency expense without borrowing money. Additionally, 31 percent went without medical care in the 12 months prior to participating in the survey because “they could not afford it.”
By challenging ourselves to save, we are creating a habit that, in time, become like second nature. Even as I had followed through on the 52 week money challenge previously, there would be times I would forget to place money into my savings come Monday morning. But, I would make it a point to get to it Tuesday if it did not happen Monday.
I feel I should note, though, that you cannot solely rely on money challenges to build your savings. This is a great way to encourage paying yourself first, but
Even though the only debt I carry are in the form of student loans at this current time and I live comfortably, I have my eyes set on financial freedom and continue to plan financially for my future. I know that with consistency, dedication and hard work, my savings in 2017 will flourish and grow.
Will you be trying this challenge out for yourself?