Many of us make financial resolutions at the start of the year to avoid over spending, start saving and get out of debt. What if we played games instead?
Money-saving challenges like "no-spend January" make the process of saving money less stressful and more motivational. This method can incentivize you to save more money while making the process enjoyable.
Whether you're saving for a big expense like a wedding or vacation, or you just want to get rid of a bad financial habit, having a little healthy competition with yourself will help you establish achievable financial goals.
Why do a savings challenge?
Saving money in today's economy isn't easy. Many of us are struggling with student loan payments and high-interest credit card debt. And everyday essentials and housing costs remain high because of inflation. If you're feeling financially overwhelmed, a savings challenge might help you get in the right mindset.
Plus, interest rates on many high-yield savings accounts and certificates of deposit are still relatively high, giving you the opportunity to get a better return on your money through compound interest.
The best savings challenges to consider
Not every savings challenge aligns with your personalized savings goals, so tackle one or create your own with your specific financial objectives in mind.
1. The no-spend challenge
The no-spend challenge encourages us to avoid spending money on nonessentials for a period of time, whether that's a month (like with "no-spend January") or a number of months.
You won't be cutting out every expense -- we all need to pay for housing, food, transportation, utilities and so on. Instead, this challenge forces us to rethink our priorities and what kind of spending is most important, while helping us adopt healthier financial habits for the long term.
Many people stop spending money on things like gifts, travel, eating out or entertainment for the month. Others avoid shopping online or with specific retailers, like Amazon.
2. The 52-week challenge
The 52-week challenge involves saving a little each week to reach at least $1,378 in one calendar year. It starts small, with just $1 set aside in the first week. Then, you'll save an additional dollar each week moving forward -- $2 in week two, $3 in week three and so on, until you stash away $52 in the final week of the year. When you add up all those weeks, you'll have put aside a total of $1,378.
Though many people start the 52-week challenge with $1, see if you can set a more ambitious goal. Try increasing the amount by $2 each week or starting with $20 the first week. The higher the starting number, the more you'll save in the long term if you stay consistent.
3. The eating-in challenge
You can simplify the no-spend challenge by just cutting food spending away from home for a longer period of time. A home-cooked meal costs around $4 to $6 per person, whereas a restaurant meal can cost $15 to $20 or more. You might spend a few bucks on coffee or tea when you're on the go, but buying a box of tea bags or a can of coffee to make at home can last you weeks.
This plan requires creating a focused grocery list and spending more time in the kitchen. You don't want to deprive yourself of going out once in a while, but you'll save a lot by not spending on restaurants or takeout.
4. The cash-only challenge
This challenge involves having physical cash, so it might feel old-school. However, using cash has proved to be an effective savings strategy. There's a psychological component: Parting with physical cash at the register provokes a higher degree of "pain," according to a 2021 MIT study.
By taking out a set amount of money for spending activities, you're setting a boundary that will help you be more conscious of overspending. When we buy things with a credit card or digital payment option, it's easier to lose track of budgeting.
5. The free date challenge
This is a great challenge if you have a significant other (not necessarily the best challenge for a first date). You and your partner focus on finding ways to have cheap dates. Scout out a nature trail for an outdoor hike, or look at your city's parks department website or local magazine for a list of free events and seasonal programming. Put the typical price tag you would have spent on a regular date in a joint savings account to save for future expenses, such as a vacation or a new car.
Where should I put the money that I save?
Starting a savings challenge is only one piece of the puzzle. You'll also need to find the best place to store your cash so you can keep earning.
Instead of keeping that money in an account which pays little to no interest, find a high-yield savings account that'll get you a greater return on your deposits.
In addition to the interest rate, look for other features to accelerate your savings even further. For example, some banks offer the option of rounding up the change from your purchases to make extra automatic savings deposits. If you buy a candy bar that costs $1.54, the bank will automatically transfer 46 cents from your checking account to your savings account.
What if the savings challenge doesn't work for me?
There's a reason that savings challenges are called "challenges" -- they can be tough. If you wind up falling short of your goal, take a big-picture look at your financial routine to adjust.
On the flip side, be honest with yourself if the challenge feels far too easy. The main goal is to have fun while pushing yourself to make some strides in your financial wellness. Think of it like training for a race: Can you run just a bit faster?
How to stay motivated with a savings challenge
If you're losing motivation halfway through your savings challenge, consider these three tips to stay on track:
- Ask someone to hold you accountable: Tell your spouse, a friend or a colleague that you're doing a savings challenge and want help staying motivated. They can help keep you honest and check on you along the way.
- Set aside time to review your finances: Compare your savings today with your savings a month ago. This is the best way to get a real sense of the progress you're making. If you saved $100 with a no-spend challenge, take time to congratulate yourself.
- Use an app: The best budgeting apps will help you create goals and monitor your progress. Plus, having that app in your pocket will outlive the duration of one challenge. You can use it as regular inspiration for maintaining healthy money habits.
The bottom line
It's never too late to get your finances in order, but sometimes we need a little extra push to get started. Whatever your style, turning your savings goals into a game can accelerate your money-saving efforts.
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