Key Takeaways

Whether you want to create an emergency fund, save money for a vacation, or cultivate good financial habits as a part of your New Year’s resolutions, a money-saving challenge can be fun and effective. These challenges not only help you achieve a specific saving goal but also help you develop the money management discipline that will serve you well in the future.

Food prices have gone up by 4.9% from July 2022 to July 2023 in America. The overall consumer prices have increased by 3.2% during the same period. Now is the best time to start a smart money-saving challenge to help accommodate these increased expenses as well as achieve other financial goals.

Introduction to Money-Saving Challenges

A money-saving challenge is a budgeting activity that encourages one to achieve a financial goal in a specific time frame. There are a variety of challenges available online that you can participate in, depending on your financial goals and how much you can put aside. Each challenge comes with its own set of rules that you can follow to achieve your goal.

Benefits of Participating in a Money-Saving Challenge

Money-saving challenges are an excellent way to build an emergency fund, put aside more savings, or save for a specific goal, such as a vacation or Christmas. These challenges are not only fun, but they also help you develop smart money management habits, such as making a budget, tracking your expenses, setting goals, and saving consistently.

Saving money is a habit, like brushing or flossing. Money-saving challenges help you start a habit of putting aside money for your financial goals. The more you participate and practice, the easier this habit will become until it’s second nature. Additionally, having some savings will ease your stress and make you better equipped to handle unexpected expenses.

How to Beat a Money-Saving Challenge

Before you decide which money-saving challenge to participate in, let’s talk about a few ways you can make sure you achieve your goal of saving money.

Create a Budget

The key to succeeding in a money-saving challenge is budgeting. Having a well-structured budget will provide you with a better understanding of your income and expenses. It will help you prevent overspending and ensure you have enough money available to allocate to savings. Here are a few tips to help you make a budget before the challenge:

  • Document all sources of income and list all your expenses. Categorize your expenses so you can spot spending patterns.
  • Prioritize essentials by first allocating money for necessities like groceries, transportation, utilities, and housing.
  • Next, put aside money for discretionary spending.
  • Check to see if you’ll have enough available each week or each month to put aside for the challenge. If not, check to see if you can scale back your discretionary spending for the duration of the challenge. Put aside less spending money for takeout and entertainment, and you’ll be able to save money fast.
  • Review your budget periodically and make adjustments. Your budget should be flexible enough to accommodate unexpected circumstances or events.  

Set Achievable Goals

Establishing realistic goals is crucial in a money-saving challenge. You’ll lose motivation and focus halfway if you don’t have clear goals. They’ll give you direction so you can measure the progress you make.

If you’re participating in a challenge that lasts a short duration, for example, three months, it may be easier for you to make short-term sacrifices to build your savings. For challenges that last for a year, you’ll need to have a concrete plan to achieve your goals. For example, you may need to take up some freelance work on the side for the year to have some extra money on hand to put aside throughout the duration of the challenge.

Reduce Expenses

A fundamental strategy to successfully complete a money-saving challenge is reducing your expenses. When you cut unnecessary costs, you can free up more funds that you can put towards your saving goals. Here are a few ideas that may help you reduce expenses:

  • Prioritize cooking at home instead of dining out. This is significantly cheaper and can help you save a lot of money while also being a healthier choice.
  • Choose generic brands over brand name items. These items are often comparable to name brands but are available at a much lower cost.
  • Use discounts, coupons, and cashback apps when you are shopping. While it may not look like much, the savings can add up over time.

Deal with Unexpected Expenses

Emergencies and unexpected expenses are a part of everyone’s life. If you’re not prepared, they can derail your progress. An essential step before you participate in a money-saving challenge is to create an emergency fund. This will ensure you can pay for these unexpected costs without having to compromise your progress.

Aim to save at least three month's worth of living expenses. Put these funds in an easily accessible account, such as a high-yield savings account.

Avoid Overspending

One of the most difficult aspects of a money-saving challenge is resisting the temptation to overspend. This is also a crucial habit to learn if you want to stop living paycheck to paycheck and achieve financial independence.

Train yourself to make thoughtful buying decisions instead of purchasing impulsively. Wait before you buy anything. This cooling-off period will help you cut down on non-essential purchases. Find low-cost or free activities that you enjoy. Hobbies like hiking, reading, doodling, free community events, and outdoor activities are all enjoyable and will not strain your budget.

4 Money-Saving Challenges

Now that you’re equipped with the knowledge of how to succeed at money-saving challenges, here are four challenges that you can participate in. Pick out an activity that looks the most enjoyable and achievable to you. Invite friends and family to join the challenge with you to increase your chances of being successful.

1. 3 Month Money Saving Challenge

If you are just starting out, this is a great challenge to participate in because it only lasts for three months. You don’t have to commit for a long time, so you are more likely to succeed. This challenge is a great way to kickstart your emergency fund if you don’t have one and save for a vacation or a planned purchase in the future.

With this challenge, you can save $84 each week for three months. At the end of the three months, you’ll be able to save $1,000. Check your budget to see if you’ll be able to put aside $84 every week. You can free up more money temporarily by making small changes such as making your coffee at home, not dining out as much, and carrying your own lunch to work.  

2. Bi-Weekly Money Saving Challenge

The bi-weekly challenge starts small and builds up every two weeks. The amount you’ll be required to save will grow bigger as time goes on. You’ll start with a very small amount, $5 for the first two weeks, so it’ll be easier for you to ease into the challenge. As you make progress on your biweekly savings, you’ll feel more motivated to adjust your budget and find more ways to save money so you can handle the increasing savings requirements every two weeks.

The challenge lasts for one year. You’ll start by saving $5 for the first two weeks. For the next two weeks, you’ll save $10. You’ll bump your savings into $5 increments every two weeks. This means that in your 13th bi-weekly period, which is the last one in the challenge, you’ll put aside $455. If you succeed, you’ll have $1,655 at the end of the year. You’ll also find a printable for this savings plan to make things easier to understand.

You may find it difficult to put aside this much money every two weeks, but there are several ways you can work around it. For example, if you receive a bonus or tax refund during the course of a year, you can put aside that entire amount for the challenge so you can get a head start on your challenge. Ask your family and friends to give you money instead of gifts at Christmas and use that money for the challenge to achieve your goal.  

3. Weekly Money Saving Challenge

The weekly money-saving challenge, also known as the 52-week money challenge, is perhaps one of the most popular and well-known challenges. The challenge lasts for 52 weeks or one year.

To participate in this challenge, you’ll begin by saving $1 during the first week, $2 for the second week, $3 for the third week, and so on. In week 52, you’ll end the challenge by putting aside $52. While this is the usual guideline, you can also tweak the challenge to make adjustments. For example, if you received a larger paycheck in one week, you could put aside more during that week to make up for any shortfall during the other weeks.

At the end of the year, you’ll manage to save $1,378. You can also win the challenge by putting aside the entire amount at once if you receive a tax refund or windfall during the year.   

4. Daily Money Saving Challenge

If you’re really struggling to save money but would like to develop the discipline and consistency that comes with a money-saving challenge, a daily money-saving challenge may be the right option for you.

With this challenge, your goal is to save $1 a day. It’s not much, but it will allow you to save $365 at the end of the year. You can add this money to your emergency fund, pay towards your credit card debt, or use it for holiday shopping.

All you need to do to succeed at this challenge is to use any spare change you have or forgo a small expense every now and then to allocate it towards the challenge. Set up an automatic transfer of $7 each week from your checking account to your savings account. You can also keep things simple by using a piggy bank.

Other Great Activities to Save Money

Other than the money-saving challenges listed above, you can also incorporate a few other frugal, creative, and fun activities in your journey toward financial freedom to achieve your goals faster. The small choices you make today can make a big difference to your financial future.

Clothing Swap

A clothing swap is a fantastic solution if you’d like to refresh your wardrobe without the high cost. You can trade clothes with family and friends or attend a clothing swap event in your community. Everyone attending can bring gently worn clothing items they no longer want. In return, you get to take home new pieces from the collection.

A clothing swap allows you to get new-to-you clothes without having to spend anything. It’s a budget-friendly and sustainable way to update your wardrobe. Other than the financial benefits, you’ll also get to interact with others, make eco-conscious choices, and find unique clothing pieces that you wouldn’t probably find in most stores.

Host a Potluck

American households spend $3,000 each year on dining out on average. If you’d like to save more money, eating out less is an important strategy. Instead, host a potluck with family and friends.

With a potluck, everyone will contribute a dish, so the costs will be shared. It costs much less than dining out. You’ll also have the opportunity to connect with others, cultivate relationships, and enjoy the comfort of a familiar atmosphere. Another benefit is that you’ll have access to a diverse range of dishes without having to spend a lot of money.  

Have a Movie Marathon

If you’re looking for an inexpensive form of entertainment, bring the magic of the big screen to your home without spending a lot. Going to the movies involves purchasing tickets, concessions, as well as transportation costs. All you need for a movie marathon at home is a streaming service subscription, if you don’t already have it, and a few snacks.

Invite family or friends to join you to turn it into a social event without spending a fortune. You’ll have the flexibility to watch any move you want, rewind, and pause when necessary, and enjoy the company of the people you love.

Tools and Resources

With an increasing number of people participating in money-saving challenges, there’s a wealth of tools and resources available to help you track your progress and stay motivated.

Budgeting Apps

Budgeting apps can be incredibly useful for managing your finances, tracking expenses, and staying on top of the money-saving challenge. For example, PocketGuard offers you real-time updates on your expenses, tracks your bills, and offers suggestions to save.

Most budgeting apps will provide you with an overview of your financial status, allow you to set alerts for important payments, and may also encourage you to save more money. Use these apps to ensure you have the right amount of money available to put aside for the challenge without having to spend hours manually budgeting.  

Online Support Groups

You’ll also find online support groups and communities for popular money-saving challenges, like the 52-week savings challenge, pantry challenge, and no-spend challenge. These groups offer a sense of motivation, accountability, and community.

Share your progress and the challenges you face with other savers to create a sense of accountability so you don’t deviate from your goals. These communities are also a treasure trove of tips, hacks, and strategies to manage your money effectively and develop good saving habits. Interacting with people who are pursuing similar goals can also boost your determination to succeed.

The Bottom Line on Money Saving Challenges

Participating in a money-saving challenge will make you get serious about spending less and saving more, but in a fun way. Regardless of which challenge you try, make sure you have a safe and accessible place to house your savings, such as a high-yield savings bank account. Start by setting up a budget and having a plan to use the extra cash, such as allocating it towards your emergency fund, paying off debt or saving for retirement, or saving for a down payment.