Going on a Financial Diet? Try One of These Savings Challenges

Life is more fun if you play games, so shouldn’t that apply to your finances too? 

Money-saving challenges make the process of saving money less stressful and more motivational. 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 goals while keeping track of your spending.

Why do a savings challenge?

Now’s a great time to save money. Interest rates on many high-yield savings accounts and certificates of deposit are the highest they’ve been in over a decade. You’ll get a much better return on the money you deposit into one of these accounts by letting compound interest do its magic over time. 

Of course, it’s also a difficult time to save. Many of us are struggling with the return of student loan payments while chipping away at high-interest credit card debt. Everyday essentials and housing costs remain high because of inflation.

Saving money doesn’t always feel as rewarding as spending it. But if you’re feeling financially overwhelmed, a savings challenge might help you get in the right mindset.

The best savings challenges to consider 

With the right kind of savings challenge, you can incentivize yourself to put more money away, while having fun doing it. Just keep in mind that not every savings challenge will align with your personalized savings goals, so tackle one, or create your own, with your specific financial objectives in mind. 

1. The 52-week challenge

The 52-week challenge involves contributing a little bit each week to save a minimum of $1,378 in one calendar year. You’ll start small, putting aside just $1 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.

2. The no-spend challenge

The no-spend challenge encourages us to avoid spending money on nonessentials for a period of time, whether that’s for one month or a number of months.

You won’t be cutting out all expenses -- 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.

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. The average meal cooked at home costs $4.23, while the cost of eating out at an inexpensive restaurant costs about $16.28, according to Top Nutrition Coaching. 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 rather old-school. But 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 date that doesn’t cost a dollar’ 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 paying little to no interest, find a high-yield savings account that will get you a greater return on your deposits. The best high-yield savings accounts offer annual percentage rates of around 5%. If one of these challenges helps you save $1,000 over the next year, you could earn an additional $50 in interest by depositing it in the right HYSA.

In addition to the interest rate, look for other features to accelerate your savings even further. For example, Ally offers a savings account that rounds 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 that you 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 – in the middle of the challenge – with where they stood a month ago. This is the best way to get a real sense of the progress you’re making. If you saved $100 with that 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.