Saving money can be tough when you’re not used to it. It can be very hard to get into the saving mindset until you have stored away a substantial amount of cash. However, the more disciplined you are, the better the results will be. Having access to savings can mean you’re covered when emergencies strike, you’ve got something to fall back on if you lose your job, can afford vacations, can keep debt to a minimum, pay bills on time, enjoy more financial freedom, build a brighter future, fund further and higher education, get a house deposit together and cover the cost of a car.
Reduce unnecessary purchases
Even if you rarely have much left after meeting your day-to-day living costs, a few simple sacrifices here and there can make a substantial difference. The costs of drinks and snacks can quickly add up, and you may be paying more for your bills than you need to. If you want to become more adept at saving money, you could try out the 52-week savings plan. There are many versions of this plan (you can download a free template here), but the main concept remains the same – saving for a year to generate a substantial sum to achieve financial readiness.
How does a 52-week savings plan work?
In a typical 52-week savings plan, you’ll need to save twice as much as you did the previous week. For instance, someone in North America may save a dollar one week, two dollars the next, four dollars the week after, and so on. However, you don’t actually need to do this in chronological order if you’re worried about some weeks being more expensive than others. For instance, Christmas tends to be a very expensive time for most of us (help on this subject here), so it might be hard to put away the largest amount in December if you start in January.
Our advice is to actually start your savings plan in February. You’ve overindulged at Christmas and survived a dry and lean January while making it to your next payday. So start by saving the highest amount of cash this month and incrementally work your way back so that by the time next Christmas rolls around you’re only saving a relatively small amount each week.
Do I need to complete the weeks in order?
Instead of doing things chronologically or in reverse chronological order you can simply put away as much as you can actually afford to each week then cross the value of your spreadsheet. For instance, if you’re starting with a dollar but are able to save $40, you can cross off the ‘week 40’ amount. The chronological approach isn’t too important to the whole concept as (in theory) you should still have the same amount of money saved at the end regardless. This means you’ll be crossing off the larger amounts when you can afford them and the smaller sums when you can’t. You may even receive interest on your money as you save, leaving you with even more by saving large amounts when you can.
The only thing we will say for the chronological aspect is it makes the whole endeavor feel like more of a journey (especially if you start paying the high amount and then decrease weekly) it’s kind of like a fitness regime; it starts off extremely difficult but as you keep at it each week it becomes easier and easier to accomplish the goal, so you’re more likely to sustain the healthy habit.
Why do people commonly fail the Annual savings challenge?
There are a couple of key pitfalls that seem to trip up many would-be saving champions. We’re going to look at two of the most dangerous below to help you out:
1- Skipping a week.
It may seem harmless enough to skip one week of saving with your best intentions to make it up next month, but it’s the start of a slippery slope. One skipped week very easily becomes 2 or 3, which is a death sentence when you’re doing a difficult challenge. Do yourself a favor and always keep the accountability each week no matter what, even if it means completing the weeks in a non-chronological order by checking off a smaller amount from another week instead. As long as you’re doing something.
2- Not using physical reminders.
It’s incredibly easy to ignore a difficult savings challenge if you’re hiding away the accountability on a spreadsheet somewhere on your computer. We recommend printing out a ‘too large to miss’ grid and sticking it on your fridge or somewhere you’ll see it every day. You’ll take heart from this as you slowly see the number of successfully completed weeks continue totally up to an impressive amount.
Save life-changing sums
Savings challenges have helped many people to get used to putting money away. Once you have been saving for a year, you can put the money towards a big life-changing purchase, whether that’s a car, a higher education course, a house deposit, or whatever else you’re saving for. Even people that have never saved substantial amounts before have been able to stick to the savings challenge. The world is going through incredibly challenging economic times, which means it’s particularly important to avoid wasting cash right now. The pandemic has made it much harder for some people to obtain credit, which means saving may be the only way you’ll be able to cover the cost of a big purchase.