Experts say that everyone should have 3-6 months’ worth of expenses in savings in case of a major financial emergency, such as a job loss or injury/illness. Building up your emergency fund and doing a savings challenge is a great way to make sure you’re prepared for the unexpected. One popular savings challenge is the 52 week challenge. You would start with saving one dollar the first week and increase by $1 each week (week one $1, week two $2, week three $3, etc) until you hit $52. Here are 4 ways to make this challenge even more fruitful:
- Start at $52 (instead of $1) then reduce it by $1 each week. You’re doing the challenge so you’re already motivated; why not start with the higher amount then? Plus, it will feel more satisfying after 3 weeks to already have $153 than to only have $6.
- Don’t reduce it if it’s affordable or stop reducing it at $50 or $40 or even $25…again whatever is affordable for YOU. If you did the challenge the regular way, you’d have $1,378 at the end. If you started at $52, then $51, and $50 the rest, you’d have $2,603 saved up!
- Increase and automate. If you’re not really missing that money now that you’re saving it up, try increasing the amount and even making the deposits into savings automatic. $75 for 50 weeks would give you $3,750; $100 would give you $5,000. That would be a HUGE safety net to have in just a year.
- Use cash windfalls wisely. When you get your tax refund or make money off a garage sale, put some of it into savings. That will help boost your safety net even more.
Remember: if you falter, it’s okay. Just don’t give up. There are times when you might not be able to set aside as much or any, but just make sure you’re not accruing any debt at the same time. Once you’re able to, get back on the horse and save again. Also, you might have to use savings if something unplanned comes up.
But only use your savings if absolutely necessary…and if using savings helps you avoid using credit cards, then consider that a win!
Have other tips? Share them with us! Or, if you’re not sure how you can afford to contribute to savings, read How can I save money right now? and there are plenty of money saving tips in this post about increasing financial wellness.
If credit card debt is holding you back from achieving your savings or other financial goals, a Debt Management Plan may be your answer. It will help you pay off debt faster and save money. Find out if it’s right for you with your free financial counseling session. Call us at 888.577.2227 to schedule yours or get started online right now. Our financial counselors are here to help you conquer your debt for good.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.