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In 2021, I received an inbox message from a friend. She informed me about a “Saving Challenge” she was inspired to do. In 2022, on New Year’s Day, she inboxed me again saying Happy New Year. She included a photo of a pile of cash that was at least three feet high. She said she had saved a total of $4,610 from her saving challenge.
After seeing her success with this challenge, I thought it would be a good idea for me to challenge all my readers and followers to a saving challenge. I, too, was going to participate in this challenge. I was going to report my results in an article on New Year 2023. I never reported my results on New Year 2023. In 2022, we were about seven months into the challenge. It was going great. Then life happened. We experienced a major medical emergency with a family member. This family medical emergency was both stressful and extremely expensive. During this time we had exhausted our emergency funds. Fortunately for us, we also had this money set aside that we’d been saving for seven months. Our emergency funds coupled with the money we were saving for this challenge helped us weather the storm. We didn’t fall behind on bills, incur any debt, nor did we withdraw money from our retirement savings during this time. We endured the stress of this medical emergency without creating financial stress on the backend. I’m reminded of a previous article I wrote titled, “Money talking: Save me today, I’ll save you tomorrow!”
Saving money is the cornerstone of sound money management. Saving money is how you create financial stability, financial security, and financial independence. Sadly, Americans grossly undersave money. We live in a culture and an economy that thrives on spending money. From the moment we open our eyes in the morning until the time we close our eyes to go to sleep, we’re inundated with marketing messages via TV, radio, print media, social media, and podcast with one goal in mind—to extract money out of our pockets into theirs.
Having gone through the saving challenge twice, one of which we didn’t complete, the money saved during this time proved to be a lifeline. I decided to simplify the challenge. I wanted to make it easy to understand and practical for all to do.
The main takeaway from this challenge is for all of us to develop the habit of consistently saving money. As we develop our saving habits, we grow our saving muscles allowing us to save more and more. Doing this allows us to eventually grow our savings and investment accounts.
This saving challenge is in addition to money you may be saving or investing at this time including your retirement savings.
Saving Challenge Explained:
- Set A Savings Goal: Put that money on a mission. Establish a reason for why you’re saving this money. Having a goal will create purpose, passion, discipline, and consistency to stay the course.
- Purchase Envelopes: Depending on your pay cycle, you’ll need between 12-52 envelopes. Some people asked if they could do this challenge electronically. Sure! Whatever works for you. However, there’s something thrilling and visually appealing about counting and stacking greenbacks. I prefer to save cash for this challenge.
- Count your paydays: How many paydays do you receive in a year? Depressing when you think about it. Work a whole year and only get 12 to 52 paydays? Quick reference guide for your number of paydays per year based on your being paid monthly, bimonthly, biweekly, or weekly. Monthly: 12, Bimonthly: 24, Biweekly: 26, Weekly 52. Based on your pay cycle, number the envelopes accordingly. Example. 1-12 (Monthly) 1-26 (Biweekly)
- Set a dollar amount to be saved each paycheck: Be realistic with your budget. How much can you realistically save for this challenge each and every paycheck without dipping into it or stopping the challenge altogether? Minimum amount is $25 per pay. I know you can save at least $25 per pay. The key point here is to consistently set aside said amount each paycheck be it $25, $50, $100, $200 or $500. We will do this challenge annually. Each year, set a goal to increase the amount you save for this challenge.
- Calculate how much you’ll save by the end of the year: Amount saved per paycheck times the number of paychecks received in a year will tally how much you can expect to save by the end of the year. For example, if you were to save $50 per paycheck and you were paid biweekly, you can expect to save $1,300 for the year. $50 X 26 (biweekly) = $1,300. If you were to save $50 per paycheck and you were paid weekly, you can expect to save $2,600. $50 X 52(weekly) = $2,600. You can also calculate with the end of the year saving target in mind. Let’s say you wanted to save $4,000 for the year. Take $4,000 and divide it by the number of paychecks you’ll receive in the year. If you’re paid bimonthly, that’s 24 paychecks in the year. $4,000 divided by 24(bimonthly) = $166.67 per paycheck.
- Payday/Save: Stuff the envelopes with cash starting with your first paycheck in January. This envelope should be numbered “1” accompanied with the date of your paycheck. Put the dollar amount you decided to save in the envelope then seal it. Sealing the envelope will make you think twice about opening it during those moments in between pays when the funds get low.
- Place envelopes in a safe secure location—preferably inside of a waterproof, fireproof safe.
- We did it! January 2025, we’ll be saying, we did it. Count your cash!!
Married couples—Your choice: You can merge forces and take on one challenge together—or you can both do a separate challenge then combine your savings at the end.
(Damon Carr, Money Coach can be reached at 412-216-1013 or visit his website at www.damonmoneycoach.com)