Savings challenges actually have pros and cons.
- Many people set financial goals at the beginning of the new year.
- Sometimes these goals include participating in savings challenges.
- While these challenges can be fun, you don’t want to get caught up in them at the expense of bigger financial moves.
If you’re hoping to improve your financial life in 2023, savings challenges could be a good way to do it.
There are a number of different savings challenges. A popular challenge is the 52-week challenge, which involves setting aside $1 in the first week of the year, $2 in the second week, and so on until you’ve saved $52 in the last week of the year. But there are many others, including a challenge to go as many days as possible without spending or vowing to save every $5 bill you get for the year.
These challenges can be fun, but before you decide to commit to one, it’s important to think about whether it really makes sense for you. Here are some key things to help you decide.
Are there other goals you should focus on first?
Increasing the amount you save can be a good financial goal – but only if it’s the right goal for you given your personal circumstances.
If you already have at least a little money set aside for emergencies and have high-interest debt, then saving more money may not be the right direction for you. There’s no point in trying to put extra money away in a high-yield savings account that pays you a nominal amount of interest while paying 17% or more to credit card companies.
While aggressively paying down debt may not be as much fun as drawing your savings account balance every week, it could help you in the long run.
Will Treating Savings Like a Game Increase Your Chances of Success?
One of the best things about savings challenges is that they can make saving for your future seem like fun instead of a sacrifice. If you’re bored or struggling to put money into a savings account, but taking part in a savings challenge turns the process into a game, you might want to give it a go.
You’re much more likely to stick with your goal if you enjoy it rather than feeling like something you’re forcing yourself to do. And there’s no harm in taking a difficult money task and turning it into a fun competition you want to win.
Will focusing on savings challenges prevent you from making meaningful changes?
While savings challenges are fun, they’re not likely to get you invested enough to build a secure future. If you really want to build wealth, you need to adopt smart, responsible habits like automating your savings to set aside enough for retirement, emergencies, and big purchases.
If you’re focused on fun challenges but don’t look at the big picture and take meaningful steps to achieve your goals, you can to feel as if you are managing money more successfully than you are.
Of course, you can make big improvements in your financial life and do the savings challenge too. Just don’t lose sight of the big picture as part of your efforts to make saving more fun.
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