Liam Croke: Modify 52-week money saving challenge to suit you

You might have heard about a money savings plan called the “52-week savings challenge” which, in theory, is supposed to be an easy-to-follow way of accumulating money over a 12-month period for those who find saving on a regular basis hard.

You might have heard about a money savings plan called the “52-week savings challenge” which, in theory, is supposed to be an easy-to-follow way of accumulating money over a 12-month period for those who find saving on a regular basis hard.

The concept is shared, mostly through social media, at the beginning of the year where people circulate this “fantastic idea” that will be the answer to their saving problems for the year ahead.

The premise is simple: you save increasing amounts every week starting with €1 in week 1, and you increase your savings by €1 for each subsequent week.

An example of this is: Week 1 you save €1; Week 2 you save €2 ... all the way until week 52 when you save €52. By doing this, at the end of a year you will have saved €1,378.

You record your savings typically on a chart or on an excel spreadsheet where each week you tick off the money saved.

And it is not deposited into an account but into a jar or an envelope, i.e. a place where you are constantly reminded of and a place you can easily put the funds away and into.

I actually think this isn’t a bad plan and the basic idea is fine, but it has its limitations and the problems I see with it are as follows.

The immediate results are small and I wonder will they keep you motivated to continue to save?

Because after week 26 (June 22), you are half way into the challenge and you would only have accumulated €351.

As you are coming towards the end of the year, the amount you have to save increases and increases by a lot.

In November, to stay on track you would have to save €235 in that month (in January you will save €15).

It might be a whole lot harder to save money at particular times of the year with November and December being good examples

I like the idea of saving in jars because you have that visual impact of watching your fun build.

But someone once said to me that jars are for jam and mayonnaise which are things we consume; the whole challenge of saving is not to consume so having money that is visible, and accessible means there is always a temptation to dip into the jar when funds are low.

The good news is that there are many variations of the challenge that can be modified to suit you and your finances giving you more flexibility to continue to save and succeed over the long term which, of course, is the objective of this exercise.

My first suggestion at modifying the original idea is by doing it in reverse, i.e. start off by saving a decreasing amount each week.

Rather than save €1 in week 1, why not save €52 in week 1 and €51 in week 2, etc. because if you do this, by the time you reach half way in week 26 you will have saved €1,027.

By doing this you are seeing much more immediate results and you will have something real and big to show for your efforts.

If you think of reversing the amount you save, in terms of beginning a dieting plan - would you prefer to lose weight in a short period of time or lose it over a much longer period of time?

Of course you would like to see a quick loss - 8lbs in one month rather than 1lb each month for the next eight is something I suspect the majority of people would like to see.

The same applies to saving: immediate results motivate.

Yes, of course, saving €250 in January for many people is a big ask and €15 is much easier, but the reality is that you will be more motivated and more enthusiastic at the beginning of the year when your motivational levels are at their highest.

Do the heavy lifting now and you will be glad you did because, come December time, with Xmas upon you, all you will need to save that month to hit your target is €10.

Another variation of the savings challenge is where you save in increments of €2 each week for the first 26 weeks of the year and for the last 26 you decrease the amount you are saving by €2 each week.

I like this method because it makes saving at the start and end of the year easier.

The months where you make the biggest outlay are in the middle of the year – something you can plan for in advance.

The challenge for many people using this method or any other for that matter can be that they find it difficult to save money, particularly the week before they are due to be paid.

So, in order to overcome this, consider saving the amount, you need for the entire month in one go when you get paid and have the money.

It’s the classic, pay yourself first advice and do so at the beginning of the month rather than in the middle or at the end, because you will get used to managing your income minus your savings because you can’t miss what you don’t have … or can’t see

I remember a client saying to me a couple of years ago, that his financial life improved when he distanced himself from his savings.

What he was referring to was, when he put his money out of reach and into an account where he had to give two weeks’ notice to get it out, that it prevented him from dipping into and out of it on regular basis.

I think what is really important to bear in mind and this is something I am always at pains to say, is that the amount you save is not nearly as important as (a) starting to save in the first place and (b) getting into the habit of saving on a consistent basis.

Like anything, once this habit is formed, it is hard to break it and over time you can increase the amount you save each month, if your situation allows you to.