Perhaps you've heard of or seen the following chart:
It's the 52 Week Money Challenge (hence forth known as the Challenge because I am lazy)! It's a way to create a habit out of saving. I actually think it's ingenious. There are a number of hangups and obstacles to overcome when trying to save money that this challenge attempts to address. The first one is a lack of a plan. Say you want to save $10,000 in 5 years. Great! How are you going to do that? Most people don't have an answer for that question which is a real problem. Since most people haven't cobbled together a budget, it's nearly impossible to save anything. So Rule 1: Create a budget/plan.
Another obstacle to saving is, let's be honest here, a lack of commitment. It's true of anything. A major life goal is really just a bunch of little goals and motivations all stacked on top of each other. How do you know that what you're doing on a daily basis will give you the results you need? It's so easy even a cave man, to borrow a cliche, can recognize it. The thoughts and actions on a daily basis should be a slipshod, roughed-up version of your overall goal. If you want to be a great pianist, you play the piano daily. Initially you'll be downright awful. Your downstairs neighbor might, in fact, insist you stop. But you just keep on playing that piano like your third grade music teacher. It's the same idea with really any other goal in your life. Saving a fortune means savings a few dollars a day, everyday. And I'm sorry, there's no easy way around this. So, to save money, we've come to Rule 2: Practice daily/weekly/methodically/consistently/habitually/ any other adverb that pops into your head.
Okay so you have a budget and you're committed to practicing daily. What's the problem? Well, for most people with a goal of losing weight, getting healthy, changing jobs, playing the harpsichord, or saving money, getting started is a serious hurdle. People go too hard, too fast right off the bat because they want to race to the finish line. They want to obtain their goal and move onto the next one. To borrow another cliche, "life isn't a race but a journey." Greatness comes from those who love what they do. It's a universal truth as far I am concerned. Do what excites you but do it slowly and forever. Otherwise, it'll be almost impossible to fall in love with it and success, if it comes at all, will be empty. So I give you dear reader Rule 3: Slow and steady wins the race or how I learned to stop worrying and slow the hell down.
The Challenge is very appealing to people because it encapsulates my three rules of saving so brilliantly. It gives the saver a plan, a way to habitually save, and a way to start off very slowly. For a lot of people, saving $52 a week might be difficult. Starting off with $1.00, however, can be as easy as raiding your car for loose change.
I immediately recognized the Challenge as not only a savings plan, but a debt paying plan too. Paying debt is a drag. I know it. Everyone knows it. Paying debt at the expense of saving is probably even more of a drag. The Challenge allows you to pay debt and save in an organized way. Here's how:
Say you have $208 to save every month. That's $52 a week.
Debt Cumulative Save Cumulative
Week 1: $1.00 $1.00 $51 $51
Week 2: $2.00 $3.00 $50 $101
(bunch of weeks)
Week 52: $52.00 $1378 $0 $1326
You're both saving and paying debt in a systematic way. At the end of 52 weeks, you would have paid off $1378 in debt and saved $1326. Not too shabby.
Also, you can adjust this according to your income. If you make more money, instead of going up by $1, you can go up by $5.00 or $10 or more (if you're a high roller). At the end of 52 weeks, you would have paid off $6,890.00 and $13,780, respectively. Whatever number you choose, just make sure it fits your savings and income. The $10 multiple (first week $10, second $20, third $30, etc) has you paying $520 dollars on the last week. That has to be doable for your own personal situation. Like I said, remember Rule 3: Slow and steady wins the race.
I'm personally doing the $10.00 Challenge to pay down some debt. It'll get pretty expensive toward the end. I may have to eat Ramen for a few weeks, work overtime and maybe donate blood. Okay, most likely donate blood. However, January 1st, 2015, I plan to start over again at $10.00 to give myself a break. On a spreadsheet, because I'm a numbers junkie whose nerdiness knows no bounds, I carried this out as a 5 year plan. At the end of 5 years, I would have paid off $68,900.00 in debt.
A little mind boggling I know. Join the Challenge!
