If you’re hoping to improve your financial life in 2023, savings challenges could possibly be a good way to do it.
There are a number of different savings challenges out there. A popular one 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’re saving $52 in the final week of the year. But there are also plenty of others, including challenging yourself to do as many no-spend days as possible or vowing to save every $5 bill you get your hands on over the course of the year.
These challenges can be fun, but before you decide to commit to one, it’s important to think about whether doing so really makes sense for you. Here are a few key considerations to help you decide.
Are there other goals you should be focused on first?
Increasing the amount you save can be a good financial goal — but only if it’s the right objective for you given your personal circumstances.
If you already have at least a little bit of money set aside for emergencies and you have high-interest debts, then saving more money might not be the right course of action for you. It makes little sense to try to sock away extra cash in a high-yield savings account that pays you a token amount of interest while you’re paying 17% or more to credit card companies.
While paying down your debt aggressively may not be as fun as inching up your savings account balance each week, it could help you in the long run.
Will treating savings as 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 like a sacrifice. If you find it boring or difficult to put money into a savings account but participating in a savings challenge turns this process into a game, then you may want to go ahead with it.
You’re much more likely to keep at your goal if you enjoy it rather than it feeling like something you’re forcing yourself to do. And there’s no harm in taking a tough money task and turning it into a fun contest you want to win.
Will focusing on savings challenges prevent you from making meaningful change?
While savings challenges are entertaining, they are not likely to lead you to investing enough that you can build a secure future. If you truly want to build wealth, you need to adopt smart, responsible habits like automating your savings so you’re setting aside enough for retirement, emergencies, and big purchases.
If you’re focused on the fun challenges but you aren’t looking at the big picture and taking meaningful steps to accomplish your goals, you may feel like you are managing money more successfully than you actually are.
Of course, you can implement big improvements to your financial life and do a savings challenge as well. Just don’t lose sight of the big picture as part of your efforts to make saving more fun.
