Money challenges can be a wonderful way to reach your financial goals. They can help make saving money more fun and give you the motivation you need to reduce your spending. There are many different types of money challenges out there, but one of our favorites is the 26 Week Money Challenge. It involves setting aside 1 percent of your income the first week and increasing the percentage you save every week until you reach a 26 percent saving rate.
Drastically increasing your savings rate can be a difficult lifestyle change. But gradually bumping up the percentage you save every week will help you adjust to spending less, making you more likely to stick with it. If you want to see if a money challenge can help you reach your financial goals, here are some tips for completing the 26 Week Money Challenge.
What Is a Money Challenge?
Before learning about the 26 Week Money Challenge, let’s talk about how money challenges work. Money challenges tie a timeline to your financial goals. Some money challenges last for a month or two while others last for the whole year.
During a money challenge, you’ll usually have a daily or weekly savings goals you need to meet. The 365 Day Challenge, for example, involves saving one dollar every day for a single year, leaving you with $365 at the end. Some challenges require you to save the same dollar amount every day or week, while others progressively increase the amount you’re required to save to accelerate your financial progress even more.
The 26 Week Money Challenge is an example of a progressive financial challenge because it requires you to increase your savings rate by 1 percent every week. Let’s take a closer look at the details of this challenge to help you decide if it’s right for you.
What Is The 26 Week Money Challenge?
The 26 Week Money Challenge is a financial goal program designed to assist you in increasing your savings rate to 26 percent of your income over the course of six months. A lot of people begin at the start of a new year. At this time we’re thinking about our goals and planning our finances, so it’s a natural time to start. However, you can begin this challenge at any time.
There are three things that you should know about this challenge:
- It’s a weekly challenge
- Your goal is savings
- This is a progressive challenge. You’ll save incrementally more each week for 26 weeks
How to Increase Your Savings Rate to 26 Percent of Your Income In 6 Months
In this challenge, you’re going to deposit a specific amount of money into your account each week. You might want to set up a specific savings account just for this challenge. That way you can see your progress adding up each and every week, which will help you stay motivated. Opening a separate savings account will also prevent you from touching the money.
How much you save is tied to your income, because the goal is to increase your savings rate to 26 percent of your salary by the end of the challenge. You can either use this challenge as a short-term savings accelerator to help you achieve a specific financial goal, or you can use it as a springboard to saving 26 percent of your income (or more if you choose).
The challenge starts off slowly, requiring you to deposit 1 percent of your income into your savings account in week one. Then, you’ll deposit 2 percent of your income into the account in week two. And so on and so forth until you’ve reached week 26 when you’ll deposit 26 percent of your income.
Here’s what that looks like if you earn a $1,000 weekly salary:
Over the course of the challenge, someone earning $1,000 per week will save $3,510. Just imagine what you could do with that money—go on a vacation, put a down payment on a car, start an emergency fund—the possibilities are endless!
If you continue to save 26 percent of your income after the challenge is over, you’ll accelerate your financial progress even more. But you don’t have to stick with that exact savings rate. You can set aside a higher or lower percentage of your salary depending on your financial goals, income, and expenses. It’s all about finding a savings rate that works for you, and this challenge can help you determine what it feels like to save different percentages of your income and live off what’s left.
Tips for Completing the 26 Week Money Challenge
Money challenges are called challenges because they aren’t always easy to complete. However, the rewards are worth it. Imagine how good you’re going to feel at the end of the challenge when you’ve achieved a 26 percent savings rate. In order to assist you in sticking with the plan, here are some tips for the 26 Week Money Challenge:
- As aforementioned, open a separate savings account just for this challenge. Connect this to your checking account so that you can easily deposit money into this account.
- Set a day of the week when you will make your weekly deposits. Some people like Mondays whereas others prefer Fridays. Put it on your calendar every week for the next 26 weeks to ensure you don’t forget!
- Incorporate this financial plan into your budget. It’s easy enough to set aside 1 percent in the first week. However, you need to remember that you’re going to spend more than half of this challenge setting aside more than 10 percent per week. Therefore, you want to budget accordingly. Rework your finances so that you’ve accommodated for this.
- Make a back-up plan. What will you do if you don’t have enough money to make your deposit? After all, things do come up. You might deposit as much as possible then extend the savings plan another week. Alternatively, you might work to earn extra income so that you can make the deposit. Know what Plan B is just in case it arises.
- Get an accountability buddy. Some people do challenges well on their own. Other people need accountability. Find a friend to do this challenge with you, or at least cheer you on from the sidelines. Check in with each other weekly – a quick text or call to confirm that you’ve made your deposit will help you stay on course.
- Keep your goal in mind. Remember the reason that you’ve decided to do this for yourself to stay motivated!
Another tip to keep in mind before starting a money challenge is to choose a program that works for you. There are all different kinds of money challenges out there, some with more aggressive savings goals than others. If you’re new to saving money, maybe beginning with a 365 Day Challenge and setting aside $1 per day would be more realistic than the 26 Week Challenge.
Take stock of your expenses and income and decide how much you can afford to set aside before choosing a savings program. Although it’s good to stretch yourself a bit to see what you’re capable of, you don’t want to set yourself up for failure and end up feeling demotivated.
Other Money Challenges
The 26 Week Money Challenge is a great option for many people. However, you might want to create a different challenge for yourself. You may want to try a challenge that grows income instead of focusing on savings. You might prefer a shorter challenge, such as a 30 day challenge. Alternatively, you might want to try a year-long challenge. Here are a few examples of other money challenges to consider:
- Money Challenge 2022. This is a year-long $1/day savings challenge. The post explains how to adapt it to your situation, combine it with a 52-week challenge, and use it to pay down debt. If you’re looking for a basic year-long savings plan, this is a great place to start.
- Monthly Money Challenge. In this challenge, you save a specific amount each month. That amount grows every. month for one year. If you get paid monthly then this can be a good option for an annual savings plan.
- The $5 Bill Money Challenge. In this challenge, every single time that you get a $5 bill back as change for a cash payment, you put it into savings. That’s it. Some people love this because it’s not tied to a specific timeline. You don’t have to meet a certain goal every week, for example. It also rewards the brain with a bit of dopamine every time you pay for something with cash as you wait to see if you get that $5 bill. If more traditional money challenges have failed you then consider this one.
- 365 Day Dime Challenge. This year-long savings challenge involves increasing your savings goal by $0.10 per day. So the first day you’ll set aside $0.10 and the second you’ll set aside $0.20. The third day you’ll save $0.30 and so on. Those dimes really add up, because you’ll be able to save over $6,000 in just one year using this challenge.
- 30 Day Money Challenge. This challenge will help you save $465 in just thirty days. On the first day, you’ll set aside $1. Every subsequent day, you’ll increase your savings goal by $1. So on day two, you’ll save $2. On day 3, you’ll set aside $3, and so on.
- 26 Week $1,050 Savings Challenge. This variation of the the 26 Week Challenge is a progressive savings challenge based on the biweekly schedule most employees are paid on. To start the challenge off, you’ll save $3 from your first paycheck. Then in two weeks when you get paid again, you’ll set aside the same amount you saved last time plus $3, which equals $6. You’ll keep adding an extra $3 to your savings goal every time you get paid, and by the end of the challenge, you’ll be saving $78 from each paycheck and have around $1,050 in the bank.
- No Spend Challenge. During a no spend challenge, you’ll try to only buy necessities like gas and groceries and cut out spending on luxuries to save extra money. The most common version of this challenge lasts for 30 days, but some people choose to cut out nonessential spending for months at a time, or even a whole year to reach big financial goals.
- Pantry Challenge. This is similar to a no spend challenge, except it only applies to food spending. Instead of ordering takeout, you’ll attempt to cook meals using only the ingredients in your pantry, fridge, and freezer to save money on food. Pantry challenges usually last for 30 days, although you may choose to extend the challenge if you have a deep pantry with many items to use up. Some people give themselves a small budget for nonperishable grocery staples like eggs and milk, while others try to avoid going to the grocery store altogether for thirty days.
As you can see, there are lots of different challenges out there. If the rules of a particular challenge don’t work for you, remember you can always change them or find a different savings plan that suits your lifestyle and finances better. These challenges are a tool to help you boost your savings and meet your financial goals faster, so don’t be afraid to customize them to your unique situation.
Will you try a money challenge this year? Tell us about your goals!
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Kathryn Vercillo is a professional writer who loves to live a balanced life. She appreciates a good work-life balance. She enjoys balance in her relationships and has worked hard to learn how to balance her finances to allow for a balanced life overall. Although she’s only blonde some of the time, she’s always striving for total balance. She’s excited to share what she’s learned with you and to discover more together along the way.
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