Saving money is a hard thing for many people. Some have issues with discipline, while others struggle to find money in their budget to save. Enter the 52 week money challenge. It’s a year-long savings plan that helps you overcome the most common savings struggles.
Today, I’m going to explain why the 52 week challenge works, how it will help you save $5000 in one year, and the most important part of all… how to save money during the 52 week money challenge.
How to Save $5000 in a Year | 52 Week Money Challenge
Why a money saving challenge works
Saving money can feel like a chore for a lot of people – you’re pushing your limits, and it can be hard to find ways to save money. But there are several reasons why money saving challenges really work.
You are holding yourself accountable
Part of good financial health is about being accountable to yourself. This is a huge part of being an adult – people count on you, and you need to prepare for your own financial future as well. A money saving challenge can teach you about financial responsibility and that you can actually make and follow through on plans for your future.
It changes your mindset
A challenge forces you to rethink the way you do things. And for many people who aren’t saving money like they should be, a challenge is a good opportunity to think about how you make and spend your money.
When you take part in a money challenge, you’ll look at every purchase in terms of “how does this help or hurt me?” You might find that you have more room to work within your budget or that you need to start making more money to reach your financial goals.
The math is done for you
A 52 week money challenge breaks down a big lump sum of money into smaller and easier to work with amounts. Instead of looking at $5000 and thinking, “No way can I save that much,” you’re looking at $20, $50, or $100 increments. That’s a lot easier to process and work towards.
You’ll see how small amounts of money add up
I’m all for keeping the lattes, but during a money savings challenge, you will see the effect of saving $5 here and there. You’ll see how cutting something simple like cable can make a big difference in savings over time. You can see how eating at home one more time a week can literally save you hundreds of dollars over the course of a year.
The lessons you learn in a 52 week money challenge are long lasting
Even if you don’t make it through the entire year, you’re learning that it is possible to save money. You’ll know when to cut expenses, when you need to find ways to earn more, and that you’re in control of your financial life (for the most part).
Trust me, these are lessons that you’ll carry with you for the rest of your life.
What is the 52 week money challenge?
The 52 week money challenge is simple in theory: every week for a full year, you push yourself to set aside a certain amount of money. And at the end of the year you’ve saved a nice chunk of cash.
One of the most popular 52 week money challenges is an incremental plan where you start by saving $1 on week 1, $2 on week 2, $3 on week 3, and so on. You do this all the way until week 52, when you deposit $52 into your savings account. Following this plan, you’ll save $1,378 by the end of the year.
But a 52 week money challenge can be anything you want it to be. You could challenge yourself to save $20 a week, $50 a week, $100 a week, whatever works for you and your lifestyle. It’s all about pushing yourself.
Because I love a challenge, today I’m going to tell you how you can save $5000 in one year.
That might sound like a lot to some of you, but a $5000 savings challenge will allow you to do some pretty incredible things…
What you can do with $5000?
There is A LOT that you can do with $5000. And knowing what you’re going to do with your money at the end of the 52 week challenge will help you stay motivated throughout the year.
With $5000, you can:
- Save for retirement. Annual IRA contribution limits are currently at $6,000, so this is a nice amount to add to your retirement fund. IRAs offer tax-advantaged retirement savings so you can get the most out of your retirement savings.
- Set aside for an emergency. An emergency fund helps you cover unexpected expenses. It’s recommended that you have 3-6 months worth of expenses in your emergency fund. Having an emergency fund is a basic personal finance, and it will help you avoid taking on debt if your car breaks down, you lose your job, you have an unexpected medical bill, or are faced with any other unexpected expenses.
- Invest. Investing your money in the stock market puts your money to work for you. There are inevitable ups and downs, but overall, you’ll earn passive income due to the power of compound interest.
- Put that money towards your debt. If you want to destroy your debt, take that $5000 and make a lump sum payment to one or several of your debts. That could be your student loans, your mortgage, or car loan.
- Take a vacation. Everyone needs a break, and if you’ve been putting off a trip, a 52 week money challenge will help you cover the cost of a pretty sweet vacation.
Where to save your money during the 52 week money challenge?
Ideally, you’re not spending the money you’re saving throughout the year. To help with this, I recommend opening a separate account for the money you’re saving with the 52 week money challenge.
A separate account will make it easy to see your progress, and you might be a little less likely to dip into your savings. There are now lots of reputable online banks offering high-yield savings accounts with $0 minimum balance.
Your year-long savings plan
To save $5000 over the course of the year, you’ll need to save just under $100 a week. I’m going to give you tips that will teach you how to save $5000 in a year, and you can use the chart below to keep track of your savings.
I suggest printing this chart out and sticking it somewhere where you’ll see it every day – may be on your refrigerator or next to your desk.
How to save $5000 in a year
If saving $5000 in a year sounds unattainable, these 6 tips will help you create an actionable plan to start saving.
1. Start by finding one bill to cut
Most people have some expense they can completely cut, and cutting that bill at the beginning of your 52 week money challenge will motivate you to find even more expenses to cut or reduce. Here are a few places to start:
- Finally get rid of cable TV. If you’re still paying for cable TV, there are much less expensive options that can help you save $50-$200/month. There are less expensive streaming services, digital antennas, and even some legit free options. Read more at 17 of The Best Cable Alternatives for 2020.
- Ditch your car payment. Cars are depreciating assets, plain and simple. Fortunately, there are lots of great and affordable options, and I will explain how to get rid of your car payment in How to Get Rid of Your Car Payment: The Ultimate Guide.
- Cancel some of your subscriptions. Subscription services are way too easy to sign up for, and most people have at least one or two they’re not using, from extra streaming services to meal boxes. The Trim app is a free service that can help you find and cancel unwanted subscriptions. Learn more at Trim App Review 2020: An Easy Way to Save Money On Bills.
Learn more at 36 Ways to Save Money Fast.
2. Make a budget
A good budget will tell you exactly where your money is going every month, and it’s a great way to find places to save money. The key is to be honest with your income and expenses to make your budget work for you.
Zero-based budgeting is a really popular strategy that forces you to examine every single dollar that flows in and out of your budget. It works by starting with your monthly income, then allocating every single dollar to different expenses until you reach zero.
It’s a hands-on budget that prioritizes debt and savings by creating a line item for each of them in your budget. Want to save $5000 in a year? Put it in your monthly budget!
If you’re interested in learning more about zero-based budget, including exactly how to make one, where to find free budgeting spreadsheets, and what apps are built for zero-based budgeting, check out these articles:
- Zero-Based Budgeting Explained: How it Works, Creating a Budget, and App Alternatives
- How to Make a Budget Spreadsheet in Google Sheets (Step-by-Step Guide for 2020)
- How to Make a Budget in Excel: How to Guide and Free Templates
- 12 Free Budget Templates to Get Your Money Under Control
- YNAB Review 2020: The Most Effective Budgeting App Around?
3. Automate your savings
Micro-savings apps are apps that automate your savings with different rules, triggers, round-ups and more. They work on the idea that no amount is too small to start saving because small things add up. Isn’t that the point of the 52 week money challenge?
One micro-savings app, Qapital will save a predetermined dollar amount when you do things like:
- Shop at a business you’ve been trying to avoid
- Post a Facebook status update
- Like a YouTube video
- Get paid
- Go under or over in a budget category
Those are just a few – Qapital has over 200 different ITTT (if this, then this) triggers to automate your savings. Qapital also lets you make one time and recurring transfers that would make it easy to automate your 52 week money challenge.
Twine is another micro-savings app that’s specifically meant for couples. You can even use Twine to invite your partner to save for the 52 week money challenge with you.
Learn more about these micro-savings apps in Qapital Review 2019: Save Money Without Even Noticing and Twine App Review: Money Saving Solution for Couples.
4. Save with a friend
If you think staying accountable is going to be an issue for you, then invite a friend to save for the 52 week money challenge with you. You can do weekly check-ins to make sure you’re moving money over and provide each other with the motivation it takes to follow through on a year long project like this.
The bonus is that you and your friend will each have a nice chunk of money saved at the end of the year. Nothing wrong with celebrating together by going out for a nice dinner or sharing a bottle of wine.
5. Do a no-spend week each month
A no-spend week is exactly what it sounds like – you don’t spend any money for an entire week. Sounds hard, I know. But you can set your own rules to make it work for you.
One option is to not spend money on any non-essentials. You would still spend money on gas and groceries, but not spend money on clothes, going out to eat, entertainment, etc. Another way to approach a no-spend week is to give yourself a limited allowance for non-essentials, but make it a small amount so you’re progressing with your money saving challenge.
No-spend weeks are a challenge in their own right because they force you to rethink the way you spend money throughout the week.
Read more at 7 Easy Ways to Save Money on a Tight Budget.
6. Find ways to make more money
This is where I would personally start because making more money is one of the most effective ways to save more money. Most people only have so many expenses they can cut, and there’s a quality of life argument that comes up when practicing extreme frugality – I experienced this when I was paying off my $40,000 student loan debt in just 18 months.
I’m all for rethinking the way you spend money, but making more money just lets you do more stuff, and you can do it faster.
Side hustling is one of the best ways to increase your income, and there are tons of options that can fit in with your normal life. Here are some of my favorite side hustles that will help you make more money:
- Run Facebook ads for small businesses. This is how I supplemented my income after starting this site, and after just a few months I was earning more than I was as a high school teacher. Running Facebook ads is doing digital marketing work and helping small businesses reach a wider yet targeted audience of people. It’s flexible work that can be done in just a few extra hours each, and you can make around $1,000/month per client. Learn more at the Facebook Side Hustle Course.
- Become a Pinterest virtual assistant. Pinterest VAs help online business owners bring in more traffic via Pinterest. You’ll be creating pins, optimizing for search results, creating a pinning schedule, and more. Pinterest VAs average around $500/month per client. You can learn more at How to Make Money on Pinterest in 2020 (Earn $1,000 Extra Per Month!).
- Teaching English online. VIPKid is a top-rated platform that connects native English speakers with young Chinese students. You pick your own schedule, teach lessons online, and make $14-$22/hour. Learn more at VIPKid Review: How to Apply, How to Get Paid, and Is It Legal?
- Walk dogs or pet sit. This is a fun and flexible side hustle for anyone who loves animals, and Rover is a platform that connects caregivers with pet owners in their area. You can make around $1,000/month with Rover if you treat it like a part-time job. Learn more at Rover App Review: Get Paid to Walk Dogs.
- Deliver food. Companies like Postmates and DoorDash make it easy for consumers to get on-demand food delivery, and they are incredibly flexible side hustles. These companies pay around $15-$20/hour. Learn more at DoorDash vs. Postmates: Which is a Better Side Hustle?
For even more side hustle ideas, check out 22 Best 2020 Side Hustle Ideas (Make $1,000+ Per Month).
The final word on how to save $5000 in a year
Here’s the reality: big financial goals only come to fruition if you’re willing to work to make them happen. That takes finding your motivation, creating a plan, and then executing it. You’re going to have to make sacrifices, change your mindset, and challenge your limits.
If that sounds tough, it should! It wouldn’t be called the 52 week money challenge if it wasn’t going to be just that – a challenge.
Remember that you can take what you learn throughout this challenge and apply those lessons to the rest of your financial life. You will have proven to yourself that you know when to pull back on your spending, how to make more money, and your future financial self will thank you.