Look At You - didn't you do well!
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The Original 365-Day Saving Challenge was a Weekly Plan
Many of you would now have heard of the 52 week saving challenge. If you haven’t, it’s quite simple, so let me explain.
The idea behind the challenge is that you save an increasing amount per week for each week of the year. In week one you save £1, week two you save £2, three you save £3 until you’re saving £52 by the last week of the year.
Cool eh! In your first month, you'll put away £10 from your budget. (£1 in week 1 + £2 in week 2 + £3 in week 3 and finally £4 in the fourth week = £10 saved in your first month.)
The problem (the plans major flaw) comes later down the line. During the 12th month, you're expected to put away £49 in the 49th week, £50 in week 50, £51 in week 51 and finally during Xmas, another £52. A total of £202. That's a lot of disposable income to find during December.
The One Penny A Day Saving Challenge is similarly flawed.
Instead of saving £'s a week, this challenge see's you saving in multiples of pennies/day.
The premise: You start by saving a penny on day one, 2 pennies on day two and on towards £1 on day 100 and £3.65 on day 365. By increasing the amount by 1p each day you will end up with £667.95 at the end of the year.
How is it flawed
There are a couple of stumbling blocks. Firstly, the low starting amounts saved during that first couple of weeks.
You're expected to drop in a penny on the first day, then two pence on the second day, and so on. Are you really going to continue in this vain, where is the motivation to continue. At the end of the first week, you'd only have saved 28 pence. Easy right! Yeah, Too Easy. Another potential pit-fall is that during the last month of saving you'll be expected to save approximately £25 a week.
Week 49 £23.87
Week 50 £24.36
Week 51 £24.85
Week 52 £25.34
Total you'll be expected to put away for savings during December (including days 335, 336 and 337 (days 1,2 and 3 of December belong to week 48 which starts during November)) is £108.50.
If you're unemployed, or working and living month to month, can you honestly, hand on heart, say you're going to be in a position where you can put £108.50 into your savings jar during the hardest financial month of the year, hell no. The idiots creating these saving challenges aren't thinking these things through.
The Revised 365-Day Saving Challenge is just the above plan, in reverse. This revised plan wants you to start saving the higher amounts at the beginning of the year, working down to the lower savings as you progress through the year. The same flaw remains, only now you're hit with the mammoth saving challenge during January, the month after one of our most financially challenging months of the year.
Another (lesser) flaw I've seen with the above challenge, almost all of the web bloggers who push the above as a saving solution provide a 'printable' chart with the figures pre-printed. What happens when, for what ever reason, you fail to meet the amount printed for any particular month. If you fail to hit Aprils target saving, every printed amount for May forward, is now out of sync. Wave bye-bye to your motivation.
Want a Saving Challenge that Is Fun, Motivational and Works For Everyone. Welcome To Crafty's 365-Day Saving Challenge. You're Welcome
The above calendar is for December and shows a breakdown of what's expected of you during the final days/weeks of the Penny A Day Saving Challenge (which by the way is a poorly worded title, saving a penny a day for 365 days will result in a piggy poor £3.65).
So above, you'll see the days in calendar form, days 1, 2 and 3 (which incidentally falls in week 48, which starts during November) of December, you'd put in your Savings Jar towards week 48. Total £10.08
Day 1, 2 & 3, £10.08
Days 4 to 10, another £23.87
Days 11 to 17, another £24.36
Days 18 to 24 (Whoop Whoop, Santa's coming) , another £24.85
and finally Days 25 to 31st Dec, another £25.34
Total pennies for December, a whopping £108.50
Welcome to Crafty's 365-Day Saving Challenge
*** So in my last post I picked apart the 1p A Day Saving Challenge ***
Now it's time for Crafty to have a go at creating a saving challenge that is both fun, and practical - lets get this right...
THE CRAFTY 365-DAY SAVING CHALLENGE
I have created two ways in which you can take part in this challenge. The first is via my excellent Excel Spreadsheet. This bad boy will allow you to simply enter the amounts you drop into your savings jar (or Savings Account) and automatically calculate your balance. It also has the added benefit of showing you visually the days you deposited money by highlighting the cell on the calendar in a lovely blueish colour.
Days you missed are left blank as a reminder of your failure to save on that day (naughty you!).
The second option is to download our PDF, allowing you to print out our chart and hang it somewhere visible, which then acts as a tangible reminder of the money you have saved throughout the year.
365 Day Saving Challenge Spreadsheet
A spreadsheet that does most of the work for you. I've tried to make it as simple as possible, mainly due to being a little bit simple myself...
365 Day Saving Challenge Printable PDF
Sometimes you just want to use pen & paper, for this reason I offer you a printable PDF. Click on the download button below, print out the worksheet and get saving. Don't have access to a printer, no problem, i'll happily print them out for you, simply get in touch.
I want a rainy day fund...
1. Find a Credit Union
2. Set a Goal
In order to start saving, you need to know how much money you can afford to stash aside. So the first step is to build your budget. If you don’t have one yet, consider doing it now! A budget is the foundation for a solid savings plan.
3. Create a Budget
This is a Work In Progress
Create a budget!
We create a budget to better understand where we stand financially. We give every penny of income a job. We know exactly what we can spend on eating out. On clothes. On everything. No more worrying we'll accidentally spend the money needed for next week's bills.
As you Embrace Your True Expenses, you smooth out your cash flow by breaking down larger, less-frequent expenses (holidays, birthday presents, insurance) and treating them like monthly expenses—saving for them each month. Goodbye financial roller coaster, hello financial freedom...
Eventually, through careful use of our money we'll say goodbye to the paycheck-to-paycheck cycle, timing bills, and money stress. When a bill comes in, you’ll just pay it. If an emergency happens, you’ve got time to come up with a plan.
The first thing you need to know when you set up a budget is that your goal is to live on your net income, the money that hits your bank account after all your deductions.
You’ll divide that amount into three buckets according to what we call the 50/20/30 rule:
When it comes to money, there’s certainly no shortage of ways for us to spend it—food, rent, retirement accounts, a down payment on a house, gym memberships, gifts … you get the picture.
So where should my money be going?
When it really comes down to it, the answer is different for everyone. You may be in a hurry to pay off debt, so you’re willing to spend less on eating out in the meantime. Or you might live in a city where rent is prohibitively expensive, so you have to allocate more of your paycheck to housing.
So what’s a budget-perplexed person to do? While we can’t give you a hard-and-fast rule for where to put your money, we did come up with a general benchmark to consider if you’re just starting to set up a budget: the 50/20/30 guideline.
Whether you’re a parent with two kids or a recent college grad working your first job, this 50/20/30 guideline can help you not only figure out how much you may want to allocate to each area every month; it can also help you determine the order in which your money can be allocated.
50/20/30 Broken Down
The 50/20/30 guideline can be easy to follow because instead of telling you how to break down your budget across 20 or more different categories (who could possibly keep track of that?), it splits everything into three main categories:
1. Fixed Costs
These are bills and expenses that don’t vary much from month to month, like rent or mortgage payments, utilities and car payments. We also include subscriptions, such as gym memberships and Netflix accounts, in fixed costs because you’re committed to paying them on a monthly basis.
When it comes to fixed costs, we generally suggest that you aim to keep your monthly total no more than 50% of your take-home pay.
Tip: If you’re trying to make more room in your budget, fixed costs can be a great place to trim. For example, are there any bills or subscriptions you could reduce or cancel entirely?
2. Financial Goals
Consider putting at least 20% of your take-home pay toward important payments or contributions that will help you secure your financial foundation.
We believe there are three essential goals everyone should strive for: paying down credit card debt, saving for retirement and building an emergency fund. But your financial goals can also include larger savings priorities like a down payment on a new home.
Tip: We recommend automating your savings contributions and debt payments to help make sure you’re saving consistently—and to help ensure you don’t miss a payment!
3. Flexible Spending
Finally, consider budgeting no more than 30% of your take-home pay toward flexible spending. These are day-to-day expenses that can vary from month to month, like eating out, groceries, shopping, hobbies, entertainment, or gas.
We include groceries in flexible spending because even though food is a necessity in your budget, how you spend on food can vary. Some weeks you might eat out more, while others you may buy more groceries to cook at home.
We often say that it doesn’t really matter what you spend your money on each month in this category, as long as you’re aware of your spending and not going over your total flex budget each month.
Tip: To determine your flex-spending amount, we recommend first subtracting your fixed costs and financial goal contributions from your take-home pay (the amount that hits your bank account after taxes etc). This way, you’ll know that the amount that’s left for flexible spending is truly yours to spend however you want.
One Note About Retirement
As you might have noticed, the 50/20/30 guideline applies only to take-home pay/income. Any contributions you make to retirement before your paycheck hits your bank account are not included. For that reason, you may actually be contributing much more toward your financial goals than this breakdown would suggest. And you may find that it’s a good thing to keep that retirement money out of sight, out of mind!
Feed The Piggy!
Positives Of Saving Money In A Piggy Bank
A friend of mine places all of her daily change into a very large piggy bank each and every night. On average, she estimates that she adds around 60p each day into her not so little piggy. This equates to £219 each year. Every year, around Christmas, she empties the piggy bank straight into her savings account. This money isn't ear-marked for spending either, its part of her retirement fund.
After 25 years of saving money in a piggy bank and transferring to the actual bank, with compound interest at the average bank interest rate over the past 25 years, she will have £12,378. This all seems very positive.
Also, it is often stated that people are more likely to spend money if it is in loose change. Therefore, by taking out no loose change, it means that she has to “break a note” for a purchase. This helps prevent small, unplanned purchases and can further add to the loose change she can add to her Piggy.
Negatives Of Saving Money In A Piggy Bank
However, in my opinion, saving money in a piggy bank has its cons. The main negative impact is the loss of interest. She loses out on some interest by saving money in a piggy bank. For instance, if she were to place the money saved into the bank each week, she would still save £219 each year, but her balance after the 25 year period we looked at above (due to the impact of compound interest) would be £12,924.
Therefore, we are losing around £600 in interest over 25 years (or around £24 per year).
Therefore, to work out if saving money in a piggy bank is right for you, you need to determine whether you’ll save more because of the psychological factors involved. Your numbers will vary depending on how much money you put in your piggy bank each day, but if you believe that saving money in a piggy bank will make you save over £24 more than you would each year without keeping one, then go for it.
Piggy Bank Saving Tips
Money saving comes in many forms, from putting money away in a savings account to stock market investments. The right method for you is the one that best meets your aims and your budget.
If money is tight, maybe you're unemployed at this minute, or in a low paying job and you have out goings higher than your income can cope with, then saving money is a huge challenge.