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Saving money is easy in principle but difficult in practice. In theory, all you need to do is spend less money than you make, and set the extra income aside for future use. But try as you may, your piggy bank fails to accumulate any wealth over time.
Like many challenges in life, the hardest part of saving money is simply getting started. Money-saving challenges can help with this, as they offer a great way of getting started by setting out a plan of action for you. While any savings plan is better than none, the following four savings challenges offer you the best chances for success in 2016.
The 52-week money-saving challenge is simple and works on a “snowball” principle. On the last day of week one, deposit one dollar in your savings jar. On the last day of week two, deposit two dollars in the jar. As you continue this pattern, you will begin accumulating quite a bit of money. If you stay true to the formula, you will have amassed more than $1,300 by the end of the year. You can also try out a 52-week savings plan that may be be a bit easier to follow; it’s detailed here.
The save-splurge challenge emphasizes the importance of both saving and spending money. By periodically allowing yourself to splurge, you will find it easier to adopt a consistent savings plan. Set up this challenge by identifying a comfortable rate of savings — perhaps 10 percent of your weekly paycheck. Begin your savings plan, but then buy yourself a treat every four to eight weeks.
If you like perusing garage sales and shopping at the thrift store, the no new items challenge may be ideal for you. Start by finding the full retail price for any new item (except things like food or medicine), then go out and find a used version of the item. Take the difference in price between the two items, and deposit this amount in your savings jar. In addition to saving you money on each purchase, the additional work involved will tend to make you skip buying things that you do not really need.
The one-dollar-bill money challenge is a very effective method for saving significant sums of money — particularly if you use cash to pay for your daily expenditures. The premise is simple: You cannot spend any dollar bills. Instead, you must save all of the dollar bills you accumulate throughout the day as change. Place the saved dollar bills in a jar each night when you get home.
No matter your savings strategy, make sure you deposit those funds in a high yield savings account to make that money work for you … and don’t wait until the end of the year — make it a point to make monthly deposits and watch your money grow.