Hello! Welcome back to Millennial Money Journal!
They say that saving and building wealth should be uncomplicated. I’d once read somewhere, that the more boring your savings and investments plan the more likely you are to be successful. Of course the context of that statement was avoid to glamourous Ponzi schemes, but nonetheless I agree with it. The simpler my plan, the easier it is for me to stick to it. That being said, I do like to mix things up a little bit and add some fun to the mix. This is where I use financial challenges.
Financial challenges basically involve a target that you reach through a plan where you’re saving smaller amounts at a regular frequency. It helps you avoid the overwhelming feeling that comes with large savings goals, especially when you make the decision to save that amount. Plus some of them make it really fun! There are some simplistic ones and some which are a little puzzling for fun. Let’s check them out!
The 52-Week Challenge
This is one that I am pursuing currently and was the first financial challenge that I ever started with. This challenge spread over 52 weeks, requires you to increase your weekly contribution to your savings by the week number and at the end of it, you will have a sum of money which is a multiple of 1378.
For example: In my first week, I set aside Rs. 100, in the second Rs. 200, in the third Rs. 300 and so on. My weekly contribution is the week number multiplied by Rs. 100. At the end of the 52 weeks I would have Rs. 1,37,800. Not too shabby!
Of course, in the later weeks it gets tougher when you have to set aside as much as Rs. 16000+ per month to work out Weeks 40-52. You’ll be putting in more than Rs. 4000 each time. To compensate for that, what I’ve done is that whenever I have additional money left over in my last week of the month, I knock off a larger week number. So, for instance in week 12, instead of putting in Rs. 1200, I put in Rs. 4200. Now I can put 1200 aside in a week where cash is tighter, instead of having to not contribute in that week.
You can also use random number generators to generate a number between 1-52 and the number multiplied by 100 is your weekly contribution. Of course that means that in a cash strapped month you could have to contribute 5200 in the first week, but hey! That’s the fun. Pulling chits with week numbers is another variation too that some people use.
I like tracking this in writing in my bullet journal and you can see my tracker below. I’ve made 52 boxes and I make my deposits every Monday because that’s my way of beating the Monday blues, by moving towards my goals! I scratch out the week number for which I’ve made the deposit and my multiple is Rs. 100 for each deposit. I also mention the date on which I made that deposit so that it gives me further clarity.
Fixed Amount Every Week
This is as simple as it sounds. On a weekly basis you save a fixed amount of money. The weekly frequency makes you feel like you’re taking regular action on your financial goals, making it easier to stay on course. It also helps you break down your monthly goal into a smaller chunk. For instance, Rs. 10000 a month may sound big, but Rs. 2500 a week sounds much smaller. Especially since that’s the price of a very average shopping spree for some people. Knowing that you have to put aside Rs. 2500 in a week can also help you be more intentional about your spending. You’ll probably weigh your purchases in light of the fact that you also need to ensure that you have Rs. 2500 to save in the week.
Save The Remainder
This is an interesting challenge. Although it can be slightly tedious to do, there’s a trick to simplify it too. In this challenge, for every transaction you make, you save the remainder to the nearest hundred. For instance, if you spend Rs. 120 on coffee, you save Rs. 80 in a recurring deposit or in cash in a piggy bank. This can be a great way to build some savings although it can take a significant amount of time for you to see some traction. It’s also a great way for you to be more intentional about your savings. In the short term that coffee is worth Rs. 200. And even if Rs. 80 is savings, you better have Rs. 200 to set aside ont hat coffee cup!
You can keep track of this challenge by visiting your statements on a week or a fortnight or once a month and manually calculate your amount and siphon it off somewhere. It’s best if you do it on a weekly basis because that way you’ll be able to keep track of how much money needs to be saved and how much do you have left over for the rest of the month.
ICICI Bank has a I-wish Recurring Deposit which allows you to automatically do this by selecting the Save-the-change option. Everytime you make a transaction from your account for your chosen types of vendors and purchases, your change gets transferred over into the recurring deposit.
No Spend Months
These can be particularly tricky but if done right, can put you at least a month ahead on your savings. In a chosen month you don’t spend on anything other than food, rent, utilities and anything else that you have deemed necessary for survival. This way you’ll be able to make a substantial amount of money saved in a month. To start off, you can start by doing a no-spend week to see the difference and then bump it up to a month.
Tip: Don’t do them in a festival or birthday month because these are times when you genuinely have to spend and spending the month for these occasions brings you joy. Do it in a leaner month to avoid the mindless spending
Bonus Tip: Where to set aside this money?
Keeping it in your usual bank account more often than not means that you’re probably going to spend it on something that has nothing to do with your original goal. So I do one of the following two things:
- When I need the month after six or more months, I simply open a recurring deposit and keep adding to it. Some banks have flexible deposit schemes that allow you to make deposits as per your convenience. So I use the I-Wish Flexible in ICICI Bank and deposit the money every week. If not, then you can account for that money in your budget and set it aside in a separate bank account every week and at the end of the month, put it into your recurring deposit. This way you’ll still be able to take advantage of the higher interests rates of recurring deposits.
- If I need the amount in less than 6 months, I put it aside in a separate bank account. Since, most banks don’t allow for recurring deposits of less than six months I put it away in a separate, less accessible bank account. Don’t put it in e-wallets like PayTm or something just to get it out of your sight. You won’t earn interest and when you want to transfer the money into your bank account for some reason, you’ll end up paying them a fee of 1-3%.
And that’s it! These are some challenges that I’ve personally used that have helped me build up and save for small savings goals. Savings challenges not only make it fun, but they give you a sense of accomplishment everytime you stick to your goal. They’re also more flexible and help us be more intentional and concscious than our usual arbitrary goals of ‘Save Rs. X every month’. Maybe this month you can’t afford X, but that doesn’t mean Y or Z is bad. Its still saving!
I hope you enjoyed the post. Write down in the comments below and let me know if you’ve used any savings challenges and how they have helped you!