Money-saving challenges pop up every new year, as people resolve to keep more money in the bank.
This year, several new challenges are being shared on the Internet.
One posted on the website Apartment Therapy has gained attention online. The yearlong challenge involves putting aside $1 on Sunday, $2 on Monday, $3 on Tuesday, and so on — then starting fresh at $1 each Sunday. After 52 weeks, there will be savings of $1,456.
The website notes that those taking part in the challenge can collect money in a jar, or even sign up for mobile apps that do the work for you.
Technically, challenges such as this one work but they can be difficult to stick to, Toronto-based personal finance expert Rubina Ahmed-Haq explains.
“This sounds like a lot of maintenance, like every day remembering to save money,” Ahmed-Haq told Global News.
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But the finance expert said such challenges do have some benefits for those trying to stick to their money-saving new year’s resolutions. For example, they can help kick-start the year with an overall focus on saving.
“Challenges are great. It’s just like a fitness challenge — it’s like doing 10 squats a day, then the next day doing 15 squats. And you just improve yourself by challenging yourself for a short time.”
But for true improvement, Ahmed-Haq says challenges aren’t the best option. Instead, she recommends long-term goals that are low-maintenance. She suggests setting aside 10 per cent of after-tax income each month for a retirement fund, for starters.
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Another smart money-saving habit is putting five to 15 per cent of income into an emergency fund that represents three months of living costs.
Consistently saving money each paycheque — rather than a few dollars each day — ensures that in times of trouble, there will be a good amount of money to fall back on, Ahmed-Haq explains.
“For example, you lost your job or you got sick and couldn’t work for a short amount of time, then you wouldn’t be worried about where the money is going to come from because you have the cash saved.”
For those who want to jump into 2018 with financial goals in mind, there is one challenge Ahmed-Haq recommends taking on this month.
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“For 30 days, live like you are a student,” Ahmed-Haq suggests. “Take the bus, brown bag your lunch, find things in your house to cook rather than going to grocery stores. Find ways to have fun for cheap, rather than spend a ton of cash.”
Embracing a challenge that promotes a more holistic attitude of spending money wisely, rather than a money-saving challenge, can help set the right focus for the rest of the year, Ahmed-Haq says.