52-Week Money Challenge for FY 2014

It’s the start of the New Year and what would be a better way to start it than by starting your own savings plan for the year? A lot of us probably end up broke or worse – with zero-balance on our accounts due to our numerous expenses these past holidays. So to avoid the last-minute financial stress we went through last holiday, why don’t we start saving as early as now? Yep, that’s right. Not tomorrow or next week or next month. But NOW!

 

Many have probably heard of the 52-Week Money Challenge. For those who haven’t, it really quite simple. Every week, you deposit the base amount multiplied by the week you are in to your savings account. For example, you decided that your base amount is P10.00. For week 1 of the year (January 1-7), you should deposit P 10.00 (P10.00 x 1) to your account. So on the second week, you will have to deposit P20.00 (P10.00 x 2)  and on the last week of the year (week 52) you will have to deposit P520.00 (P10 x 52). By the end of the year, you’ve accumulated P13,780.00. The basic idea is that you are gradually increasing your savings every week.

 

The base amount may vary depending on your financial capability. So, if you’ve decided to start at a base amount of P50, you’ll end up saving P68,900!!!  Here’s a table showing the amount you’ll accumulate by the end of the year depending on the base pay:

 

 

There are also various ways on which you can do the 52-Week Money Challenge. Here are some that I’ve read from blogs (The PROs and CONs are based on some of my observations and insights of others who tried this challenge):

 

1. The classic 52-WMC. As described on the example above, this means gradually increasing your savings each week.

 

PROs: If you end up broke from the previous holidays, this won’t hurt your current budget as this starts at the least amount. Moreover, once you’ve grasped the idea that you have to increase your savings each week, you’ll refrain more and more from spending for unnecessary items.

 

CONs: The bulk of the savings swells in the last months of the year – the Christmas Holidays! If you are planning on using part of your savings for the holidays, well, you’d be drained of cash before the year ends. (Emphasis on ‘part’. By all means, never use up all your savings to spend on something. Use it in a more productive way.)

 

2. You can do it backwards. Referring to the table above, if your base amount is P10, you’ll have to deposit the amount corresponding to week 52 and working backwards till you reach week 1.

 

PROs: You’d get to eliminate the bigger amounts first. As such, before the Christmas Holidays arrive, you are only required to pay the smaller amounts. Plus, you’d reach about 75% of your target amount by the middle of the year (26 weeks). 

 

CONs: The bulk of the savings starts early in the year – that is week 1. So if you are still paying some of your debts from last year, this may not be advisable for you. Moreover, for some who are still new to this savings scheme, it may shock your wallets out of their wits (happened to me) especially when your base amount is quite high. Unfortunately, being unable to keep up with the savings discourages others and eventually decides to give up on the challenge (also guilty on this account too).

 

 

3. Cross-out System. It basically means that you can pay for whichever week you choose and cross it out from your list once you’ve paid it off. Example, (please refer to Base Amount at P10 on the table above) you decided that you want to set aside P300 for this week. This means you can cross-out the required amount to be saved for Week 30. The main idea is still, you have to cross-out all 52 required amounts for the entire year.

 

PROs: This is the most flexible scheme amongst the three. This is advisable for those who don’t have a fixed weekly income as you can deposit P10 for this week then P300 next week, depending on whichever amount you can spare.

 

CONs: Flexibility will not instill a sense of “responsibility” to save. The former two schemes somewhat obliges you to deposit a certain amount. This scheme lets you pay whatever you can afford at the moment. For others, irregularity or not having a predetermined fixed amount to save makes them feel not obligated to save now and opt to procrastinate.

 

There are other schemes that one can use to fulfill this challenge. Just be sure to pick out whichever suits you best.

 

To fulfill this challenge, it is best if we have discipline. That is ensuring that we fulfill our weekly requirements for the challenge. Much like most of all our New Year’s Resolution, at first, a challenge like this may seem to excite a lot of people but later on, the excitement wears off and there goes your savings as well. That is why it is crucial that we discipline ourselves into setting aside money to save.

 

So how do we discipline ourselves? Here are some tips that may be useful:

 

1. Set a target. What are you planning for your savings? It can be your tuition fee or emergency fund or trip with friends abroad. When you have something to look forward to, you are motivated to keep up with your savings.

 

2. Have a savings buddy/ies. Invite and encourage your family, friends or co-workers to do same. When you have other people doing the same challenge, you will have someone else who will help remind you to keep up with your savings.

 

3.  Open a separate account for your savings. Opening a separate account will ensure that you don’t end up “accidentally” using your savings. Besides, a separate account will help you track your savings better than having it mixed up with your other money for your monthly requirements. If your savings account comes with an ATM, better keep your ATM away from you as much as possible so you’ll resist the urge to use it. On a more creative side, you can always put a little sticky note on your ATM reminding you of your target such as, “Use this and say bye-bye to Paris”.

 

 So, who’s excited to save some money? If you are, then let us all do this challenge for a more fruitful 2014! Happy saving!