How Does the 52-Week Saving Challenge Work?
The 52-week saving challenge is an exciting way to start saving some money. Basically, the challenge dictates that you set aside a fixed amount of money each week, starting with $1. Thereafter, you increase the amount you save every subsequent week by an additional dollar. In simple words, the number of dollars you save should be the same as the number of the week you’re in. $1 in the first week, $2 in the second week, $3 in the third week, and so on. In the last week, which is the 52nd week, you have to save the highest amount of money which is $52. If you follow this method diligently, by the end of the year, you would have saved $1,378, which is a surprisingly substantial amount.
Stepping this up, if you were to start with $1,000 in that first week and followed the process of adding $1 per week, you'd have $53,326 by the end of the year!
People typically start the challenge at the beginning of the year, as it’s easier to keep a track of the weeks and can be thought of as a new year's resolution. However, of course, you can start the challenge whenever it is most convenient for you. Moreover, by no means does this challenge need to be your only source of saving. You can continue to save whatever amount of money you deem fit, this challenge is just a fun way to stay consistent.
Variations of the Challenge
The details of the challenge don’t matter as much as consistency does. You can set your own rules depending on your requirements. Below are some of the variations you can consider:
You can start the challenge in reverse order. This means you contribute $52 in the first week, and reduce the amount by $1 in each subsequent week, making your contribution in the last week (52nd week) only $1. Major holidays, such as Christmas, Thanksgiving and Halloween, fall in the second half of the year and naturally, holiday seasons are often big sources of expenditure. So when you start the challenge at the beginning of the year, this reverse order might help as you have to make smaller contributions as the year progresses.
Make the stakes higher and increase your weekly contribution by $2 instead of one. This implies you start with $2 in the first week, $4 in the second week, $6 in the third week, and so on. By the end of 52 weeks, you would have saved a handsome sum of $2,756. Similarly, you can stretch it even further and start with $3 in the first week and increase it by $3 every week. This way, you would have $4,134 at the end of 52 weeks. The exact increment is a personal choice. You can make the challenge as difficult as you’d like to match your individual capacity.
Save a constant and fixed amount every week. Instead of starting with $1 and increasing the contribution by $1 every subsequent week, you can simply contribute $26.5 every week for 52 weeks. This would give you the same amount at the end of the year as the original 52-week challenge, which is $1,378.
Where to Save Your Money?
One of the best places to park your money throughout the 52-week saving challenge is to use a high-yield savings account. As the name suggests, a high-yield savings account offers a much higher rate of interest than traditional savings accounts found at most banks. The interest rate is much higher than the average national interest rate offered by most banks on traditional savings accounts, which is currently well below 0.20% APY. High-yield savings accounts are commonly offered by smaller-sized and online banks as well as credit unions.
One of the biggest advantages of putting your 52-week challenge money in a high-yield savings account is that you will earn interest. Hence, your final amount at the end of 52 weeks will be slightly more than $1,378, which is the amount without earning any interest. Over time, as you continue contributions and the interest compounds, your principal amount can grow substantially.
Moreover, some high-yield savings accounts have withdrawal limits (a fixed amount of withdrawals per month) and penalties for extra withdrawals. (High-yield savings accounts and money market accounts offered through Raisin do not have withdrawal limits.) This makes it more conducive to doing the challenge consistently and religiously as it curbs impulse spending. Compare this to a checking account wherein it is easier to spend from and lose track of your spending.
Additionally, you may be able to set up an automatic transfer mechanism to transfer a fixed amount from your checking or salary account to a high-yield savings account. This helps with staying consistent in case you forget to transfer manually.
How to Get Started
The best way to start the challenge is by first opening a savings account. With Raisin you have access to deposit products, such as high-yield savings accounts, which offer some of the best interest rates in the country. Our partners – banks and credit unions – are federally insured, making their saving products safe and secured.
If you’re tired of the bureaucracy, time, and effort it takes to open multiple accounts, consider opening a single account with Raisin. With one convenient account, you can access and manage some of the best savings accounts out there.