4 ‘Money Challenges’ to Help you Save Money
There’s no secret to getting out of debt and reaching your financial dreams. Using a challenge can be a fun way of keeping up your motivation up along the way. It’s about reducing your expenses to build some extra money. Reduce your debt, then investing that money after the debt is gone. However it’s a long term process and getting there requires determination and stamina. The following Money Challenges will fine tune your mind set, save a bunch of cash and keep you on the path to financial freedom.
1. Spending Fast Money Challenge
A spending fast is a way of saving as much as possible in as short a period of time as possible. All non-essential spending is cut with the goal of paying as much debt off in as quick a time as possible. Spending fasts are not forever. It’s a short term thing that will help with your motivation. Typically they last around 3 months but some people have done them for up to 18 months. Anna from andthenwesaved.com paid of $24,000 in 15 months by going on a spending fast!
First you need to write a list of your essential spending (Needs) and non-essential spending (Wants). Here is a basic list:
- Utilities – you need to keep the lights on but maybe the air-conditioner, dryer, etc.
- Phone – but do you need data?
- Groceries – Home brand were possible
- Private Health Insurance
- Medicine – Stop supplements that don’t work
- Car Loan Payment
- Petrol and Public Transport (limit long drives)
- Gifts – buy presents for your young children, I’m not the Grinch, but your friends and relatives should understand if you take 6 months off.
- Take Away
- Take Away Coffee
- House Stuff/Etsy/Decorative Stuff
Maybe Need, Maybe Want
- Alcohol – a $10 bottle of wine once a week is not a big deal, but a $200 night out is
- Hair Colour for women – If you have a professional job you may need to colour your hair, you can do this at home with a box dye set and still be in the spirit of the Spending Fast.
2. $500 Sprint Money Challenge
The sprint is about how quickly you can save $500. Once you get there you’re done. Challenge over. The $500 sprint is awesome because it’s exactly the same as the first emergency fund milestone. You can get there through:
- A spending fast – as above
- Check your couch, ash tray, pockets
- Selling your stuff on Gumtree
- Doing odd jobs on Airtasker
- Rent a room on AirBnB
3. The Every Day Challenge
Most people can afford to buy 2 coffees a day, and lots of people can find money for a packet of cigarettes but hardly anyone can find money to save. A simple challenge to help you build savings is to save a small inconsequential amount every day, equivalent to something like a coffee or a packet or cigarettes. You can either set up an everyday transfer or put money in a money box/jar. $3.50 (a small coffee in Sydney) deposited everyday will accrue to $1,277.50 over a year and you won’t even miss it.
4. Cash Only Money Challenge
We go on about this a lot. I’m sorry. However here we go again. Cash is much harder to spend. The research is clear. Physically handing over money, seeing that money leave your hand has a huge impact. Tap’n’Go’ing a coffee doesn’t have the same effect. Having a direct debit automatically come out of your account definitely doesn’t have the same effect psychologically. So use cash for 3 months and see what happens. Cancel all your direct debits and pay cash if you can. I guarantee that it will reduce your spending. It’s the only thing that has worked for me.
Which money challenge will you try first?