Saturday, February 02, 2013

The 52 Week Challenge

I noticed the other day that there was a new popular thingy going around on Pinterest. The 52 week Challenge.

Since most stuff like this tends to catch my eye, make them roll, and then I move on, I thought I would stop for a moment and actually see what it was all about.

I entered it into my favorite search engine and sure enough, it was a variation on the penny trick used for MANY years to to teach children the value of saving. In short, it's all about compounding. 1 penny today, 2 tomorrow, and soon enough, MONEY!!

Only in this case, it's $1 this week, (not a problem) $2 next week, (still not a problem) and so on. 52 weeks later, MONEY!

You can see the chart here.

What no one seems to remember is that this money has to come from somewhere. And when you are on a tight budget, it's difficult to say where the money will come from. Sure, I can come up with $1 for this week, and maybe $2 next week, but when we start getting into the $5 and the $10, it gets a little more difficult. In fact, you start risking dipping into my grocery or gas fund.

By week $40, you just took both my grocery AND gas fund. In Week 50, there's no more money for the dog and the bird to eat. Sure, I have saved over $1,000, but I broke my budget doing it. Sound extreme? from what I see, for many Americans, it's reality.

I find it easier to build a specific amount directly into my budget. I put $30 per week on automatic withdrawl. I've had to learn to check each week on Friday to ensure that the money will be in there to be removed on Monday, but since I started doing that, I haven't overdrawn. The one time I was going to, I went ahead and put a stop on the transfer.

Over all, at $30 per week, for 52 weeks, I save over $1,500. Which is actually not too much more than the 52 week challenge, but I also don't have to worry about where I'm going to find that cash (if I have it, and it's not in an envelope, I'm going to spend it somewhere) it's already allocated.

Do what works for you, but I've put quite a bit of money away over the years this way and give myself regular raises. It seems to be one of the few financial things I've done right!

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