4 ideas to start a savings challenge

Ready to see your savings grow? Here are four ideas to inspire your very own money savings challenge.

You’d expect a couple dubbing themselves “the Frugalwoods” on their finance blog to be experts at living with less and saving a lot. Even so, hearing some of what their extreme frugality has achieved is stunning, especially if you’re thinking about how to do a money savings challenge.

By faithfully tracking every penny they spend and ruthlessly cutting out unnecessary purchases, Liz and Nate Frugalwood—who use pseudonyms for blogging and interviews—claim they now save 80% of their income. To live on just 20% of what they earn means being able to get many of the things they need at no cost.

A man cooks pasta as his young son looks on.

How to save money with a challenge

Living on a 66-acre homestead in rural Vermont, the Frugalwoods belong to a local online group, part of a worldwide gifting, lending and sharing movement that has expanded to 20 countries. When their daughter was born in November of 2015, they say they spent only about $20 to outfit both her and the nursery. The money went to purchase some clothes and a baby swing they found at a garage sale.

Everything else for their daughter they found through the online group or as hand-me-downs or other free sources, Liz Frugalwoods says.

Liz Frugalwoods, a communications manager, and Nate Frugalwoods, a software engineer, started their frugality project more than three years ago. The couple has shared some of their secrets for low-cost living with a money savings challenge, which they’ve posted on their blog.

The key to learning how to save money with a challenge, they say, is to know why you’re doing it. Identifying a purpose for the money you’re saving is the first step of a money savings challenge. For those who share a household with a spouse or partner, it’s also important that both be committed to working toward a common savings goal, Frugalwoods says.

A man and a woman, sitting together on a couch, meet with a financial advisor.

For David Ning, who manages and writes for a personal finance blog, the essential ingredients for a successful money savings challenge are fun, simplicity and consistency. To help his readers stick with the challenges he creates, he posts plenty of reminders to follow daily saving practices and track their progress.

“Saving is hard,” Ning says. “If you don’t keep reminding everyone, people forget. They can come up with excuses.”

If you’re ready to shake your excuses for not saving more and learn how to start a money savings challenge of your own, here are four ideas that may inspire you to get going:

1. The extremely frugal makeover

If you’re game for going all in on frugal living with your money savings challenge, you can consider giving the Frugalwoods’s money savings challenge a spin. You’ll get 31 consecutive days of emailed motivational messages, homework assignments and practical information like tips for saving on groceries. One of the homework assignments asks you to write down all of the things about your life that you would like to change and how your spending habits might be preventing the transformation.

“Saving is hard. If you don’t keep reminding everyone, people forget. They can come up with excuses.”

David Ning, writer of a personal finance blog

“The idea is twofold,” Frugalwoods says. “It’s to help you save as much money as is possible for you, but more importantly, it’s to help you identify what you really want out of life—what you see as your long-term goals.”

You can also create your own money savings challenge for frugal living. Partner up with friends who will take the challenge with you and share ideas—such as biking to work a couple of times a week to save on gas or swapping like-new children’s clothes instead of heading to the department store when your little one outgrows something. Exchange calls, texts and emails to help each other stay motivated and on track. Your goal doesn’t have to be living on one-fifth of your income like the Frugalwoods. Maybe you have another financial goal, like saving up for a new house or boosting your contribution to your 401(k).

Worried about how to start a money savings challenge if this is your first go? Don’t be. “The great thing about frugality is that you can apply it at any level,” Frugalwoods says, whether you are trying to save 10% or 50% of your income. “The themes and the lessons are the same.”

A man standing in his kitchen, making tacos and looking at something on his phone.

2. The save the change challenge

Another possibility for those interested in learning how to start a money savings challenge is to earmark some of your extra cash, such as the change from regular purchases or the amount your bill goes down when the price drops on a recurring expense, for deposit into your savings account. For example, you might decide to sock away any change that’s less than a dollar, or every $1 or $5 bill you get back.

Ning came up with the idea for his $5 challenge about five years ago after gasoline prices in his home state of California finally came down after soaring to $5 a gallon. Joining the challenge meant that every time you filled up, you calculated what you would have spent had gas still cost $5, and you saved the difference between that figure and what you actually paid at the lower price. Over a couple of weeks, Ning says the average participant in the challenge reported saving about $200.

3. The restricted shopping list

A long-range goal of the Frugalwoods is to grow their own food at their homestead in Vermont. In the meantime, they keep their grocery bills low. One of the tricks they use may inspire other families thinking about how to do a money savings challenge. The couple buys mostly raw, bulk ingredients and avoids items that are prepackaged or ready-made.

“It’s always less expensive to buy the bulk or raw foods,” Frugalwoods says. “We make our own bread. We make our own hummus. Just about everything that comes in a package, we make it ourselves.”

You can also explore how to save money with a challenge by crossing certain products off your shopping list, or perhaps buying them only when they go on sale or doing without them for just one week or month. Follow a meatless Monday menu, for example, pass up the packaged cookies aisle, brew your own coffee or give up your weekly trip to the salon. When you see how that money can grow when you put it in your 401(k) or an online savings account, you may find you really don’t miss some of the things you thought you couldn’t live without.

A man rides his bike to work.

4. The savings accelerator

Taking incremental steps with the amount you set aside is another way to learn how to do a money savings challenge. This is a method that Ning finds particularly effective. For instance, you can start by saving one dollar a week and add a dollar each subsequent week for a year. Once you’ve collected a few hundred dollars, you can start transferring the money to an online savings account and watch your savings grow even more.

The snowball effect of this challenge—seeing $500 turn into $1,000 and so on—is the difference maker. “That can fuel your enthusiasm,” Ning says.

If you’re thinking about how to do a money savings challenge with another version of this theme, consider cutting back a little more each week on the amount you spend on certain treats, like eating out or online shopping.

A man and a woman enjoy coffee together in their living room.

You can continue following the principle of accelerated savings even after you’ve reached your initial savings goal. You might do another 52 weeks of accelerated savings starting with $1 a week or, if you’re able, raise the bar to start with a larger amount per week.

In fact, the best result from any money savings challenge will be if you keep the momentum going, making saving a lifetime habit. Knowing how to start a money savings challenge can help you get in a saving groove, but making saving a long-term priority is the key to success.

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