Saving money is something that many people ought to do, but it can be quite difficult to know just how to save effectively which results in many people not saving any money at all. A great solution to get more money into a savings account and to get you into the habit of saving is the 52 week savings plan. We will go over just what this savings challenge consists of and a few of the variations on it.
The basics of the plan is to set aside a certain portion of money to save each week. Typically, the money will be saved with each week of the year. For example, the first week of the year you will set aside a dollar, second week of the year you can set aside two dollars and so on. However, by week 52, you will be setting aside 52 dollars. By the end of the year, if you have followed the plan properly, you will have saved over a thousand dollars.
That is the basics of the plan, but does this plan really work or not? For people who are able to follow the plan to the letter, this plan definitely works and can make it easier to save some money. However, the average person may find that setting aside 52 dollars around Christmas may be difficult to do. The higher savings amounts may happen when people are not going to have the extra funds available to put into the bank account.
To avoid this pitfall of having to come up with extra money during the end of the year, a good work around is to start on the 52nd week and work backwards. What’s great about starting on week 52 is you can take advantage of compound interest. You would start with the largest amount of cash savings and reduce the amount each week.
There are no hard and fast rules. You can choose to start with a dollar or you can use a different monetary amount, say for instance, 20 dollars and then continue to multiply that. Whatever works for your budget would be fine, just be sure to be realistic as you are planning.
There are other variations of the plan. You could deposit 20 dollars on week 1 of month one. On week two, increase it to 40, on week three, increase it to 60 and week four, increase it to 80. Then the following month, start your first week off at 25, the second week at 50, the third week at 75 and the fourth week to be 100. Really, whatever you think you can afford to save, as long as you are saving something.
Besides watching your money grow, this savings plan will also get you into the good habit of saving on a consistent basis which can really help if you struggle to save. You should open up a new savings account to start this challenge and try to schedule the transfers one week in advance or at least, choose a recurring date that you go to the bank each week to deposit this cash. As you become more accustomed to saving, you can even challenge yourself to double up on your deposits.