Have you heard about the “52 Week Money Challenge?” If you spend any time on the internet lately, you’ve probably seen it. The concept is the save in dollars the week of the year you are currently in. So, in week 1 of the year, you would save $1, in week 40, you would save $40, etc. By the end of the year, you will have accumulated $1,378.

This idea is not new; we’ve seen it around for many years, usually starting to circulate the internet late each year as a possible New Year’s Resolution for people. This year in particular, we noticed it “shared” a lot among friends on Facebook as something to try for the New Year.

While we love the idea of people saving more throughout the year, we have our reservations about this plan. People get excited over the simplicity of it, thinking about how easy saving almost $1,400 in one year can be. But it’s not that simple.

Trent Hamm, over at The Simple Dollar did a post on this topic that made some great points: “Thoughts on the ’52 Week Money Challenge’.” (Please view the post for a sample “52 Week Money Challenge” chart). While Hamm is a supporter of the concept in theory, he makes some good points on the validity of it:

  • “[…]the catch is that the later weeks are far more challenging than the earlier ones. If you start this in January, December’s weeks are going to require you to put away $49, $50, $51, and $52, respectively. This plan is asking people to put aside more than $200 during the one month of the year when money is often the tightest.”
  • “If you just follow the chart as-is, you’re going to eventually run into a week where it’s not easy to make that goal. If you fail for a week, it’s going to feel pretty tough to get back on the routine.”

Both of these points are the main problems we have with the challenge. As with any New Year’s resolution, people will start off strong, especially since the early weeks are so easy to complete. But then things are going to start getting tighter the more money you have to save. Once you get to the point where you can’t save the required amount, people will start to flounder. What happens next? Do you just skip that week? Save what you can and move on? Suddenly your $1,378 starts decreasing and you start to get disheartened. Maybe you should try to add this week’s savings to next? Can you afford that?

Hamm has an interesting variation of this challenge that does makes sense to us. Instead of following the chart as laid out:

“Each week, make it your goal to save as much as you can. Can you save $20 this week? How about $40? How about $52? The higher you can make that number, the better. You can bump that number up through little choices during the week.

At the end of the week, just cross off the line on the “money challenge” table that matches how much you were able to save. If you were only able to sock away $15 this week, cross off the $15 line. If you saved $52 this week, cross off the $52 line.”

This variation to the plan will still allow you to save the $1,378 in one year, but without the added stress of raising the amount each week. However, we still take some issue with this plan.

  • Manual Savings – Part of the reason plans like 401(K)s are so easy to maintain is that the savings are automatically invested. With a plan like the “52 Week Money Challenge,” automatic savings is not an option as laid out. You will have to manually set aside this money every week. Do you work on your finances weekly? If so, that’s great. Unfortunately many people’s answer to this question would be no. If that is the case, it’s unlikely you are going to be able to keep up with putting this savings aside weekly.
  • Supplemental/Emergency Savings – To us, a challenge like this should be used only as supplemental or emergency fund savings. Do you save at least 10% of your income for retirement? Are you debt free outside of your mortgage? If the answer to either of these questions are no, then the money from this challenge would probably be put to better use elsewhere. If the answers are yes, then this can be a great way to boost supplemental savings, maybe for a project or vacation. Or, if you have no emergency fund currently, this can be a great way for you to start one, whether you are saving for retirement or paying down debt currently or not.
  • Normalize It – To make this plan simpler and easier to handle, why not normalize it? As in, average out the $1,378 over the 52 weeks, allowing you to save up automatically, without the added stress of the higher savings weeks. Not only will this still give you the savings you want, but saving $26.50 a week will be much easier to handle than saving $202 in December alone.

We can see why this would not be as appealing to people looking for easy savings tactics (those drawn in by only having to set aside $10 in January). But in the long run, over the course of the year, we believe someone saving a set amount each week will be much more likely to end up with the $1,378 in their bank account by the end of the year than those following the “52 Week Money Challenge” as is.

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.