And the psychological tricks they use to save you some money
With every new year, there are money challenges galore — from no-spend days/weeks/months to saving pennies in a jar, there is as much variety in the challenges as the people being targeted for them.
But not all challenges are created equal. Some are more satisfying than others, and hence more likely to be sustained. After all, a mediocre challenge that you can comfortably continue is superior to one that is brilliant but dies in a burst of flames, along with your motivation.
Some challenges are more effective, in terms of the money actually saved. Since that is the whole point of 'challenging' oneself, this is a crucial component of a good challenge.
Third, since all of us have full-fledged lives that don’t quite afford us hours of time to devote to money challenges, a good challenge will also have to be super-simple to implement.
And just like that, we have our three criteria to judge money challenges by — psychological satisfaction, effectiveness, and simplicity of implementation.
Here are my choices, in descending order of rank:
6. The Latte Factor
Lattes have been blamed for an entire generation’s poor finances — systemic factors like stagnating salaries and out-of-control housing and living expenses be damned.
But as a small savings technique, there is definitely something to be said about cutting out the store-bought lattes. Like Graham Stephen on YouTube said, (go follow him if you don’t already), a latte can be made for 20 cents flat at home — less if you have it black. A $5 coffee a day costs you $2000 annually — a neat sum to save, given you can have the same thing with a couple of minutes of work a day.
- Physiological satisfaction: 3/10. There isn’t much visual feedback in this challenge — it is only the sight of your morning home-brew that will remind you of the money being saved. No piggy banks filling up, no money being transferred to savings.
- Effectiveness: 6/10. $2000 is an extremely reasonable sum for a few minutes of work.
- Simplicity of implementation: 7/10. Again, this is a very simple challenge to actually get done. Making coffee at home isn’t rocket science. The only difficulty is in curbing the temptation of a caramel mocha.
- Total score: 16/30.
5. Weather Wednesday
This is an interesting challenge — . Basically, you check the weather every Wednesday and put aside the same amount that the temperature reflects. For example, if it is 53 degrees outside, that is how much you save that week. It is a small fun activity and has an element of surprise — and makes you wish for cooler times!
- Psychological satisfaction: 6/10. This one is pretty satisfying since you’re actually putting the money aside — whether in a jar or in a savings account.
- Effectiveness: 5/10. If you live in the sunshine state, you can expect savings of about $3600 (average temperature of 70 degrees). If you live in one of the colder ones (average temperature of 30 degrees), your savings will be a mere $1500. Nothing to be scoffed at, but still on the lower side of the spectrum.
- Simplicity of implementation: 7/10. There’s zero extra effort — but there’s also nothing in this challenge that is generating those extra savings, unlike challenges like the latte one, which give you the HOW with the HOW MUCH.
- Total score: 18/30.
4. 52-Week Challenge
It’s a simple concept. Every week, you save a different amount of money. The original concept wanted you to save according to the week of the year, i.e. $1 in the first week, $2 in the second, and so on till you reached $52.
The flexible version of this challenge is my favorite — you can save anywhere from $1 to $52 every week, depending on how you’re doing monetarily. The only catch is that you can’t repeat the number and that all numbers need to be covered at least once.
- Psychological satisfaction: 8/10. I would rate this one pretty high because you will probably cut off the figures you’ve covered already. There’s nothing like crossing off things on a list to give you mental peace.
- Effectiveness: 4/10. You will save $1469, which is a decent sum, but not as good as some other challenges can get you. Plus, this is another example of a challenge that only tells you HOW MUCH and not HOW.
- Simplicity of implementation: 6/10. Although the effort is weekly, like the Weather Wednesday challenge, it scores lower than it due to one factor — having to decide regarding how much you’re going to save that week. Extra decisions regarding our personal finance can lead to decision paralysis, defeating our entire purpose.
- Total score: 18/30.
3. Meal Planning
After housing, food is the largest category we spend on. It also is the category that has the most scope to cut down. The meal planning challenge requires you to plan either or both meals of the day, once a week. The added advantage, of course, is that eating home-cooked meals makes it easier to get healthy.
- Psychological satisfaction: 7/10. I would rate this challenge solidly in this category because putting together a meal from scratch can be a very therapeutic experience. Sure, you won’t have the visual pleasure of putting aside a few dollars every week, but be assured that your bills are gonna be ticking downwards with every meal prepared.
- Effectiveness: 9/10. An average American family spends a whopping $7720 annually on food — out of which $3365 is on eating out. Even if meal planning can cut this to a third, that is $2200 saved. And of course, this is at the lower end of the spectrum that can be saved. Meal planning can not only cut out your food spends outside the house, but can also reduce your grocery bills significantly by minimizing wastage.
- Simplicity of implementation: 4/10. Yes, meal planning is hard to do, especially when DoorDash takes a couple of seconds. It takes a few hours of your precious weekend to plan, shop, and prepare the meals. But it’s a real way to save up substantial amounts of money while freeing up time during the working week and improve your health as a bonus.
- Total score: 20/10.
2. No-Spend Challenge
The runner-up! The trusty old No-Spend challenge, whether for a specific day per week or the more difficult longer versions — no-spend weeks and months.
There are endless variations to this. There is, of course, the strict one — no spending at all, even on food. These are easier to do for a day or a week, but a month at a time may be a little rough to pull off. If you prefer continuing for some more time, you can choose one of the more lenient ones — spending on necessities is okay, but no discretionary spending.
- Psychological satisfaction: 8/10. We are so used to spending that the simple act of avoiding it, is oh-so-satisfying. Add to it the joy in finding things that can be enjoyed without spending, and the satisfaction levels will sky-rocket.
- Effectiveness: 8/10. No-spends can really surprise you with the amount of money you can save if you just don’t — spend. From about $200 per weekend (totaling $10000 for 50 weekends a year) to thousands of dollars a month if you choose stricter and longer challenges, there’s a lot of money on the table.
- Simplicity of implementation: 8/10. No spending can be challenging if you bite off more than you can chew. Start slow and cut spending where you can. If you need gas and groceries, you need them. Start a day at a time, cutting only the discretionary. It is simple enough if you give yourself some leeway.
- Total score: 24/10.
1. Finding extra money
Ta-da! Our grand winner!
This is my favourite challenge for one simple reason — while most other advice online focuses on reducing spending and living like a monk, the other side of the equation is often woefully neglected.
There’s only so much you can cut from your budget, without losing out on a reasonable quality of life. But if you decide to earn more money — the sky’s the limit.
- Psychological satisfaction: 9/10. When you push yourself to think of novel ways of making money, even a few dollars a month can make you deliriously happy. Plus, it is a virtuous cycle. The joy of earning more makes you want to earn more.
- Effectiveness: 9/10. This is the only challenge where it is impossible to quantify how much you can save — it could be a few hundred dollars a month if you sell some unwanted articles lying around. It could be a few thousand dollars if you get a side hustle going. By the way, I have an article for you, if you want a side-hustle that everyone can do — no special skills required.
- Simplicity of implementation: 7/10. It isn’t easy to earn money, especially when there’s just no time left in the day to breathe, let alone work more. But it is the first step that’s the hardest. Once you build a secondary income stream, life gets easier. Suddenly you have enough money to buy some time back, which you use to earn more money and so on. It is the only way out of the rut, so grit your teeth and start.
- Total score: 25/10.
Like everything else in life, huge leaps won’t take you as far as small steps every single day. Take control of your financial life before it decides otherwise!
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