Why the 52-Week Savings Challenge Doesn’t Work

Ever heard of anyone who actually succeeded in doing the 52-week savings challenge? Last January 2014, I’ve read quite a number of blog posts encouraging readers to do this savings challenge. I’ve also seen several versions that transmuted the dollar values to peso with varying increments from 10 to 100 pesos. As 2015 started, I saw once more a host of blog posts about this challenge. However, I have yet to read about someone who has successfully completed the 52-week savings challenge. (In case you do know someone who’s had, please do let me know.)

Why the 52-Week Savings Challenge Doesn’t Work?

The original 52-week savings challenge was in US dollars and if you’re working in the US, it would be quite easy for you to set aside $50/week even on just a $3,000/month income(the median household income in the US). Given that saving $200/month is doable and won’t hurt the budget much, why save only $9 during the first month of the year?

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52-Week Savings Challenge

It’s an entirely different story for those in the Philippines where median household income is roughly 30,000 pesos which is just about $1,000. Setting aside almost 10,000 pesos in 3 consecutive months is near impossible.

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52-Week Savings Challenge in Philippine Pesos (initial savings of 50 pesos with 50-peso increments)

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52-Week Savings Challenge in Philippine Pesos (initial savings of 10 pesos with 10-peso increments)

For me, and many others I believe, this system just doesn’t work. Why? First, Saving should NOT be a challenge. You do not save just because everyone else is doing it or because someone designed a seemingly cool way of doing it. SAVING SHOULD BE A LIFESTYLE. Incorporate it in your daily life and it becomes as natural as breathing, but also requires a little out of the box thinking like considering how you could check up on your mortgage to save money.
Also, consider things like replacement windows which help you to save without even having to think about it.

Second, the 52-week savings challenge is somewhat impractical and inefficient. The original system has one saving $1 on the first week of the year, then $52 on its last week. Bulk of the savings fall on the months when expenditures are highest which makes this system impractical. Inefficient simply because there are simpler ways to save much more than the $1,378 total of the 52-week savings challenge.

An Efficient Way to Save

Have you heard of the Savings Equation? It goes like this:

INCOME – SAVINGS = EXPENSES

This, at least for me, is the best way you can grow your savings and, eventually, increase your investments. By setting aside money right after receiving your salary, you ensure monthly savings. This also disciplines you to live well within your means. How much should you save each month? Ideally, you should set around 20% of your income as savings; or 10% at the least. However, with the average salary of the working class, this may not be feasible.

Always save the maximum amount that you could while still having enough left for your basic needs. It doesn’t matter if it just amounts to 1,000 pesos per month – that would still give you 12,000/year which could double in 5 years time if invested wisely. Whatever amount you choose, the important thing is to set aside a specific amount every payday. Grow your savings by investing in mutual funds – you only need a minimum investment of 5,000 pesos so there’s no excuse not to have one.

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How to Save More

Want to increase your savings while barely noticing it? Use an old fashioned piggy bank or glass jar. When you get home every night, dump all the coins in your pocket and wallet into your piggy bank. If you need coins for transportation fees the next morning, set those aside first, then dump all the rest in the piggy. You’d be surprised how much your little piggy would weigh in just a few months.

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Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Live simply. Do you really need a new desktop, a laptop, a tablet, or a smartphone EVERY YEAR? Why buy a 6,000 peso jacket when you can get a good one for a quarter of that price? Live well within your means. And for a little extra help, see how you can increase your income online click to earn money with Clixsense.

Again, let me leave you with this, Saving isn’t a challenge, SAVING IS A LIFESTYLE.

Off the Bookshelf: I Wish They Taught Money in High School

Well, I do remember studying about money in high school. We were taught to count money and change as early as first grade. We also had business math in high school and we had those investment problems in algebra. So, yeah, in a way we were taught money in high school. But, like the authors of I Wish They Taught Money in High School, I wish they did teach us how to apply all those “word problems” in real life. If somebody had taught me how the stock market worked in high school or even how to invest in mutual funds, I’d have made a fortune by now! It makes me question that if a lot of students had been taught how to apply such techniques, would we need as many payday loans in order to survive in the world. Maybe we would all be rich and live happy lives knowing that our teachers gave us all the skills we needed to be able to look after our money and spend it wisely. Who knows? But this didn’t happen and consequently, it inspired this book to be created.

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The book, I Wish They Taught Money in High School, comes in two parts written by Sharon Que and by Clarissa Serina-de la Paz. Both authors share their respective money journeys with Sharon Que focusing on entrepreneurship and Clarissa Serina-de la Paz focusing on investments. Both debunk the myth that you have to be rich to start a business or to have investments. Their personal narratives and the quirky illustrations by GooglyGooeys.com make the book a light yet very informative read.

No One’s Too Young to Start a Business

In my generation, kids were supposed to focus on their studies and leave money-making to their parents. Prior to being gainfully employed after college, all our expenses were funded from allowances given by our parents. Unless we took stock market trading courses or had lessons on how to pay bills appropriately, we were basically just thrown into adult life and the way the world works in terms of money. Ms. Que though shares with us how she, as a young child, was already exposed to the rigors of business. This early exposure to entrepreneurship has paved the way for her early success in the field of business. Yes, she was already a young entrepreneur at age 10. 🙂 In the book, she encourages us to start a business and turn it into a way of life. She also shares with us how to be an entrepreneur without shelling out any capital. So whether you choose to open up a one product shopify store, a t-shirt printing company or sell jewelry, there’s no better time to start this than the present! The book also provides you with a step-by-step guide for registering your business. If you’re looking for other tips and tricks for starting your own business, such as how to get a higher sales count, then you can look at this negotiation skills training course to help you on the road to being successful. There is plenty of help out there you can find no matter the area you’re looking to improve on in your business, whether you’re just starting off or have been going for years.

From Working for Money to Making Money Work for You

Clarissa Serina-dela Paz on the other hand shares her money journey as a fulltime employee. She gives very helpful advice on how to make your money work for you. Those who slave in the office only to have paychecks barely last a second in their hands would be wise to take Ms. Clarissa’s advice.

Specific and Attainable Goals for Financial Freedom

Both authors espouse goal setting to achieve financial freedom. They do not claim to make you millionaires overnight but share doable ways on how you can grow your wealth even with meager resources. Though most of their recommendations can also be found in other online sites and books, it still is inspiring to hear their personal success stories. Unlike books written by financial experts, these two books do not contain highly technical terms that make our heads dizzy. They provide concrete ways – the very same ones they used – to achieve financial freedom. I Wish They Taught Money in High School is highly suggested for those who want to grow their money but have no idea where and how to start.

Steer Clear of Debts

Being on the red list of debt collections really should be the last thing you want to do. Though it may be necessary to get a house loan or a car loan, other forms of debt should be avoided. One of those that many people fall prey is the credit card trap. Many mismanage their credit cards and end up deep in debt before they could stop swiping countless purchases. If this has happened to you, do some research into your options and learn about credit card debt relief, it might help you out. You might also be lucky enough to have generous parents who are willing to release some of their home equity to help you get a mortgage by using later-life finance services. Here’s what you can do to get out and keep out of debt:

  • Pay off all your debts. Any debt would put you deeper and deeper into the bankruptcy pit so pay off all debts the soonest possible time. If you are having difficulty paying off all the accumulated interests, do let your creditor know. Your creditor may soon get a California collection agency to get you to settle your debt if you suddenly ignore notices from them. Try to settle an agreement that’ll enable you to fully pay what you owe them. If you’re looking for alternatives, you can always clear debt with a lifetime mortgage which can really help you out when you’re in need so it may be worth doing.
  • Live within your means. Don’t spend more than what you earn. You may treat yourself once in a while to a little luxury, but you really should not shell out a year’s salary for something you don’t really need. Really, don’t buy a Porsche if a Kia’s all you can afford.
  • Save Before You Spend. Here’s a great rule of thumb: Earnings – Savings = Expenses. Most people save whatever is left after all the expenses but more often than not, they are unable to save anything because of “emergency” purchases which are more likely unnecessary ones. If you want to have a sizable amount in your nest egg, save first before you spend.
  • Grow your investments. Keeping your money in savings accounts may give you security but interest rates on savings accounts are much lower than the inflation rate. You may try investing in mutual funds or the stock market which yield higher earnings. They involve certain levels of risks though so put some thought on your investment. Perhaps some people could consider investing in cryptocurrencies, like Bitcoin. That is believed to make people money, so it might be worth getting a portfel bitcoin (or Bitcoin wallet as we would say in English) to store the digital assets safely. Hopefully, Bitcoin could make you some money. If you are business savvy, start one that would provide substantial profit.


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Practical Tips On Lowering Household Expenses

With oil prices rising on a steady uphill trend, fuel, and food items naturally follow the same trend. Unfortunately, workers’ wages are on a plateau and can’t keep up with skyrocketing prices. We, consumers, have no choice but to tighten our belts and to deal with the high cost of living today, and we all need to be careful with your money.

Here are some tips on how you could lower your household expenses so you can allocate a greater part of the household budget to more important needs:

  • Always have a list before going to the grocery. And, stick to the list! Avoid impulse food purchases at all costs. Also, check out bulk sales as it’s more economical to buy items you frequently use in bulk. Additionally, you can always look out for discount codes that you can use for your grocery shopping. Even if you check out something like this Getupside Review, this could be a step in the right direction when it comes to eventually saving money on your shopping. We can all do with saving a little bit here and there, especially when you have other things to pay for in the home.

  • Take advantage of discount coupons found in newspapers and online. Be wary though of being swayed into buying something that you don’t really need just because you can get a discount. Purchase only the items that are necessary to take full advantage of these coupons. Frugal Dad suggests that you find coupon codes before ordering from helly hansen and other stores.
  • Lower your electric bill by using energy-efficient LED lamps and by lessening the use of electronic gadgets. You really don’t need a handheld mixer to prepare mashed potatoes and just about every meal you whip up. Do it the oldfashioned way and use those muscles – it’ll be great exercise too. 😀
  • Conserve water. By doing so, you not only get to save money with lower water bills but you also save the earth from further degradation. Taking shorter showers, using half flushes, using a water-efficient washing machine and checking for leaks are just some of the things you can do to conserve precious water.
  • Shop the sales. Especially for clothes shopping, sale season is the perfect time to update your wardrobe. Companies like NEXT have sales throughout the year, so keep an eye on the NEXT Sale Dates and How to get a VIP Sale Slot to save some big cash on that new best outfit.
  • Concoct your own natural cleansers instead of purchasing expensive ones. Sometimes, all you need is a little baking soda or vinegar to make a stubborn stain disappear. Aside from saving money, you’d be helping Mother Earth a great deal by going “green”.
  • Always, always, always pay your bills on time to avoid late charges. If you use a credit card for your household expenses, make sure you pay the full amount due before the due date. I know of people who have fallen into debt for mismanaging their credit cards. I’ve also known people who decided to use payday loans and it got them in a headspin over what to prioritise so they decided to use payday loan consolidation, I hear it was useful for them.

It’ll be wise to follow some, if not all, of these tips. Do remember though that frugal living isn’t only about scrimping on expenses to save money. Frugal living is about avoiding waste and efficiently using your resources for a better life. We really can’t do anything about the skyrocketing price of commodities, but we can do something to live a better life in spite of the high cost of living.