I fucking love money challenges. As a naturally competitive person, gamifying self-improvement is totally my jam. I’m one of those weirdos who sets a New Year’s Resolution every year and always finishes it. Turning money, exercise, or learning a new skill into a game to be won makes it feel like I’m leveling up with every grand I save, baby!
I’ve tried a number of money challenges to achieve my goals (like paying off my student loans in half the time). But some criticize money challenges. They risk starting you on a financial yo-yo diet in which your good habits wax and wane according to whether you’re currently pursuing a money challenge.
Preach, Sir Ian McKellen! I don’t buy the yo-yo diet theory of money challenges. Rather, I think money challenges are a fresh and exciting short-term method of meeting long-term goals. And while I’m sure there have to be downsides, I blithely hypothesize that the good far outweighs the bad.
Take the 52 Week Challenge, for instance. Sure, it’s a short-term way of saving money. You have no obligation to continue the challenge or start it over once it’s done. But through the experience, you build the kind of savings muscles you need to make tucking money away a permanent part of your life. Plus it’s fun. All the cool kids are doing it!
Let’s look at money challenges through a realistic case study. How can they help—and hurt!—financially?
Why try a money challenge?
Mine is but one experience. So to flesh out my understanding of the hidden benefits and downsides of money challenges, I turned to sisters Katelyn and Gabby, who recently finished a money challenge themselves. Full disclosure: they’re two of only a handful of my IRL friends who know about this blog (hey girls!).
A little background on my darling volunteer guinea pigs:
Katelyn is a 32-year-old married small business owner who owns a home. She’s been investing since she was 21. She says, “I have what I think (hope!) are relatively successful but conservative diversified investments. Since opening my business I’m not able to put as much towards savings as I once did in a corporate job. But I’m leading a happier life, so for now, I’m trying to focus on the balance.”
Gabby is 30, single, and works as an account manager at a large company. She’s a new home owner, and explains, “I started investing in 2012 when my company had the option to have a 401(k) with a small match percentage. I feel like I’m significantly behind in saving per paycheck and for my future. At times, it feels like I’m just keeping my head above water with my expenses and spending.”
The challenge and the goal
Katelyn and Gabby started their money challenge with the goal of saving. But it was also to “test our spending will power and discover areas of weakness.” Bad-ass, no?
Here’s how it worked: They each took out $125 in cash to cover their complete spending over the course of a week. That includes food, bills, shopping, gas, the whole enchilada. No exceptions! Within the first few days Katelyn had to pay $45 to the sprinkler maintenance guy and another $12 in fees to her soccer league. No paying ahead or delaying payments. If the money was due that week, it had to come out of their $125.
The money challenge immediately put their personal financial struggles in perspective.
“I find that I typically have very predictable behavior during the week that helps me save,” Gabby said. “My behavior and spending is more erratic over the weekends or when impromptu plans come up.” She had to face this problem head-on when an impromptu happy hour with coworkers left her with only $30 just before the weekend.
The main benefit is obvious: mo’ money!
But according to Katelyn, the challenge also positively affected her other goals. “I cooked (or my husband cooked) every single meal that week and literally ate whatever I wanted, but lost weight. Certainly confirmed what I already knew: dining out causes weight gain. What the fuck is in that food?!”
You hear that? A spending diet can affect your actual diet. And to be fair, Katelyn’s one of the fittest, most athletic broads I know. So if refraining from dining out affects her weight that much, there’s got to be something to it.
The challenge also had long-lasting effects on Gabby’s savings. Following the challenge, she realized she could easily increase her 401(k) contributions. “It was very minimal, but if I don’t see it in my checking account, I hopefully won’t spend it.” I completely agree.
According to Katelyn, “I’m completely my father’s daughter (i.e. a cheapskate), so it felt a little addicting and relatively easy to cook 3 meals at home, brew my own coffee, and basically avoid Amazon.com.” Hear that, kids? Being frugal is addictive. That’s proof positive for those preaching the gospel of frugality.
This money challenge proved to the sisters that they can trim the fat in their budgets. And that they do have the will power to accomplish big financial goals. That assurance is well worth the challenge. Plus, Katelyn says: “Like a successful diet (there is such a thing), it feels like something I can fall back on when I need to tighten it up.”
Rinse and repeat for best results!
Gabby is single as fuck (HER WORDS NOT MINE ILU GABBY). Dating hogs a fuck ton of one’s time, money, and resources.
“How can one be social (and let’s face it, try to upgrade my status from single af) if they cannot go out?” Gabby said. “I worry that if I want to try to stick with this challenge or a variation of it, I’ll become a hermit. I need to reevaluate how I can be social but not overspend.”
That’s the million dollar question: how to be frugal and financially responsible while still getting out there and making connections? Because like it or not, you can’t find a romantic partner or even benefit from networking with industry colleagues while staying home organizing your collection of reusable cloth grocery bags. We’ve touched on this a little bit in the past, but it’s clearly something others are wrestling with. So CHALLENGE ACCEPTED. More writing on this topic to come, my fabulous frugal ferrets.
Working within the confines of a strict challenge can also be really fucking stressful. Both sisters mentioned stress dreams and feeling overworked. “Having to cook or prepare a meal when I was on hour 12 of the work day totally sucked,” Katelyn said, “All I wanted to do was order takeout. Also, I work from home and getting out of the house is my only way to really take a break. That frequently means walking my dog to my favorite coffee shop for a $4.32 iced latte.”
Even after the challenge, Gabby said “The stress is still very real. Granted, I bought an $80 bag at the flea market (it was on sale!) and as good as it felt, as much as I love it, I wanted to puke at the same time.”
Interviewing Katelyn and Gabby revealed one more positive benefit of their joint money challenge:
The two of them felt supported by doing the challenge together. They were accountability partners in this process, a technique Kitty and I firmly endorse. It’s literally the only reason any of this blog gets written (stop playing Overwatch and go write about the housing market, Kitty).
“My husband was supportive and started the week also doing it, but flunked out after three days from online shopping and buying sports tickets. It really meant that Gabby and I had to do it together,” Katelyn said. “And we did!”
Gabby said that “My coworkers were intrigued at first. . . but some of these coworkers were the same ones that wanted me to stay for 1 more drink at happy hour so it quickly flew out the window for them.”
So it was the sisters vs. money, with everyone else either failing fast or actively standing in the way. Working together and checking in with each other made it easier to focus on the positive results of the money challenge and get through the stress and fatigue.
So my verdict? Despite the stress and the temporary social isolation, I’d say the positives outweigh the negatives of this money challenge. Our test subjects accomplished their goals of saving, practicing self control, and identifying their areas of monetary weakness. And they can choose to keep up the challenge, or return to it when they need to tighten their respective monetary belts. I call that a win.
Have you ever tried money challenges? How’d it go? Tell us all about it in a comment below!