Money challenges seem to be popular at the end of the year, probably because we’re all nursing our holiday spending hangovers. These challenges might be gimmicky, but they’re still a great first step for getting started with personal finance.
If you’ve never heard of a money challenge, it’s basically a goal with steps to motivate you to save more cash during the year. Chief among these is the 52-week challenge, and there are a number of variations on it. As popular as these challenges are, not everyone is a fan. When I wrote about them once at Get Rich Slowly, some readers said money challenges simplify personal finance; they don’t focus on the big picture. Others say they aren’t ideal savings strategies: automatically paying yourself first is the best, most practical savings habit you can develop.
Those are valid points, but here’s why I think money challenges are still great for personal finance:
Challenges appeal to money noobs: To a lot of people, personal finance is intimidating. Most don’t know where to start, so they don’t start at all. But a first step is all it takes. If you’re not sure how to take that first step, a challenge is an easy, accessible way to get your feet wet in the personal finance world.
Challenges are fun: Let’s face it, personal finance isn’t the most exciting topic. Turning it into a game can be motivating. You might actually look forward to managing your money when it’s presented as a challenge instead of a chore.
Challenges focus on control: Yes, automatic saving is a smart, practical money saving strategy. But savings challenges are designed to give you a hands-on sense of control; you’re taking the wheel and making it happen. Automating everything is great, but sometimes you need to get down and dirty with your money. Doing so gives you a better idea of what’s going on with your finances (and maybe what’s going wrong with them). A sense of control is a huge part of successful money management.
Finally, money challenges are great learning opportunities. It’s hard to make it through a challenge without learning a thing or two about your habits. If you’re looking to get started, here are a few more of these challenges and techniques we’ve covered:
While there’s definitely more to personal finance than these challenges provide, they’re still a great introduction to money management.
Photo by Steven Depolo.