7 money saving challenges that actually work (and 3 that don't)

Saving pennies and pounds during the cost of living crisis might sound difficult – but it’s not impossible. If you're concerned about how to save money, taking part in a money saving challenge can be a fun and easy way to get in the savings habit.

You don’t need tons of spare cash to start saving either. There are several methods to save small amounts of money over time, which will begin to add up. To maximise any savings you might make, it's worth seeing if you’re eligible for a Help to Save account. Eligible savers get a bonus of 50p for every £1 they save in a designated savings account, up to a maximum bonus of £1,200.

Most money saving challenges involve following certain rules which tell you how much to save and when. Others involve giving something up (such as alcohol or chocolate) and putting the money you save to one side. Before you start, check out these things that you should never do when trying to save money.

Personal finance expert Andrew Hagger from Moneycomms says: “Rounding up payments is a great way to start saving, the amounts may be small, but you have to start somewhere and once you begin to see your savings balance grow it should hopefully encourage you to save even more in the future.”

Money saving challenges that work

1. 1p savings challenge

The 1p savings challenge has been around for years but it’s currently trending on TikTok so it's having a surge in popularity.

This challenge lasts 365 days and you can start it at anytime. You don't have to time it with the start of the new year. The general idea is that you start by saving 1p on day one, then increase the amount you add to your savings by 1p per day for a whole year. Instead of starting in January that might seem logical, it's worth thinking about starting the challenge in December. This means you save the lowest amount in what is normally the most expensive month of the year. 

Another way to avoid trying to save the highest amount is to work the challenge in reverse and save £3.65 on day one and just 1p on day 365.

Although suitable for people who can only afford to save a low amount, this challenge can be tricky. Not all banks will let you transfer small amounts each day, so  if you don't want to try the challenge with actual cash and a jar, it's easier to work out how much you'd pay each month, and transfer that into a savings account instead.

• Who’s this suitable for? Those who want to save little and often and get into a regular savings habit
• How much do you need to save? 1p on day one, up to £3.65 on day 365.
• How much will you save in a year? £667.95
• How easy is it? 4/10 (can be fiddly to do on a daily basis)

2. The £1 Savings Challenge

This simple money saving challenge involves saving £1 each day. If you complete the challenge, you’ll save £365 in a year (£366 in leap year). You can easily complete this challenge with the coins or put the money into a savings account. Similarly to the 1p savings challenge, your bank might not allow you to transfer a single pound into a savings account each day, so it might be worth transferring on a monthly basis instead. 

If you save with the coins, you'll need will power not to dip into it whenever you need change.

• Who’s this suitable for? This challenge is perfect for people who can’t afford to save very much and want to do something straightforward and easy.
• How much do you need to save? £1 a day
• How much will you save in a year? £365
• How easy is it? 9/10

3. The 52-week saving challenge

With this challenge you save weekly, rather than daily. The amount you save per week depends on what week it is in the year. So, in week one you'll save £1 all the way through to week 52 when you'll save £52.

The amounts in this challenge start off low but the final month will be a killer – you’ll need to save £49 in week 49, £50 the following week, then £51 and finally £52. That means you'll need to save £202 in the final month.

• Who’s this suitable for? Those who are able to save up to £202 in a month
• How much do you need to save? Between £1 and £52 a week
• How much will you save in a year? £1,378
• How easy is it? 6/10

4. The No Spend Week challenge

This saving challenge differs from the others because you won’t set aside a specific amount of money. Instead, you stop all spending, apart from on essentials, for an entire week. While this might be difficult for parents, especially when trying to keep kids entertained at the weekend, you could always adapt it to have No Spend Weekdays and see how you get on.

Nick Drewe from coupon and discount website Wethrift: “The #nospendweek hashtag has received 1.6 million views on TikTok - this hack is where you commit to a week of only spending on essentials such as groceries and travel to and from work,” 

“No spending should take place on any leisure activities or non-essential items, and is designed to encourage more mindful spending. From cutting out day-to-day expenses on things such as takeaways or going to a bar after work, you can assess how much you have saved at the end of the week.”

• Who’s this suitable for? Those looking to be more mindful about how much they spend
• How much do you need to save? This will vary on how much you normally spend on non-essentials
• How much will you save in a year? This depends on how often you do the challenge, but helps avoid needless spending
• How easy is it? 9/10 - you don't have to commit all year if that's not managable.

5. The Round-Up Hack

“This involves rounding all purchases up to the nearest full number, and adding the difference to your savings,” explains WeThrift's Nick Drewe, “For example, if you were to spend £5.75 on your lunch, you would round this up £6 and transfer the 25p to your savings account. Over time, adding the difference to your savings from all of your purchases will soon increase without the need to transfer significant amounts.” 

There are several banks including Monzo, Natwest, Starling and Lloyds that will do the rounding up for you when you spend on your debit card, and move your change into a separate savings account.

Alternatively, if you tend to mostly spend cash to keep on budget, then a savings jar will achieve the same result. But it can be harder to keep track of how much you've saved.

• Who’s this suitable for? Those who want to save without really noticing 
• How much do you need to save? Anything to round your spending up to the nearest whole pound
• How much will you save in a year? It depends on how much you spend, but five 25p round ups each day adds up to £456.25 a year
• How easy is it? 10/10

6. The ‘little vices’ challenge

This challenge means giving up one more of your 'vices'. These might include: 

• takeaway coffees
• buying lunches when you're out and about
• smoking
• chocolate
• alcohol
• takeaway dinners.

The idea is you put the money you would have spent on your ‘vice’ into a savings account instead. 

This can not only help your bank balance but can make you healthier and, depending on what you give up, also be good for the environment.

• Who’s this suitable for? Everyone
• How much do you need to save? Depends on what you’re giving up, but could be anything from a couple of pounds a week
• How much will you save in a year? If you stop buying £10 bottles of wine a week, you’ll save £1,040 in a year
• How easy is it? 3/10. You’ll need willpower to quit your vice and discipline to save the money, but if you manage it, the reward will feel doubly-sweet.

7. Set up a regular savings account

Most banks offer Regular Saver accounts where you save between £25 and £500 a month, with interest you earn paid at the end of the year. Even if you only save £25 a month, after 12 months you’d have saved £300. If the account paid 5% interest, you’d have a total of £308.13 after a year.

Andrew Hagger founder of personal finance website Moneycomms says: “By setting up a regular standing order to your savings account on or very close to payday, you'll soon become accustomed to that money not being in your current account where you may have previously be tempted to spend it.

“After a while this practice will become the norm and your savings balance will grow month on month and with a bit of luck will spur you on to persevere with the savings habit you've recently adopted.”

• Who’s this suitable for? Those who want to start a regular savings habit without taking on a challenge
• How much do you need to save? From £25 a month
• How much will you save in a year? £300 if you save £25 a month
• How easy is it? 10/10 - you can set up a standing order to transfer the money from your current account to your savings account on or just after pay day and you don't have to worry about forgetting.

Money saving methods that don't work

1. Saving whatever is left at the end of the month

Saving whatever you have left at the end of the month might seem like a good idea, because it's not money that you've needed throughout the month. But you run the risk of not having anything left to save after the month is over. 

By putting money aside for savings just after pay day, you can then adjust your budget for the month knowing your savings have been accounted for.

2. Trying to save too much each month

If you're trying to get into a regular savings habit that you can sustain throughout your life, trying to save too much at a time can be hugely difficult, not leave you enough money for your essentials for the month, and mean you give up the savings habit before it's even got started. 

It's a good idea to take a look at how much money you have coming in and how much you have going out, and seeing how much is a realistic amount to save each month. You might even consider what things you can cut back on to save a bit more, but it's important that you can still pay for all your essentials before trying to save.

3. No spend month

A no spend week is one thing, but a no spend month can be incredibly difficult to stick to, especially if you have children. 

An important thing to remember with any money saving challenge

No money saving challenge will work if you set yourself an impossible task. Stick with challenges that you think are achievable and then once you've nailed those, you can try something that feels a bit more challenging.

But the most important part is to not be too hard on yourself if you don't manage to stick to a challenge 100%. Just do the best you can, save what you can, and try not to dip into your savings if you don't have to. Just by attempting a challenge, you'll become more in tune with what you are spending and where you might be able to cut back and be a bit more mindful when spending.

Sarah Handley

Sarah is GoodtoKnow's Money Editor, writing and editing all things money - whether that's how to save it, avoid wasting or, or advising on the wisest way to spend it.