What’s Wrong With Savings Challenges

wrongwithsavingschallengesHave you become one of the many many many people who are caught up in one of the savings challenges?  If you haven’t heard of these yet, they’re spreading the social networks like wild fire, and for someone who doesn’t have a habit of saving any money, they can be both good and bad.  If you jump right into one without any thought, you’re not going to succeed.  You might succeed in completing the savings challenge, but you’re going to fail in another area of your life unless you take the right approach to one of these challenges.  The sink or swim method for these challenges will almost always end in sinking. Here are a couple questions to consider before doing a savings challenge:

 

  1. Do you have a budget? – If not, you can’t save properly!

    Saving will do you absolutely no good if you don’t have a budget.  Please go back and read my post titled “Do you know where your money is going?” You’ll find information on how to begin and even a budgeting form to help you get started.  You can save all day long, I’m not against saving at all, in fact I encourage it, but if you don’t have a plan for your money, and I mean every dollar you make, taking on a savings challenge will cause you even more stress trying to keep up.

  2. Are you still in debt? – If so, put it towards the debt, not savings!

    If you’re using a savings challenge only as a way to build your emergency fund, this could be a great system to help in that area, but if you’re using it just to build up a larger savings account and you’re still in debt, this is not the best way to go about it.  Let’s change the focus of building a larger savings account to paying off your debt.  If you have a budget, and the savings challenge is in that budget, put all that money into your debt snowball instead of the bank account.  This will do 2 things. The first will help you pay off that debt so much faster using the snowball method.  The second thing is it will allow you to build your savings so much faster after your debt free by allowing you to add your old debt payments to the savings as well.  Think of the possibilities!

 

As I said before, it’s not that I am anti-saving. Far from it. However, one thing I’ve noticed with a LOT of people doing these savings challenges is they’re all either in debt still or they don’t even have a plan for their money.  To me, I have to ask, and often do, what’s the point?! Why would you save money when you don’t know where it’s going or when you’ve borrowed money from someone on a credit card at 20+% interest? I love the idea of the savings challenges, but please make sure you have a good foundation with your financial situation before you jump in feet first!

 

Later we’ll look at some alternative ways to save money if you are in a challenge and doing it properly (budgeting and debt free), but also if you’re wanting to take some money and throw it towards debt.  What are some of the ways you have saved money in your day to day lives? Let me know below in the comments and I might use your ideas in the next post!  Thanks!

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