The 1p Savings Challenge: Save £667.95 in a Year

5 min read

---

The 1p savings challenge was the first savings challenge I ever took. It helped me build long-term savings discipline and is an excellent challenge for beginners!

The 1p savings challenge is relatively easy for beginners to tackle when they first start saving. It is an excellent tool for building saving discipline and developing the habit of putting money aside regularly.

Saving money is a goal many of us aspire to achieve, but it can be challenging to find the discipline or motivation to save consistently. That’s where the 1p savings challenge comes in.

Let us take a look at what the 1p savings challenge is and how to get started.

What is the 1p Savings Challenge?

The 1p savings challenge, also known as the penny challenge, is based on the principle that consistently saving even the smallest amount can lead to significant savings over time. This helps build discipline and encourages you to save small amounts of money daily.

The concept is straightforward: you start by saving just 1p (or the equivalent in your local currency) on the first day, then 2p on the second day, then 3p on the third and so on. Add 1p to the amount you saved the previous day every day. This continues until day 365, when you will save £3.65. This incremental increase runs for an entire year, resulting in £667.95 saved by the end of the year.

Many readers like to start this challenge at the beginning of the year, but it can be done anytime.

If you find saving more significant amounts at the end of the year too hard, reverse the challenge and start with saving £3.65 on day one, £3.64 on day two, and so on. This will then mean you will save tiny amounts by the end of the challenge. This is especially useful if you start this challenge on January 1st, meaning the lower payments will be in December when families usually have higher expenses.

💡Tip: Use the total £667.95 saved to build up your emergency fund for when that unexpected situation arises.

How the 1p Savings Challenge Works

To get started with the 1p savings challenge, download our simple checklist and follow the steps below:

1. Choose a method, physical or digital. Traditionally, this challenge was done physically with coins and a piggy bank, but as cash becomes a thing of the past, readers have moved on to complete this challenge digitally. However, collecting coins physically gives you that feeling that can’t be replaced!
2. On day one, start with 1p and drop it into your piggy bank or transfer 1p to a separate savings account.
3. On day two, add 2p. On day three, save 3p, and so on until day 365.
4. Be consistent: Stick to the challenge and save every day, no matter how small the amount might seem. If you miss a day, add up the total of the missed day and the current day and add that amount to the savings.
5. Watch your savings grow: Over time, your daily contributions will increase, and you will be amazed at how quickly your savings accumulate.

🥜 In a nutshell: Start with 1p on day one, then save 2p day two, 3p day three, 4p day four and so on for 365 days.

The Psychology of the 1p Savings Challenge

The 1p savings challenge leverages several psychological factors that contribute to its effectiveness:

1. Consistency: Starting with just 1p makes it easy to commit to the challenge. It builds a sense of consistency essential in creating a savings habit.
2. Incremental Progress: The gradual increase in daily savings keeps participants engaged and motivated. It turns saving into a game-like approach, which people find appealing.
3. Visual Motivation: A physical container (piggy bank) to collect your daily savings is a tangible representation of your progress. Watching the container fill up can be a powerful motivator. You can achieve the same digitally, seeing the account grow. However, it is less powerful.
4. Achievable Goals: The daily saving targets are possible for almost everyone, regardless of their financial situation. This can boost confidence and a sense of accomplishment.

Benefits of the 1p Savings Challenge

Let’s take a look at some of the benefits of the 1p savings challenge and how it can help you;

1. Emergency Fund: By the end of the year, you’ll have amassed £667.95, which you can use towards your emergency fund. This financial cushion can provide peace of mind when unexpected expenses arise.
2. Building Discipline: The 1p savings challenge instils financial discipline. Even though the amounts are small, it compels you to allocate a portion of your income to savings regularly. This is a valuable skill for managing your finances effectively.
3. Small Steps, Big Rewards: This challenge demonstrates that small, consistent contributions can lead to substantial savings. It’s a valuable lesson for anyone looking to achieve long-term financial success.
4. Reduced Financial Stress: Knowing you have savings set aside can significantly reduce financial stress. This will improve overall well-being and reduce the anxiety associated with unforeseen financial setbacks.

Tips for Success

Now that you understand the basics of the 1p savings challenge, here are some tips to ensure your success:

1. Choose a Suitable Container: If this is your first time doing this challenge, I recommend using a physical container rather than a digital one. Choose a container that you find visually appealing and fits well with your living space. This will make it more enjoyable to watch your savings grow.
2. Set a Reminder: Stay on track by setting a daily reminder at the same time each day to ensure you remember to make your contribution.
3. Make it a Family Affair: Involve family members or housemates in the challenge. You can save together and compete to see who can stay on track.
4. Automate Your Savings: If you prefer the digital approach, automatically transfer from your current account to your savings account daily.
5. Track Your Progress: Stay on track with our checklist and record your daily savings. You can use a physical notebook or a digital spreadsheet. This will help you stay accountable and motivated.

Final Thoughts

The 1p savings challenge is a simple yet effective way to kickstart your savings journey. It is a powerful tool for anyone looking to develop a consistent savings habit and work towards financial security.

This challenge can help you build a financial safety net in the form of an emergency fund. It will also develop discipline and gain a sense of accomplishment as you watch your savings grow.

So, why wait? Start the 1p savings challenge today, and take that important step towards achieving your financial goals!

Remember to download our handy checklist to help you on your savings journey!

Have you tried this challenge? How did you get on? Let me know in the comments below.