Putting money in a savings account seems simple enough, yet it's often a struggle for many. In 2014, the average U.S. family's savings account had a balance of $3,800, according to an analysis by Statistic Brain of federal data. While there has been an upward trend in the amount U.S. residents have been stocking away each year, they should increase their savings account balances to meet their long-term goals like saving for retirement.
A survey by Bankrate found 36 percent of U.S. residents have not begun saving for retirement, which could impact their quality of life later on. Statistics Brain said 1 in 4 families had no savings at all.
When building your savings account, take the challenge head on. To help you save money, consider tackling the 52 Week Savings Challenge.
What is the 52 Week Savings Challenge?
Named for the 52 weeks in a year, the challenge involves putting away a little money each week in your savings account. The amount increases each week. For example, you'll start off depositing $1 for Week 1, eventually depositing $52 in the final week of the challenge. If you manage to save each week of 2015, you will be $1,378 richer in your savings account. This is 36 percent of the average amount found in U.S. savings accounts in 2014.
How to Participate in the Challenge
The beauty of the challenge is you can start anytime in the year. To participate in the 52 Week Savings Challenge, you can either use a savings account or simply have a jar for collecting the cash. The advantage of a savings account is that you will be less likely to dip into your savings as opposed to having a jar. A container makes it easier to pluck out the money whenever you feel the urge to spend. A savings account can also allow you to grow your account because of interest.
Ways to Use Your Extra Savings
There are a variety of ways you can use your newly earned savings, from buying what you really want at the end of the year to paying down debt.
Here are ways to use your challenge's savings:
- Pay off credit card debt
- Grow a down payment for a house
- Put down an extra payment on your mortgage
- Erase the lowest debt balance and tackle the next biggest
- Create an emergency fund
- Add to or start a college fund for your children
Tips to Maximize Savings
The 52 Week Challenge is a good starting point for those who are not used to saving. To help achieve your goal or even increase your total balance higher than $1,378, follow these tips:
- Save more each week. Although the guidelines for the challenge state starting off with $1 for the first week, you could decide to save more than that depending on what you feel comfortable with.
- Set reminders each week. When you just start to save money, it helps to have reminders each week that you should deposit or transfer money into a savings account.
- Open a high-interest savings account. According to Today, you could open a separate savings account that has a high interest rate to grow your savings even higher.
- Follow a savings chart. Sometimes it helps people to know ahead of time how much they need to save for the challenge. Print out a savings chart that lists out how much to save each month. It can help you keep track of the week and you could cross out the weeks as you move along.
- Start backwards. To give yourself a sense of accomplishment early on in the challenge, work backwards by saving $52 the first week and then reduce these payments by $1 each week.