Some things transform our finances just as well in the physical world as they do online. The Penny-A-Day Savings Challenge (saving 1p today, 2p tomorrow, 3p the day after, etc) is one of those.
Whether using a jar or a mobile banking App, we can still amass a stunning £668 in one year.
The premise is simple. We start saving one penny and increase the amount by a penny a day. In the first week, that’s 1+2+3+4+5+6+7p, so 28p. Sounds easy. The key to saving hundreds, though, is getting into a habit. After a couple of months, we’re looking at 50p plus per day but we’ll have eased into it so gently that we’ll be thinking about it from the start of the day. ‘Maybe I could a free paper instead of buying one and then I’ll put that money into the jar’. And so it grows.
SkintDad has a ‘challenge chart’ for people taking the Penny a Day Challenge. It’s great because we can keep track of where we’re up to, ticking off the days as we go. (See SkintDad’s blog here.)
Digital bank Monzo has no branches but offers current and Mastercard accounts supported by the latest App technology. It leads the digital game on banking and one feature is its Coin Jar. The App allows customers to put money aside into different pots but we can also round up payments to the nearest pound and our change goes into the Coin Jar. They have also automated the Penny-A-Day Savings Challenge process (with an Applet) but some people want to keep tight control of every penny every day. For them, it’s just a case of opening the App and transferring that day’s amount to their savings.
(To apply for an account, we have to download their App from our mobile’s App store. There is no credit check except for overdrafts. Any of us avoiding the temptation of debt should think carefully about accounts with overdrafts.)
There are a couple of top tips with savings. Firstly, set a goal and imagine what you’ll do with the money. The Penny-A-Day Savings Challenge should ensure a debt free Christmas, for example. Experts say a rainy day fund of about a grand will protect us against most setbacks, so we’d be most of the way there. Secondly, we need to decide if it’s a stash we need access to in emergency or whether we want it out of reach. If it’s the latter, we might be able to find an account that pays more interest for making it harder to retrieve. (See the Quids in! guide to Savings.)
See also: The 5 Savings No-Nos