Wednesday, March 11, 2015

Taking the 52-Week Challenge

This week's Dollar Stretcher newsletter brought news of a new "52-Week Savings Challenge" at Every Tuesday for the next 52 weeks, the site will announce a new money-saving challenge for its readers. The main challenge page lays out thumbnail photos for each week, and clicking on any photo will take you to a detailed description of that week's challenge. To put their money where their mouths are, reporters from the Bankrate site will be attempting these challenges themselves and posting about their experiences. So naturally I figured, how could I do any less? (Especially when it means that I get one easy blog post per week out of it for a whole year.)

The first week's challenge, rather confusingly, is "The 52-Week Money Challenge." This sounds so similar to "The 52-Week Savings Challenge" that at first I thought they were the same thing, but eventually I worked out that the money challenge is actually the first weekly challenge in the yearlong savings challenge. It's easy to see why they started off with this one, since it's a challenge that's designed to last all year long. It's designed to help people get in the habit of saving by starting off slowly, with a goal that's easy to meet, and increasing their savings target each week. Thus, in the first week, you aim to save just one dollar; in the second week, two dollars; and so on, increasing the goal by a dollar each week, until by the last week you're socking away 52 bucks at once.

That's the theory, anyway. Unfortunately, the Bankrate reporter who attempted the challenge never made it beyond Week 7. She blames her failure on the fact that she uses her debit card "religiously," so she ran out of "folding bills" to stash in her new hot-pink, leopard-spotted piggy bank. (This sells for $9.48 at Walmart, so deducting that startup cost brings the reporter's total savings from $28 down to a paltry $18.52.) This sounds like a pretty flimsy excuse, since the article goes on to point out that the challenge doesn't require savings to be stashed away in cash; you could just as easily use your online banking to transfer the required amount each week to a special savings account. (The financial expert quoted in the article recommends making it an "inconvenient" account, since you're less likely to dip into your stash if it's someplace where you can't easily get at it.)

The problem with this challenge, for me, is that it's a bit like the budget rules I complained about in last Wednesday's post: it starts from the premise that the only way to save money is to trick yourself into it. Of course, the way the challenge is structured makes it clear that it's really aimed at beginning savers, who need to ease into the habit gradually, but for more experienced savers like me, it's a little bit silly. Stashing a dollar or two away each week in its own account isn't actually going to boost my overall savings for the year; it'll just make balancing my checkbook more of a hassle. Fortunately, the article suggests a way around this problem: instead of saving a little more each week, you could just tot up the total amount for the year—$1,378—and split it up into regular monthly or weekly chunks. So for me, the easiest way to fulfill this challenge was simply to take the entire $1,378 as one lump sum and transfer it to my online savings account. I was planning to make a transfer soon anyway, since the balance in my regular account was getting a little high, so I just set up a transfer of $1378 to start with, and I'll make a second transfer later if I need to. There, all done—and 51 weeks ahead of schedule, too.

My experience with this first weekly challenge, I have to say, isn't leading me to expect much from the rest of the challenges for the year. The problem isn't just that this particular weekly challenge wasn't a very useful one for me; it's also that, considering they were kicking off the whole yearlong challenge with it, the editors at Bankrate don't seem to have taken much care with their presentation of it. I noticed four problems with it right off the bat:
  1. The similarity between the names of the whole, year-long series of challenges (52-Week Savings Challenge) and the first challenge in the series (52-Week Money Challenge) is unnecessarily confusing. Surely they could have called the series something else, like "A Year of Savings Challenges," to make it clear which was which.
  2. The name "52-Week Savings Challenge" seems to be a misnomer anyway, because if you look at the main page, there are clearly thumbnails for 53 separate challenges, not 52.
  3. This isn't the only example of an elementary error in math. The article outlining the first challenge quotes an expert as saying there are many ways to save the required $1,378 over the course of a year: "You can save $115 a month; you can save $30 or $40 a week; you can arrange it in any way that you want." But $1,378 divided by 52 weeks is $26.50 per week, which does not fall between $30 and $40. (At least this isn't as dramatic an error as the one made by a reader in the comment section, who recommended a variant of the challenge in which you put a penny in a jar on day 1, increase it to two pennies on day 2, and keep doubling the amount every day for a month, so "By the end of the month, there would be a good chunk of change in the jar." That's a pretty serious understatement, since as another commenter was quick to point out, by the end of the month the daily contribution would be $5,368,709.12. I guess you'd need a really big jar.)
  4. The reporter who took the challenge quit after just seven weeks. That isn't exactly encouraging for readers. True, some of them may see this as a chance to beat the "expert," but since they only have to make it to Week 8 to do so, it's not much of an incentive to see the challenge through for the full year. And some of them will probably think that if even a professional couldn't make it for a full two months, it's hardly worthwhile for them to attempt it at all.
I still plan to keep following these challenges throughout the year, but I don't necessarily expect to learn much from them. Perhaps I should make it my personal challenge, instead, to see how many of them I can do a better job with than the Bankrate staff.
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