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How to Turn the Penny Challenge into $2,500

Use a new twist on the penny challenge for one of the best savings challenges around and grow a small amount to thousands

I love savings challenges and there are few as popular as the penny challenge.

It sounds so easy. Just saving your pennies every day can add up to hundreds of dollars a year in savings.

I tried the original penny challenge but quickly found a couple of problems that were derailing my progress. To stay on track and meet my goal, I needed to put a new twist on this old challenge.

What I came up with was a way to make saving even easier and to turn it into thousands of dollars.

What is the Penny Challenge?

The basic idea for the penny challenge is pretty easy. You save one penny your first day, two pennies the second day, three on the third and so on for 365 days. That means you’re saving the same amount you did the day before but adding another penny to it.

You can meet your savings goals from change you find around the house or from the change on purchases. By the time you are done, you are saving 365 pennies on the final day.

The idea is to make saving gradual. By starting small, saving just pennies a day, you make saving easier and don’t have to sacrifice. I’ve built a chart of how much you end up saving per week to follow along on your own penny challenge and put together my own savings challenge after the graphic.

best penny challenge idea
What is the Penny Challenge

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Two Problems with the Penny Challenge

The first problem with the penny challenge isn’t obvious at first. Saving less than a dollar over the first weeks is an easy start. You might not be able to find $0.77 laying around the house but you can usually put it together with the change from purchases.

Try making it to the final weeks of the challenge though and you’re trying to find almost $30 a week…that’s a lot of pennies. You’re not talking about saving your change anymore and that throws a lot of people off.

what is the penny challenge
How to the Penny a Day Challenge

The second problem with the penny challenge is that even making it through the entire year, you’re only saving $667 total. That’s good for a nice shopping trip and maybe pay off some bills but it’s nothing you’re going to get that excited about and might not even get motivated enough to start the challenge.

I love the idea of savings challenges though so I thought I would take a shot at improving the penny challenge, getting to the biggest problems to help you save more money.

Using a Savings App with the Penny a Day Challenge

One of the most difficult things about the Penny a Day Challenge is just remembering to save the pennies each day, and tracking your progress.

It’s easy enough saving a few days of pennies but it gets more difficult to track how many you need to save as you progress. Using savings apps can add a new element to the Penny Challenge and make it easier to save.

In fact, one savings app I use makes the Penny Challenge automatic and will help you reach your retirement goals faster.

The Acorns app connects with your credit and debit cards to help you save money without even doing anything. After signing up, you link your cards and then just spend normally.

For every purchase you make with a linked card, the Acorns app rounds the amount up to the nearest dollar and deposits the difference into an investment account. For example, if your daily double-mocha-latte-frappe comes to $3.73 then the app will round it up to $4 on your card and put the remaining $0.27 into your investment account.

how does acorns app work
How Does the Acorns App Work?

This makes it a lot easier to follow the Penny Challenge because you’re not scrounging for change in the couch every day. You simply spend normally and the app does the rest.

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What I like about the Acorns app is that it combines this instant saving with a robo-advisor which makes investing easy. From just a few questions when you open your account, the app will suggest one of five investment portfolios built from professionally-managed funds in stocks, bonds and real estate.

All your money saved goes directly into your investments and you pay no fees for investing. The only fee is a $1 monthly charge, common among robo-advisor platforms.

Now there will come a point in the Penny Challenge where you’re looking for more pennies to save than what you get from rounding up your purchases but the app will make it so much easier to get started.

Improving the Penny Challenge

To make it easier to save, especially those big weeks towards the end of the year, try finding places in your budget to cut. Instead of just making the challenge about spare change you find around the house or the leftover from purchases, try cutting expenses and budgeting to meet your savings goal.

When I did my own penny challenge, I cut back on drinks when I went out with friends. You’d be amazed at how much you can save cutting back to one drink instead of two or three just one time a week. I ended up saving almost double my goal over the last few weeks.

Even if you only manage to save the $667 from the penny challenge idea, you can still turn it into thousands of dollars. Not too many get worked up over $700 but I don’t know anyone that would turn down $2,500!

There’s no trick here, just invest the money along with the rest of your retirement money. At a return of 7% annually, $667 turns into $2,584 over 20 years.

Yeah, I know it doesn’t seem like a new twist on the penny challenge. You’d be surprised though how many people just blow their money saved each year. If you’re going to just spend it at the end of the year, why even go to the bother of saving it in the first place?

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Does the Penny Challenge Work?

The Penny a Day Challenge really does work but that’s if you can find the money to save every-single-day. It’s easy at first but by the end of the year, you’re saving upwards of $25 a week.

Being successful with the penny challenge means finding ways to make your saving automatic like with savings apps and ways to trick your spending into helping you save.

The best part about the penny challenge is simply the savings habits you’ll build in a few short weeks. Even if you don’t manage to make it the entire year, you’ll have built some savings habits in a few weeks that will help you control spending and put you on the right financial path.

The penny challenge and other savings challenges aren’t just ways to save up a couple hundred dollars. Use them as ways to change your spending habits, to gradually work into saving more on a regular basis and make saving easier. It’s not about saving more money for a few months or a year but about learning how to get the most out of your money.

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  1. If you’re just going to spend it at the end of the year, why bother saving it?

    Oh, that’s easy. Because now you can make a large purchase that maybe you couldn’t have before. By saving the money, now you can avoid finance charges, having monthly payments, and paying more than something is worth.

    I agree with setting aside for retirement, and I set aside 10%, roughly 7500 a year plus company match, into a 401k as well as doing some investments of my own, but I like doing saving challenges for the purpose of getting higher priced items.

    Personally, I do the dollar challenge, same as penny only dollars, and I add one small change. I reverse it, so I’m not trying to come up with large payments at Christmas time, and instead each payment gets easier as I go.

    • You’ve got some great points Jeremy. I like the idea of reversing it, saving the large amounts first. Besides avoiding the big savings around Christmas, it would also be easier to stick to. You’ve already saved a bunch in the first few months and the savings get easier. Not sure many people would be able to do a dollar challenge but interesting twist.

    • Avatar Julia Rose Myrick says

      I made a box with the numbers 1-52 on it for the dollar challenge and to fill it I put in as much as I can each week and cross off the amount I put in. On slower months like April I tend to do the last weeks of the year this way I make sure I fill the whole box sorry it won’t let me post aa picture of it.

  2. Avatar Sarah Florence says

    I am doing the penny challenge and the dollar challenge both. I started before the new year though and am saving up so that I will have money to buy Christmas with this year. $667 might not seem like a lot to some people but why struggle with coming up with Christmas money or go into debt when you can save a few dollars a day at the most and have it ready to go when you need it.

  3. Avatar Alberto Brando says

    I’m doing the penny challenge right now. Next month, I’ll go for nickels, then dimes, then quarters. After quarters, I’ll do the double challenge; take a penny and double it everyday. You could end up with just over 5 million in a month.

  4. And the best part is if you kept saving the penny challenge every single year for 20 years at a 7% return rate, you could have over $29,000 after 20 years, sure this may not be a huge amount to retire on, but investing that $667.95 every year for 20 years could have some weight on it after 20 years, since well you can surely do a lot more with $29,000 than you can with about $668.

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