The 1p Savings Challenge

What would you do with £667.95? Perhaps you’d treat yourself to that new sofa you’ve had your eye on or finally get round to replacing that old, leaking shower? Maybe you’d simply save it for a rainy day or put it towards your dream holiday.

In the current cost-of-living crisis, many of us are making conscientious efforts to be extra-careful with our money. Saving isn’t always easy, especially when our outgoings are already stretched and the cost of essentials - such as bills and food - are rising.

The 1p savings challenge could be a fantastic way to save £667.95 over the course of a year.

How many of us had a ‘change jar’ at home back in the day? I distinctly recall that my family’s change jar was an old, sturdy tankard glass on top of the TV table that we’d regularly toss spare one and two pence pieces into.

Over the course of the year, I’d watch the bronze mound of loose change grow until we could no longer cram in any more coins.

The glass would be emptied onto the living room floor, and we’d spend hours counting the coins. It was an oddly thrilling task, and quite satisfying to watch what was once pesky change turn into a surprisingly decent sum of money. Of course, saving our change was never going to make us millions, but it was certainly a nice additional treat that came from very little effort.

The 1p savings challenge is a similar concept in the way that you’re unlikely to miss the money you’re setting aside but will reap the rewards in 12 months’ time.

How does the 1p savings challenge work?

The great thing about the 1p savings challenge is that it really does work!

If you’re able to, try to start on January 1 by moving just 1p into your savings. You can either do this by putting a penny in a jar or by transferring the money into a separate savings account.

If you’re setting up a new savings account, just be sure to check that your bank doesn’t have a preliminary minimum deposit amount.

Each day, increase the amount you put away by a penny. For example, save 2p on January 2, 10p on January 10, and so on.

On December 31st, the 365th and final day of the year, you will save £3.65.

Here’s a breakdown of how much money you can expect to have at the end of each month if the 1p savings challenge method is followed:

Can I start the 1p savings challenge whenever I like?

While the general idea of the 1p savings challenge is to begin on January 1, you can absolutely start saving whenever you like - there are no set rules!

If you’re only just hearing about the challenge halfway through the year and you’d like to take part, you have a few options.

1. You could make an initial deposit of the amount of money you would have saved already and continue from there. For example, if you decided to start on March 3, you would put £19.53 away and then continue the challenge as normal going forwards.
2. Alternatively, you could set your own year, and start by putting your first penny away whenever you choose. Your own personal 12-month saving window could run between September 29, 2024, and September 28, 2025, for instance.

What are the benefits of the 1p savings challenge?

• It’s an effective way to save without being overwhelming.
• If you’re depositing the money in a savings account, you may gain monthly or annual interest from the bank, which could help to boost your overall amount. Money for free? Woohoo!
• Getting into the habit of putting money aside every day – regardless of the amount – encourages financial discipline.
• Saving money can be addictive! If you’re the kind of person who enjoys saving and finds the concept motivating, you may find this challenge good fun.

Things to think about: the 1p savings challenge might not be for everyone

• Some might consider saving challenges a fad, while others may really benefit from the structured approach. Saving is a totally personal task, and you should do what works for you.
• If you choose to store your saved cash in a jar rather than in a bank account, you will miss out on gaining interest on your savings. Also, keeping money at home has its own risks.
• Many of us tend to find December the most financially demanding month of the year, which may make it harder to save larger amounts of money. A good solution could be to do the challenge backwards! Why not start the year by putting £3.65 away, and work your way down until December 31, when you’ll be able to round off a successful year of saving by depositing just one penny.

Tips & hints to smash the 1p savings challenge

• Set a savings goal. If you’re lusting after a wonderful holiday, why not print out a photo of your dream destination and stick it to your jar or, if depositing digitally, add it to your phone’s background.
• Why not encourage a family member, partner, or friend to take part too? That way, you can support each another and stay motivated.
• If your partner is onboard, you may wish to consider pooling your savings together. If you both stick to the challenge for the whole year, you could end up with a combined total of £1335.90!
• You can download and print out a 1p savings challenge tick sheet to help you keep track of your payments.
• Set a daily alarm to remind yourself to transfer the money so you don’t forget.
• Don’t beat yourself up if you miss a couple of days. These things happen, and you can always try and make up for it another day. If saving is leaving you short and preventing you from paying for essentials, you should take a step back.

Look after the pennies and the pounds will look after themselves

There’s no right or wrong way to save money, and no ‘one size fits all’ amount that everyone should be putting away each month. It can be easy to feel disheartened when the media reports how much we ‘should’ have in savings, but it’s important to remember that everybody’s situations are unique to them.

If you’re comfortably able to, commit to putting away a small amount of money every day and watch your savings snowball.

The 1p savings challenge? Worth every penny.