Money challenges seem to be popular at the beginning of the year, probably because we're all still nursing our holiday spending hangovers. These challenges might be gimmicky, but they're still a great first step for getting started with personal finance. Cash in hand image from Shutterstock
If you've never heard of a money challenge, it's basically a goal with steps to motivate you to save more cash during the year. Chief among these is the 52-week challenge, and there are a number of variations on it. As popular as these challenges are, not everyone is a fan. When I wrote about them once at Get Rich Slowly, some readers said money challenges simplify personal finance; they don't focus on the big picture. Others say they aren't ideal savings strategies: automatically paying yourself first is the best, most practical savings habit you can develop.
Those are valid points, but here's why I think money challenges are still great for personal finance:
Challenges appeal to money noobs: To a lot of people, personal finance is intimidating. Most don't know where to start, so they don't start at all. But a first step is all it takes. If you're not sure how to take that first step, a challenge is an easy, accessible way to get your feet wet in the personal finance world.
Challenges are fun: Let's face it, personal finance isn't the most exciting topic. Turning it into a game can be motivating. You might actually look forward to managing your money when it's presented as a challenge instead of a chore.
Challenges focus on control: Yes, automatic saving is a smart, practical money saving strategy. But savings challenges are designed to give you a hands-on sense of control; you're taking the wheel and making it happen. Automating everything is great, but sometimes you need to get down and dirty with your money. Doing so gives you a better idea of what's going on with your finances (and maybe what's going wrong with them). A sense of control is a huge part of successful money management.
Finally, money challenges are great learning opportunities. It's hard to make it through a challenge without learning a thing or two about your habits. If you're looking to get started, here are a few more of these challenges and techniques we've covered:
Lifehacker is also holding a year-long money challenge - January is "no restaurant spending". We may be halfway through the month, but it's never too late to start!
While there's definitely more to personal finance than these challenges provide, they're still a great introduction to money management.