Gichuki Kahome

Why Saving Challenges Don’t Work

The first savings challenge I ever joined was when I finished high school. Even though I didn’t have a source of income, I figured out that the spare change I could keep from running some errands for my parents would give me a substantial amount of savings.

I kept it simple and wasn’t overambitious. I joined the 52-Week Savings Challenge. The plan was to save sh20 in the first week of the year and increase my weekly savings by Sh20 until the final week of the year. That means I would save sh20 in the first week, sh40 in the second week and sh1040 in the last week of the year. If I had stuck with this plan, I would have saved Sh27,560 by the end of the year. That would be enough to buy me a few books and give myself a small Christmas treat.

The savings challenge started well and was running smoothly for the first month. In the second month, however, I developed some illness that I couldn’t run the errands anymore, and my parents had to outsource. Even though I had partially recovered, they insisted that I had to rest fully and could only continue with normal activities after fully recovering.

Since I stopped *earning*, my savings challenge took a blow, and I slowly lost the motivation to save as I was already out of track.

After two months of zero saving activity, I got a job with a six months contract. I was now making some money, a little more than I could save from running errands for my parents. I was, however, already discouraged from the two months of savings lost that I couldn’t hit my end-of-year target. So I cancelled my savings plan but continued to save a certain portion of the little money I made.

Why Saving Challenges Don’t Work

Reflecting, now that I’m a few years older and wiser, I realize why I failed. Saving challenges hardly work. They assume that things will run smoothly from the beginning to the end of the year. And that is hardly the case. In a life that we crave calmness, peace and certainty, life gives us chaos and uncertainty. And to thrive in such a life, we need to be prepared for the uncertainties and the chaos that life brings.

Savings challenges assume that our income and everyday expenses will remain static for the rest of the year. That’s hardly the case as our income fluctuates and so do our regular expenses.

At certain periods of the year, you may be moving to a new house; you may be building something, starting or restocking a personal business, starting a personal project, contributing to a charity event or anything else that may decrease your discretionary income – the amount of personal income available after the necessities have been taken care of.

And if you look at your past year, you can hardly miss an event that you hadn’t planned for at the beginning of the year that decreased or increased your discretionary income.

And since your savings challenge doesn’t leave room for that, you end up either over saving or under saving.

Moreover, you find yourself doing away with it, and your financial goals are in trouble.

The Best Savings Advice I’ve Ever Received

Nick Maggiulli is one of the best finance bloggers of our time. In his book, “Just Keep Buying”, he writes,

“Saving rules like ‘save 20% of your income’ are so misguided. Not only do they ignore fluctuations in income, but they also assume that everyone can save at the same rate, which is empirically false.

When we have the ability to save more, we should save more. And when we don’t, we should save less. We shouldn’t use static, unchanging rules because our finances are rarely static and unchanging.

That is why the best saving advice is: “Save what you can.”

The only savings challenge that works is challenging yourself to save what you can at all times.

And this advice works not only in finance but also in other areas.

Imagine your new year goal is to lose weight from 120 kg to 90 kg by the end of the year. So you plan to lose 2.5kg every month. But as you will realize, even though you want to hit the GYM and shed those extra kilos, at some periods of the year, some things you hadn’t planned for will happen. You may fall sick; you may get an injury; you may go on holiday; you may lose your job; you may get so busy with work that you can’t keep up with your training schedule.

That means your progress will stall for some months and peak during other months, which is normal. So you won’t lose 2.5kg every month. Sometimes you may lose more, others less, and you may even gain in other months. But just because you have gone off track, that doesn’t mean that you should abandon your fitness goal.

You have to survive on your poor days and thrive on your good days.

The Truth About Saving Challenges

Savings challenges usually come at the beginning of the year when everyone is hyped and optimistic about the new year. Everyone is setting new goals instead of new habits. We get motivated for the first few months of the year and then slip back to our usual patterns.

Savings challenges are good because they act as a call to action for our financial goals.

However, we should learn, as James Clear wrote in Atomic Habits, “We do not rise to the level of our goals. We fall to the level of our systems.”

As you make your new year financial goals, understand that what helps you make progress is the financial habits you build in this new year.

I wish you all the best in your finances this year. Happy New Year!

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