The 1% Challenge
By Melissa Tosetti
Is "Save Money" on your list of New Year's Resolutions?
In our experience of working with clients, those who have the most success when it comes to saving money have done so by setting and achieving incremental goals.
One of the reasons our money saving resolutions fail is because we try to do too much at once. We go from not saving anything at all to trying to save 10% or more of our income without a plan. Then, money feels too tight, we start dipping into our savings, get frustrated and stop altogether, claiming to the world that we’re just “not good savers”.
It isn’t that we’re bad savers. It’s just a matter of trying to do too much at once.
With this in mind, we created The 1% Challenge.
The goal of the challenge is to help you build to your ultimate savings goal in baby steps.
Begin the challenge right now by calculating what 1% of your paycheck is and set up an automatic transfer of that amount. To give you an example, if your take home pay is $2,000, then 1% is just $20.
I know that for some people, just saving $20 a paycheck doesn’t seem worth it, but the goal is to build that savings slowly so you can increase your likelihood of success. Equally important, you’re also building the habit of savings.
The next step of the challenge happens in April when you'll increase the amount going into savings by another 1%. The total amount now being saved each paycheck is $40.
Every three months you'll increase your savings by an additional 1%.
The 1% Challenge
Based on a $2,000 per Month Salary
In one year you’ll be saving 5% of your income. That’s powerful!
One of the benefits of incrementally building your savings is you can get used to living with a little less money before the next increase in savings. You have an opportunity to ease into your new financial lifestyle.
If you plan to take on the challenge, let me know so I can cheer you on. Send an email to melissa@thesavvylife.com.
Get started now!
Melissa Tosetti is a cash flow planning expert, founder of The Savvy Life and author of the international bestseller Living The Savvy Life.
For the past nine years, she’s worked with over 650 individuals and families to create Spending Plans.
To learn about the Spending Plan process, visit The Savvy Life’s Home Page. If you’d like to learn about how The Savvy Life works with financial advisors and their clients visit: The Savvy Life Advisor’s Page.
