In 2020, I took part in the 1p challenge and the reverse 1p challenge. This meant that I saved £1,343.22 over a 366-day period. The whole process was super useful, so I’ll be doing it again in 2021. If you’ve never heard of it before, or you have been tempted to try it but haven’t, then please read on. Because this is one hack that could save your bacon throughout the year.
What is the 1p challenge?
The 1p savings challenge isn’t a concept I came up with myself. I first heard about it through Skint Dad. It’s a year-long challenge which starts on 1 January, when you save 1p. On 2 January you save 2p and so on and so forth. Some people do it in reverse too, meaning that they start the year with the highest amount (in 2021’s case, you’d be starting with £3.65) and then on the 2 January, you’d save £3.64.
Some people find that the reverse challenge is easier because you’re paying larger amounts at the start of the year and less when December hits. However I do both the 1p challenge and the reverse 1p challenge. I find this easier as I’m able to work out, at the start of the month, how much will be going towards the challenges. I multiply the fixed amount (in this case £3.65; as there are 365 days in 2021) by the number of days in the month (so by 31 in January’s case). I then know how much I can expect to pay towards these two challenges in a given month.
What if I miss 1 January?
Ideally you’d start this challenge on 1 January, but if you’ve missed that date, then you could start part-way through the year. You could either add the payments you’ve missed to the pot, or just start from the date you begin. There are no firm rules, so don’t be put off joining in if you didn’t get going with this on New Year’s Day.
So why is this challenge so effective?
1) You can do it effortlessly
It sounds like a bit of a faff, doesn’t it? Dealing in specific amounts of money each day. But it doesn’t have to be tricky. If you have a Monzo account then you can link it with IFTTT so that the money is automatically saved each day. You can choose between the 1p challenge, the 1p reverse challenge, or you can opt to do both like me. If you don’t have a Monzo account then the challenge may be trickier, but not impossible.
2) The pennies add up
If you’ve ever attempted to side hustle cash online, then you’ll realise that £3.65 isn’t a particularly huge amount of money to make. I regularly make £3.65 per day on Prolific (for example). That amount by itself isn’t a lot, but if you multiply it by 365, then it is a substantial amount of cash. The 1p challenge is a daily reminder that little changes can make a big difference.
3) It gets you in the habit of regularly saving
If you’re new to saving, you don’t think you’re very good at it, or you don’t think that you can afford to do it, then this challenge is worth trying. It really does help you to form the habit of regularly saving.
4) You make the rules
You can decide on your 1p challenge rules. I decided to save the proceeds of the 1p challenge, but I used the reverse 1p challenge to pay for my MOT and my annual car insurance.
5) It’s an accessible savings challenge
There are lots of savings challenges floating about, but not all of them are accessible. Some people wouldn’t be able to afford to save £10 per day (for example), despite having the best of intentions. But I do believe that the 1p challenge is something that most people can at least attempt. But if you feel that it’s too long to commit for, then perhaps you could look into doing a 30-day savings challenge.
6) There’s a 1p challenge community
With this savings challenge, you won’t be doing it alone. There’s a community of people attempting it. You will find them within the Debt Free UK community on Instagram and on Monzo savings forums. This means that if you feel like giving up and you could do with a pep talk, then there’s always somewhere to go for some words of encouragement.
7) It can be used as an emergency fund
People talk of having an emergency fund, which is money that’s put aside for, well, an emergency. If you don’t have one, then you could use your 1p challenge pot. Aim to save it, but dip into it if you absolutely need to.
If you’re considering the 1p savings challenge because you want to save some cash, then you may also be interested in my roundup of ways to save money on a tight budget.