Money Management

Saving a little bit of money every week could add up to a lot of extra cash over time. 

If you’re hoping to put more money into your savings account this year, there are lots of ways to do that. One option is to try to make the process of saving fun. And you can do that easily by participating in a savings challenge.

Specifically, there’s a 52-week saving challenge many people like to do each year that will enable you to make saving into a game.

While it’s a simple and easy challenge to take part in, you’ll be surprised at how much extra money it will net you before year’s end.

How does the 52-week challenge work?

The 52-week saving challenge is one of the simplest challenges that you can do at the start of the new year. That’s because it gets you off to an easy start but you build up your efforts over time.

With the 52-week challenge, here’s what you do. In the first week of the year, you save $1. In the second week, you save $2 and in the third week, you save $3. You then continue to add an extra dollar onto the amount you save every single week as the year goes on. So, in the 40th week of the year, you’d be saving $40 and in week 52, you’d put $52 into your savings account.

At the end of the 52 week saving challenge, if you have kept up with the process every single week, you would end up having saved a total of $1,378 during the course of the year. That’s not a bad sum of money — especially since many of the contributions that you will be making during the early part of the year are very low and are thus very easy to find the money for.

There are plenty of printable checklists you can find online to participate in the challenge so you can mark off each week that you make the desired contribution. Or you can create your own method of tracking your efforts.

You can also decide if you want to transfer the saved amount into a high-yield savings account each week as you contribute; if you want to manually put the money in a jar somewhere; or if you want to wait until the end of the month and move the previous four weeks’ contributions over into savings all at once (although that last approach can make it harder to stick with your plan since you’re losing the consistency of the weekly contributions).

Is the 52-week savings challenge right for you?

The 52-week challenge isn’t going to change your financial life by itself. It’s a fun game that can make saving seem more effortless and actually entertaining rather than feeling like a huge sacrifice you have to make all the time.

While you shouldn’t do this challenge as a substitute for making meaningful financial progress on your goals, there’s no reason not to at least start it when the first week of 2023 comes along. See how you do, and you may be surprised that it’s easy to stick with it and you end the year with over $1,000 in extra money in your savings account.

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Tackle them early on for a financially successful year. 

The beginning of a new year can read like a fresh start for a lot of people. And it’s a great time to pay close attention to your finances. After all, you probably have near- and long-term goals on your radar. And the savvier you are about managing your money, the more likely you’ll be to achieve them. With that in mind, here are the first five financial moves you should make once 2023 kicks into gear.

1. Set up a budget

Your income may have changed in 2023, and your expenses may have done the same. That’s why it’s important to set up a budget early on in the year. That way, you can see what bills you have to manage and make sure you’re not overspending in any individual expense category.

2. Assess your emergency fund

It’s always a good idea to have enough money in your savings account to cover at least three months’ worth of essential living expenses. The start of the year is a great time to look at your savings balance and crunch some numbers to make sure you can pay for those three months of bills. If not, it’ll be a wakeup call to carve out more room in your budget for savings purposes.

3. Map out a debt payoff plan

Maybe you racked up some debt during the holidays. Or maybe you were carrying a credit card balance before the holiday season began and you didn’t manage to pay it off in 2022. Now’s the time to figure out how you’ll tackle your debt so that ideally, it’s gone by the end of the year, if not sooner. That could mean looking at ways to consolidate your debt, like taking out a personal loan to pay off different credit card balances, or doing a balance transfer onto a new credit card.

4. Review your credit report

Your credit report paints a picture of how reliable a borrower you are. It’s a good idea to read that report carefully and address any issues that might lead lenders to believe they shouldn’t loan you money, such as a history of late payments. It’s also important to inspect your credit report for errors that could hurt your chances of getting approved for a loan. Credit report mistakes aren’t all that uncommon, and you’ll definitely want to address any errors you find.

5. Set up an automatic transfer to your IRA

Allocating money to retirement savings can be tricky when you have immediate bills to pay. It’s a great idea to put the process on autopilot. Many IRAs let you set up an automatic transfer so money lands in your retirement plan right off the bat each month. That’s money you won’t be tempted to spend, which could lead to a larger nest egg.

You may have a host of different financial tasks you’re hoping to tackle in the new year. But it’s a good idea to prioritize these five items once you’ve recovered from your New Year’s Eve celebration and are ready to take on 2023.

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It could be a good idea. 

In the course of your holiday shopping, you may have accepted an offer to open a store credit card. And that card may have resulted in a nice amount of savings on a big purchase.

Often, when you first open a store credit card, you get a discount on your initial purchase. So if you were buying a $200 haul and scored a 20% discount, opening that card saved you $40, which is a pretty good deal.

But store credit cards have their drawbacks. And so if you opened one recently, you may be thinking of canceling it now that your holiday shopping is done with. But should you? Or does it pay to keep that store card around?

The case for closing a store credit card

Store credit cards limit you to a specific retailer or group of associated retailers, whereas a regular credit card allows you to make purchases anywhere. But that’s not the main reason to consider closing a store credit card.

Rather, what makes store credit cards dangerous is their tendency to come with exorbitant interest rates. And if you end up carrying a balance on a store credit card, it could constitute a huge financial strain as interest on that balance accrues.

Plus, having a store credit card might tempt you to make non-essential purchases. Let’s say you got a store credit card from your favorite clothing shop. That means the only thing you can buy with that card is, well, clothing (and maybe accessories, too).

Now it’s one thing to rack up a credit card balance to cover expenses like food, gas for your car, and medication. But you really don’t want to be tempted to rack up debt just to acquire some new jeans and shirts.

Will closing a store credit card hurt your credit score?

One thing you need to be careful about when closing credit cards is hurting your credit score. That’s because the length of your credit history goes into calculating that number. And so generally speaking, you need to be careful when closing long-standing accounts, since that could shrink the average age of your open accounts and drag your credit score down.

But if you’re looking at closing a store credit card you opened just weeks ago, you shouldn’t have to worry about the impact on the length of your credit history. Generally speaking, closing a newer account will cause minimal damage, especially if you have other credit cards you’ve had open for years.

All told, having a store credit card certainly isn’t a terrible thing. But if you’re worried you’ll be tempted to rack up balance after balance, then it’s worth closing a recently opened store card, since doing so could spare you a world of debt.

And besides, you can always use a regular credit card to shop at your favorite retailer. And that could make it possible to rack up cash back or other rewards that are less restrictive than the rewards your store card comes with.

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It’s an easy step worth taking. 

There’s a reason savers are often advised to max out an IRA account if possible. The more money you put into one of these accounts, the more of a nest egg you stand to retire with.

That’s important, because many seniors who get most or all of their retirement income from Social Security struggle to make ends meet. If you enter retirement with a robust nest egg, you’ll have fewer financial concerns at a time when you’re supposed to be enjoying life, not stressing your way through it.

But that’s not the only reason it pays to max out an IRA. If you have a traditional IRA, not a Roth IRA, the money you put in serves as an immediate tax break. So if you put $1,000 into your traditional IRA, for example, that’s $1,000 of earnings the IRS won’t tax you on.

Of course, not everyone can max out an IRA. If you’re struggling with inflation and barely have enough money to pay your bills, then IRA contributions may have to wait.

But if you’re in a decent place financially, then maxing out an IRA may be possible — and it may boil down to discipline more so than anything else. And if you’ve struggled in that department in the past, one simple move could help you max out your account in 2023.

Put the process on autopilot

People who save in their employers’ 401(k) plans have their contributions deducted from their earnings automatically. That’s a good thing, because it effectively forces them to save that money. Someone who commits to a $3,000 contribution to their 401(k) for 2023, for example, will have $250 a month taken out of their paychecks before they can touch it.

IRAs often work differently. Since IRAs aren’t tied to an employer, you have to arrange for your contributions to land in your account yourself.

Now, what some people will do is see how much they spend in a given month and then move money into an IRA. But if you want to max out your IRA in 2023, then a better bet may be to set up an automatic transfer.

In 2023, the maximum you can put into an IRA is $6,500 if you’re under age 50 or $7,500 if you’re 50 or older. So, let’s say you’re 35 and really want to hit that $6,500 max. That will require you to contribute about $542 a month.

In that case, if you arrange for $542 to leave your checking account each month and land in your IRA, you won’t be tempted to spend that $542. And that could be the difference between meeting your goal and falling short.

Don’t leave things to chance

If you take the attitude that you’ll do your best to contribute to your IRA after you’ve paid all of your bills, you might struggle to max out in 2023. So instead, prioritize your contributions and then spend your money.

Now, you may find that once your checking account balance shrinks each month due to those automatic IRA transfers, you’ll need to cut back on some non-essential spending. But that’s something worth doing if it buys you a much more comfortable retirement down the line.

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Image source: Getty Images
What happenedInvestment banks are cutting banker bonuses after what was a rough year for the industry. According to the Wall Street Journal, big bank revenues fell by over $50 billion last year, the largest year-over-year decline on record.As a result, top firms such as JPMorgan Chase, Bank of America, Citigroup, Jefferies Financial, and Goldman Sachs will all cut annual bonus payments by as much as 45%. Moreover, the article warns some investment banks may also lay people off next year.So whatIf you’re living paycheck to paycheck or struggling to save money in the face of skyrocketing bills, it may be hard to muster much sympathy for bankers facing pay cuts. After all, top investment bankers can take home hundreds of thousands or even millions of dollars a year, and that’s before we even consider their whopping bonuses.But the wider question is whether what’s happening in the financial sector could play out in other industries. In other words, whether your job could be next. Right now, the U.S job market remains relatively strong in spite of layoffs in the tech industry. But a few weeks ago PepsiCo announced it would lay off hundreds of workers at its U.S. headquarters, prompting fears that layoffs are spreading to new sectors.Now whatThere’s a lot of uncertainty about whether we’ll enter a recession next year, particularly whether high unemployment can be avoided. However, there’s a chance that issues in the banking and tech sectors are only the start and we could see widespread layoffs in 2023. Although we don’t know for sure, it is worth being prepared.Take stock of your finances, particularly how much money you have in your bank account and what your monthly outgoings look like. If you were to lose your job, how would you cope financially? Do you have three to six months’ worth of living expenses socked away in a savings account? If not, perhaps there are steps you can take today to build up your emergency fund.If you’re carrying high interest debt, look for ways to pay it off. In the worst case scenario that your income drops or you lose your job, those debt payments can take a big bite out of your budget and make it harder to keep your head above water. Debt paydown won’t happen overnight, but the more progress you can make while the job market is relatively strong, the better.Alert: highest cash back card we’ve seen now has 0% intro APR until 2024If you’re using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes. Read our free reviewWe’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Goldman Sachs Group, and JPMorgan Chase. The Motley Fool has a disclosure policy. 

What happened

Investment banks are cutting banker bonuses after what was a rough year for the industry. According to the Wall Street Journal, big bank revenues fell by over $50 billion last year, the largest year-over-year decline on record.

As a result, top firms such as JPMorgan Chase, Bank of America, Citigroup, Jefferies Financial, and Goldman Sachs will all cut annual bonus payments by as much as 45%. Moreover, the article warns some investment banks may also lay people off next year.

So what

If you’re living paycheck to paycheck or struggling to save money in the face of skyrocketing bills, it may be hard to muster much sympathy for bankers facing pay cuts. After all, top investment bankers can take home hundreds of thousands or even millions of dollars a year, and that’s before we even consider their whopping bonuses.

But the wider question is whether what’s happening in the financial sector could play out in other industries. In other words, whether your job could be next. Right now, the U.S job market remains relatively strong in spite of layoffs in the tech industry. But a few weeks ago PepsiCo announced it would lay off hundreds of workers at its U.S. headquarters, prompting fears that layoffs are spreading to new sectors.

Now what

There’s a lot of uncertainty about whether we’ll enter a recession next year, particularly whether high unemployment can be avoided. However, there’s a chance that issues in the banking and tech sectors are only the start and we could see widespread layoffs in 2023. Although we don’t know for sure, it is worth being prepared.

Take stock of your finances, particularly how much money you have in your bank account and what your monthly outgoings look like. If you were to lose your job, how would you cope financially? Do you have three to six months’ worth of living expenses socked away in a savings account? If not, perhaps there are steps you can take today to build up your emergency fund.

If you’re carrying high interest debt, look for ways to pay it off. In the worst case scenario that your income drops or you lose your job, those debt payments can take a big bite out of your budget and make it harder to keep your head above water. Debt paydown won’t happen overnight, but the more progress you can make while the job market is relatively strong, the better.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Goldman Sachs Group, and JPMorgan Chase. The Motley Fool has a disclosure policy.

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