Money Challenges

Try these money challenges to become a money master.

No one becomes a money master by accident. It takes a lot of trial and error, dedication, and discipline to become master of your financial domain. Whether your goal is to reduce debt or increase savings, there are a number of simple strategies that can help you improve your financial situation. Creativity, smart planning, and consistency are keys to financial health—but sometimes, more drastic steps can pay off in dividends.

If you’re ready to take charge of your finances and make big changes, consider taking one of these money challenges to motivate you in the right direction.

1. The Spending Freeze: Spending freezes aren’t just reserved for corporations (or governments) in crisis—they can be an effective strategy for anyone who needs to adhere to a budget and save some cash. Can you go 30 days without spending? Try implementing a 30-day spending freeze and see how much extra money you have left in the bank at the end of the month. Here’s how it works:

  • Establish ground rules at the beginning of the month. You likely have non-negotiable expenses each month, so the spending freeze won’t apply to those. This is for anything above and beyond the basics.
  • Create a grocery list and menu for the month and set aside the cash you will need for groceries.
  • Determine what your non-negotiable expenses are at the beginning of the month (gas, train fare, etc.) and budget those in.
  • Hide your checkbook and credit cards and set out to enjoy a month free from spending.

A spending freeze separates the wants from the needs. For 30 days, can you refrain from lattes, movies, snacks, clothes, or anything else that catches your eye? By the end of the month you’ll not only have more money in the bank, you’ll gain an awareness of your “spending leaks”—all of those places where you spend money, but don’t really need to. Who knows—you may even decide to sign on for 30 more days of freedom.

2. The Grocery Challenge: Could you eat home-cooked meals for 30 days? Do so and you may just end the month healthier and wealthier. Here’s the challenge:

  • Create a menu and corresponding grocery list for the month.
  • Determine your grocery budget for the month. How much do you really spend on groceries? Can you reduce it by 10 percent?
  • Withdraw your grocery budget in cash from the bank and divide it among four envelopes.
  • Each week, take one envelope to the grocery store. Limit your purchases to what you can buy with the cash in the envelope.
  • Enjoy a month of meals at home. Get creative! Resist the temptation to resort to takeout or a restaurant.

The crux of this challenge is to cook with what you have on hand rather than running to the grocery store for missing—or extra—ingredients. You’d be surprised at how much those impulse grocery purchases cost you—both in dollars and calories. The most fun part of the grocery challenge—tallying up how much extra money you have saved at the end of the month.

3. The Mortgage Challenge: Want to pay down your mortgage faster so you can own your home outright sooner? It’s not as far-fetched as it sounds. Here’s how:

  • Do the math. Take a look at your budget and determine how much extra you can afford to direct toward your mortgage each month.
  • Consider increasing your income. If you can’t spare any extra, can you find ways to increase your income each month with the goal of directing the extra money toward your mortgage? Get creative—take on odd jobs, sell extra belongings that are collecting dust, or ask for a raise.
  • Set the goal and hold yourself to it. If you have decided to direct $500 extra to your mortgage each month, create an automatic payment so you won’t be tempted to spend the money elsewhere.

The mortgage challenge is a big one because it requires you to make big and permanent adjustments to your spending habits and goals—but the payoff is huge. If you pay off your home five years early, you’re five years closer to financial freedom and retirement. This is one challenge that requires you to dig deep and prioritize.

4. The Monthly-Bill Challenge: Recurring expenses can add up quickly and they’re usually not on our radar. Slash your monthly bills for extra savings that last all year long. Here’s the challenge:

  • Make a list of all of your monthly expenses.
  • Shop for lower rates anywhere you can—insurance, cable, Internet, cell phone, etc.
  • Make sacrifices. Where can you trim features or downgrade? Do you really need an unlimited text messaging or data plan? Do you need 500 TV channels? Reduce the extras for added savings.
  • Give up. Can you one thing up entirely? For example, if you gave up television, you would save both money and time—and you might find that you spent that time on healthier endeavors, such as exercise.
  • Compromise. How much is your commute costing you? Would taking the bus or riding your bike one day a week offer significant savings? What about two days a week?

The monthly bill challenge inevitably leads to lasting change—for your behavior and your wallet. It forces you to streamline your spending. The bonus—your savings accumulates over time.

Which challenge will you take? Join us on Facebook to share your experience. What better way to stay motivated than to join like-minded money masters in the journey?