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The Importance of Creating a Separate Account for the 52 Week Money Challenge

By , December 29th, 2013 | No Comments

separate money account
I spent time talking with some friends who attempted the 52 Week Money Challenge last year, but failed to continue it until the end. One reason they failed was because they never took the time to prepare for the challenge. I also noticed that for a lot of them, their failure occurred in how they set up their challenge account. Most who failed did so because they mixed the challenge money in with their regular checking or savings account. While in theory you could do this, I personally see it as being much more difficult. When you mix the two, it’s difficult to know how much money in the account is regular savings, and how much is challenge money. I also think that if you leave it in your regular account, it’s much easier to take the money out and use it than if you create a completely separate account for the challenge.

The other issue that seemed to throw people off on this challenge was what I like to call “phantom savings.” This is where people will do something like skip a cup of coffee and tell themselves that they just saved $4, but then never actually transfer the money into a savings account. They then wonder why all the little things they did to save money over the weeks isn’t in their account at the end of the month. Phantom savings occurs when you think you saved money in your head, but you never put that savings into an account where it can be saved. This is why it’s so vitally important to actually move any money that you save each week into a separate account just for the challenge. If you don’t take this step, your chances of completing the challenge will be much lower.

For these two reasons, I highly recommend that you create a separate and unique account specifically for the money you save for this challenge. There are three basic types that you can create depending on which you feel will work best for you. In many ways, this is a personal choice and you should know yourself well enough to determine which account will work best to ensure that you truly do save the money from the challenge.


The easiest way to create a separate account would be to keep the money from the challenge in cash at home. The main advantage of this is that you can physically see your challenge savings grow each week as you add more money to it. The growth of the account is also instantaneous in that you can place money into it as soon as you save it. If you keep your money in some type of bank account, you’re likely to only make a deposit into your account once a week.

What makes the cash account easiest is also what probably makes it the most dangerous way to keep the challenge money for most people. With the money right there in front of you, it can be tempting to use it for other purposes rather than save it. You have to be super disciplined not to cheat and use that money for other things. If you’re doing this challenge in an attempt to build your first emergency fund, I wouldn’t recommend a cash savings account. If you know that you have the discipline to keep a large amount of money at home without raiding it, it’s an option.

The other problem with cash is that you won’t be earning any interest on the money. While banking accounts aren’t paying much in interest at the moment, it’s still more than if you keep cash and your challenge money will grow that much more.

Online Bank

A second option is to open an online bank account specifically for the challenge money. While it’s a little bit more difficult to deposit and take out money, this is actually an advantage for most people. You want the money to be available in case of a real emergency, but you don’t want it someplace where you can easily access it without giving it much thought. I think opening up an online account specifically for the challenge is an excellent option.

Credit Union

Another good option is opening a unique account at a credit union. This is especially true if you live in a state where the credit unions offer the Save to Win option. In this case, each $25 you put into the account gives you a chance to win prizes and money while earning interest.

If you don’t currently have an account with a local credit union, this is a perfect opportunity to check them out and see how they can be a lot more advantageous than regular banks when it comes to saving money. A credit union account allows you easy access if you do have an emergency and need the money, but it’s not right at your finger tips so you’re tempted to spend it on other things.

In the end, the main point is that you really need to create some type of separate account where you can physically place the money you save each week. This will keep the challenge honest and ensure that you have the best opportunity of reaching the $1,378 in that account at the end of the year.

I’m still in the process of choosing which type of account I will use. I think if I was only doing this challenge for myself and not writing about it, I would go with an online bank account. Since I am writing about it, I’ll likely start with a cash account and then move to a credit union account after few weeks into the challenge. The main reason for this is that’ll make it much easier to take photos for this challenge with the weekly updates.

(Photo courtesy of Valerie Everett)

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