I recently attempted a no-spend month challenge. However, I didn’t succeed because I made several money planning mistakes. I considered trying it again for June. Then I changed my mind. Instead of doing a no-spend month, I’m trying something different. I’m using a weekly savings plan to improve my budget. This seems like a more practical approach for me given my current financial state.
What is a Weekly Savings Plan?
I should note that a weekly savings plan is very different from a no-spend challenge. However, in both instances, the point is to save money.
My goal with the no-spend challenge was essentially to spend as little as possible. Therefore, I would save as much as possible.
Similarly, a weekly savings plan is all about saving money each week. However, it may or may not be about “saving as much as possible.” Rather, it’s about setting a weekly savings goal and sticking to it.
This allows for more wiggle room than the no-spend challenge. After all, if I have $500 left at the end of the week, after paying bills, then with a no-spend challenge I wouldn’t spend any of that. If I’ve set a weekly savings goal of $300, I would have $200 left for spending. If it’s a struggle to not spend any money at all, that extra spending money can make things easier.
Benefits of a Weekly Savings Plan
Obviously, then, the benefit of a weekly savings plan as compared o a no-spend challenge is that you can still spend some money. Not having any frivolity throughout the course of an entire month can be daunting. It’s easy to fall off that horse, as I did last month.
In contrast, a weekly savings plan is a positive goal. “I’m trying to save this much” vs. “I’m not allowed to spend.” The positive twist makes it feel more doable. It is easier to stick with.
Of course, this would be true of any savings plan that’s framed as a goal. So what specifically makes the weekly savings plan a great idea? What’s most true for me, particularly as a freelancer, and particularly during pandemic time, is that it’s a very short-term goal that keeps resetting at the start of each new week. This is great because:
- I don’t currently know exactly what I’m going to earn each month. Between changing jobs and clients making late payments due to their own COVID hardships, my income just isn’t clear. It’s a lot easier to see what I made last week or even to predict what I’ll make next week than it is to look at the entire month ahead. Therefore, a weekly savings plan makes a lot of sense right now.
- I only have to meet a one-week goal. Therefore, the actual amount of savings could be tiny. It’s doable. And yet, it adds up. I get to save money for an emergency without feeling the pinch of setting aside too much at one time.
- If I fall off course, I can easily reset the following week. Once I fell off course with my no-spend month, it felt like, “well, that didn’t work” and I kind of gave up. But this plan resets every single week. Hopefully, I’ll save the money each week. However, if I don’t, I can start again the next Monday.
- The weekly reset also means that I can consistently recalibrate my goal. If it turns out that I’m not realistically able to save as much as I thought, I can review my budget. I can see where to make changes. And, if I’m lucky, and it turns out that I could save even more, then I can make a new plan in that direction as well.
How to Create a Weekly Savings Plan
So, does this sound good to you? Great. But how do you do it? Here’s my approach:
Where Do You Want to Put Your Savings?
What savings accounts do you already use? Is this where you want to put your money? I have two major savings accounts: a small one trough my regular bank and another high-interest savings account through WealthFront. I intend to put my weekly savings into the WealthFront account. But do what works for you, depending on how easily you do (or don’t) want to be able to access your savings.
Where Can You Pull Money From?
Before asking yourself how much you want to save each week, first ask: where could I stop spending? I combed through all of my subscriptions and spending habits to discover where it would be extra easy to cut back. For example, I was paying $19.99 per month for Lyft Pink. However, under quarantine, I’m not using Lyft as much. So, I can easily pause that account. Instead of spending that money elsewhere, I can put approximately $5 per week into my savings account.
Check to see if you can cancel the following things and redirect that money to savings:
- Delivery service subscriptions including those associated with Amazon and Postmates
- Streaming TV services such as Hulu or Netflix
- Other monthly streaming services such as Audible or iTunes
- Gym and spa memberships, especially if you aren’t attending during shelter-in-place
- Online storage systems that you might not be using such as Dropbox or Google Drive
Similarly, it’s a great time to review where you might be able to reduce spending. For example, have you checked for discounts on your phone bill or cable bill recently? If you can save $10 or $20 per month, that’s money that can go into your weekly savings plan.
In other words, look at every single monthly subscription that you pay for. Cut out what you can. Divide the number you were paying monthly by four and add that to what you put into weekly savings.
Automate Your Weekly Savings Plan
As long as you aren’t on the brink of running out of money in your checking account, I highly recommend automating your savings. Once you’ve figured out how much you can save each week, set it up so that your checking account automatically transfers that amount weekly into savings. For example, if you can save $20 per week, change your account settings to automatically transfer $20 from checking to savings every Monday.
Do a Weekly Review
This part really helps. At the end of each week, review your money. Did you earn what you expected? Did you spend what you expected? As a result, did you save what you expected? If you have to adjust your weekly savings plan accordingly, do so.
Most importantly, check if you have any more money at the end of the week than you anticipated. If you do, set aside a portion of that as bonus savings for the week. You might want to create a rule. For example, “I will add 10% of any extra money for the week to my savings account.”
Can You Earn More In Order to Save More?
Whenever you create a savings plan, it’s important to also look at where you might earn more income. What could you do this week in order to have more money next week? Could you do a quick freelance gig? Maybe you could declutter and sell some items? You might put all of your extra income into your savings. Alternatively, you might put a percentage of what you earn aside each week.
Other Weekly Savings Plan Ideas
My approach is only one way to do a weekly savings plan. Here are a few other options:
- Set a specific savings goal for the year, quarter, or month. Then divide that accordingly to figure out what your target weekly savings goal is. Plan your budget to accommodate this goal. This is especially helpful if you’re saving up for something specific such as a wedding or a vacation.
- Try an incremental weekly savings plan. Save $5 in week one. Save $10 in week two. Then, save $20 in week three. You can keep adding it up throughout the year. Alternatively, you can start over at the beginning of each month. This is a low-key way to challenge yourself to save more. There are many variations on this. Check out the 26-week savings challenge and the bi-weekly savings challenge as two examples. The Daily Nickel Challenge is yet another variation on this.
- You can also do the reverse of the incremental plan. You can start by setting aside a higher amount each week for one month and then a little bit less per week the following month. Here’s an example of this kind of plan.
- Use a physical calendar to mark down what you get paid and what you “owe” yourself each week for savings. Here’s more info on that.
Do you prefer to budget by the week, the month, or the quarter? Why does it work for you?