You might have heard of it.
The 1p Challenge gained popularity thanks to Martin Lewis mentioning it on one of his TV shows. It’s a good idea, and it’s realistically achievable provided you aren’t genuinely scraping by.
In my experience, a lot of people claim to be skint but are much better off than they make out.
I would say that the 1p challenge is kind of fun too.
We did it back in 2019 in preparation for the arrival of our son. The plan was to use the £667.95 to buy a pram for him, because damn those things are expensive, aren’t they? We had a big glass jar in the kitchen for the money, a printed sheet so we could tick off the days we had paid and those we still owed, and off we went.
I’ll take you through how it works and also let you in on any issues we came across and tips to deal with them. Bonus content at the end too!
How the Challenge Works
The system is set up so that you save in ever increasing increments of one penny per day.
So on day 1 you put a penny in the jar. On day 2 you put 2p in the jar. On day 3 you put 3p in the jar, and so on.
You track your progress along the way to make sure you have paid for each day, and to keep up with how much you need to put in from one day to the next.
You might think that only a fool could get this wrong given the amount goes up by a penny a day, but you are sorely over-estimating your memory powers. Should you accidentally miss a day, or go to visit your Mum for the weekend, or attempt to be clever by paying half of what you will owe tomorrow with the change you have left today – you will fail.
You will have no idea how much is in the jar and will have to count it all then do awful maths to work out where you got to.
Seriously, print a chart and tick it off as you go. They are all over the internet and they are free.
If you do this consistently over the course of a year, after putting £3.65 in the jar on the very last day you will have saved a grand total of £667.95. Not bad eh?
It will all be in loose change which is a bit of a pain (and reeaally heavy) but still, getting on for £700 quid saved from pocket change sounds good to me.
Flaws in the System
I have already mentioned one.
This is a year long commitment and it’s hardly going to be top of your to do list what with work/kids/husband who can’t figure out how the new electric oven works.
It’s easy to fall behind or forget where you are up to, which is why tracking your progress is key. You can see exactly where you got to, catch up, and carry on.
A more difficult issue to solve is the fact the system gets more and more expensive as time goes on.
Most people start in January, but that means the end of the saving period will be December. And what happens in December? Only the most expensive holiday on the calendar – it’s Christmas!
The first month of savings costs just £4.96, but the final month costs £108.50. Can you spare that much at Christmas? The challenge is supposed to be helpful, but if you start it in January you are actually causing yourself a financial headache at precisely the worst time.
Something else we quickly found out when we did it, was that this challenge is not designed for couples. If you have read my blog about how we split our finances, you will know that we do things 50/50, but splitting 2p, 16p, £1.23 etc. was too petty even for us! You will need to find a way to work out who pays what and when if you want to do the 1p Challenge with your partner.
Lastly, the practicalities can be a bit of a pain. Foraging around for pennies behind the sofa or forgetting to go to the cashpoint because like, who uses actual money anymore? These things can lead to days being missed and mild irritation with the whole thing.
Don’t worry though, because there are ways around these bumps in the road.
Tips to Make it Better and Easier
Before covering the different strategies people use to make the challenge better or easier, let me make it clear that you don’t have to use the coins in a jar approach.
We did, but back then the interest paid on savings was pitiful.
These days, using a savings account could bump your total money saved by a healthy amount. It’s less fun doing it this way, but you’ll be better off for it.
So as I explain each of the following strategies, remember you can use them with real cash or with an online savings account of some sort.
Flip It
To get over the expensive December issue, some people decide flip the system.
This means they start off by paying in £3.65 on day one, then £3.64 on day two, £3.63 on day three, and so on. This turns it from an incremental system to a decreasing one, so the challenge gets easier as time goes on rather than harder.
It also means you have to start with an expensive month right after Christmas… but, if you use a savings account you will get more interest from having larger sums in there for longer.
I have heard of people re-ordering the daily amounts in all sorts of ingenious ways, but flipping them is the simplest.
Split It
If you are taking on the 1p Challenge with a partner, it can get a bit fiddly and a lot petty trying to split each days savings.
At the other end of the scale, if you don’t have any sort of plan one person can easily start feeling resentful if the other hasn’t contributed to the pot for a week or so, especially towards the end when it’s more expensive.
To get around this, we took it in turns.
So I paid on day 1, he paid on day 2, and one we went. This evened things out very nicely indeed and because I paid on all the odd days and he paid on all the even days it was easy to track where we were both up to as well.
Average It Out
Another option would be to average the savings out across the whole year, so the monthly saving amount remains the same from one month to the next.
You can either divide £667.95 by 12 to get a monthly amount of £80.15 then split that by the number of days in the month, or you can divide it by 365 to get £1.83 per day.
This stops any single month being more financially taxing than another.
Automate It
In addition to the strategies above, you could also automate the savings to make the practicalities less annoying.
You would need to save online to do this of course.
The reason I don’t like this idea is because it takes all of the fun out of the challenge. It’s not really any different to setting up a savings account and depositing a set amount into it each month.
Automating increasing amounts each day is surely going to be a nightmare, so you would be forced into weekly deposits at most I should imagine. Even that is going to be a pain to set up though, unless you average it out first.
People do automate the challenge but it’s not for me.
Double It
I know this won’t be possible for everyone, but if you are in a couple you could both do the challenge side by side.
This would mean you could double your annual save to £1,335.90. Again, you could flip, average, and/or automate and still get the same result.
It’s easier to manage your own savings pot in lots of ways because you won’t need to check that the other person has been contributing the right amount. That said, if one of you completes the challenge and the other doesn’t it could cause arguments.
Equally, if you are doing ok financially you could start with a higher number. A friend of ours began with £3.65 and went on from there. She ended up saving £1,996.55 in a year.
She’s not even particularly well off, but she doesn’t spend frivolously either.
Other Money Saving Challenges
A few other options to explore if the 1p Challenge isn’t floating your boat include:
- The £1 Challenge: Similar idea, but put away a pound a day. You’ll have £365 at the end of the year.
- The £10 Challenge: Save £10 in January. Save £20 in February. Save £30 in March. Keep adding an extra £10 to the monthly savings amount and you will have a lovely £780 by the end of the year.
- The 52 Week Challenge: Start with £1 in week one, £2 in week to and so on to save £1,378 by the end of the year.
- The £2 Challenge: Every time you get a £2 coin in your change, keep it to one side until you hit a target amount. How effective this is depends on how often you use cash and how long you are prepared to save for.
- The No Spend Challenge: Pick a day a week, or a specific set of time that suits you, and don’t spend anything that isn’t an essential during that time. Note how much you avoid spending and move that amount into a savings account instead.
- The Cancel Challenge: Go through your subscriptions and other monthly outgoings and cancel anything that isn’t absolutely necessary. Stick the same amount in a savings account instead.
One of them is bound to work for you, so why not give it a go?
If you’re anything like me you will already be planning what to spend the money on 😂