If you want to start saving but your budget is tight, the 1p challenge could be for you.

This is how it works:

With the energy price cap rising in January, and doing an energy comparison to switch no longer offering decent savings, many people are feeling the pinch and finding ways to slash costs.

A money-saving hack that starts with putting just 1p aside can help you save over £650 in 2024.

The 1p challenge is a 365-day (or 366 this leap year) money-saving trick. If you’re successful, you can save £671.61 by the end of 2024.

Here’s how I explain how the 1p challenge works:

How does the 1p savings challenge work?

The 1p saving challenge was originally created by money blogger Skint Dad several years ago.

– Simply put, it’s where you start by saving 1p on the first day and then save an extra penny each day after that.

You begin by setting aside 1p on 1 January, 2p on 2 January and continuing in this manner. Essentially, each day you save the amount you saved the previous day, along with an additional penny.

This goes up to £3.66 on 31 December 2024 to account for the extra day we have in February as its a leap year.

– So your savings at the end of the year would be £671.61

– it’s normally £667.95 with a 365-day year.

How do I save for the 1p challenge?

You might think saving a little every day could be tricky to remember or keep track of. But there are ways to get around this.

  • Put a reminder on your phone: This will help you remember to put away money every day, even after a long day at work.
  • Set up a standing order: You can move the cash into a savings account or set up daily instalments. Bear in mind that this could get tedious as you’d have to log into your bank account daily.
  • Go traditional: A more traditional way would be to use a piggybank or a jar. However, because of how much cash and coin use has reduced, this could be a bit challenging.

How much would I save per month?

So as an alternative, you could save the monthly sums instead. We’ve done the maths for you, so all you need to do is get saving. Remember, your annual target would be £671.61.

Month vs how you much you would save

January – £4.96
February – £12.74
March – £23.25
April – £31.65
May – £42.16
June – £49.95
July – £61.07
August – £70.68
September – £77.55
October – £89.59
November – £95.85
December – £112.16

Other tips:

When setting up a standing order, it might be easier to take the total savings you make in the year and divide it by 12.

– This way, you can pay the same amount every month.

– Rounding the end saving goal to £672 would mean you need to save £56 per month.

– Plus, you would actually save 39p more

Author: Mukesh Malhotra, Chair of Thamesbank Credit Union