If soaring energy bills and rising supermarket prices reduced your festive spending last month, there could be a clever way to save for this Christmas without putting too much pressure on your budget at the start of 2023. You could build an impressive cash pot worth £667.95 by Hogmanay if you follow the daily or monthly guide to the ‘one penny savings challenge’.
January is the perfect month to begin saving and the ‘1p challenge’ is probably one of the simplest and best-known ways to build your money pot for winter 2023. It is also a great way to get into the habit of saving every day by starting small and focusing on the end result.
The only drawback to this savings plan is that the amounts increase as the year goes on, but hopefully the cost of living crisis will begin to ease soon, meaning more people will have a bit more money to put away.
How the penny challenge works
To start the savings challenge, you just have to put away a penny a day (at first), which gradually grows to pounds as the months roll by so that at the end of the year, you will have saved enough money to start 2024 with a few hundred pounds tucked away.
Although the challenge officially start on New Year's Day by setting aside 1p, it's easy to catch up during January due to the small amounts involved - you start by saving 1p, then 2p, then 3p a day – right the way up to £3.65 on the last day of December.
If you follow the schedule, by December 31, 2023 you will have saved a grand total of £667.95.
12-month daily savings plan
Follow this penny savings plan:
Day 1: Put in £0.01
Day 2: Put in £0.02
Day 3: Put in £0.03
Day 4: Put in £0.04
Day 5: Put in £0.05
Day 6: Put in £0.06
Day 7: Put in £0.07
Day 8: Put in £0.08
Day 9: Put in £0.09
Day 10: Put in £0.10
Day 11: Put in £0.11
From Day 100 add:
Day 100: Put in £1.00
Day 101: Put in £1.01
Day 102: Put in £1.02
Double the amount on day 200:
Day 200: Put in £2.00
Day 201: Put in £2.01
Day 202: Put in £2.02
Continue until day 300, then add:
Day 300: Put in £3.00
Day 301: Put in £3.01
Day 302: Put in £3.02
On the final 365th day, drop in £3.65 and it's time to cash in your jar.
If you have followed the plan throughout the 12 months, you should have saved £667.95 to start off the New Year.
How much you can expect to save each month
Following the 1p a day savings challenge from January 1 means you should have these amounts in your fund at the end of each month.
- 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 - £108.50
Flip it round to suit your financial situation
Alternatively, you could reverse the order in which you save, if you have the cash to spare and think that will work better for you. This would mean starting saving £3.65 on January 1, so you will only have to put aside 1p on December 31.
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