1p savings challenge: how to save £667.95 in 12 months

Use the 1p savings challenge to save £667.95 in 12 months

1 p challenge

The 1p savings challenge is a simple way to build up a savings pot - and can be easily adapted for kids to get in on the action too

The 1p savings challenge can be an easy way to boost your bank balance by nearly £700 a year. Families may find this especially useful at a time when they are concerned about national insurance going up (opens in new tab) and how much their energy bills will cost (opens in new tab) in light of the energy price cap (opens in new tab) increase. 

"With bills across the board on the rise, and so much uncertainty regarding our finances - it’s now more important than ever to have either an emergency fund or some money in savings,” says Jordon Cox (opens in new tab), Britain’s Coupon Kid. “The 1p challenge is a great way to put money aside without feeling the pinch too much - and by the end you have £667.95 at your disposal.”

When it comes to cash savings, one in five UK adults (over ten million people) have less than £100 in savings, according to a study (opens in new tab) by Yorkshire Building Society. This challenge is an easy way to get into the habit of saving little and often.

What is the 1p savings challenge and how does it work?

The 1p savings challenge is an easy way to turn pennies into pounds. It involves saving little and often over the course of 12 months. On day one, you start by putting 1p aside, then you save 2p on day two, 3p on day three, and carry on in this way, saving an extra penny a day every day for a year. The amount you save goes up each day. The most you save will be on the final day, day number 365, when you put in £3.65. It really is as simple as it sounds. It's an easy way to kick start a regular savings habit. 

The traditional way to do the challenge is to start on 1 January and finish on 31 December, but there are no hard and fast rules. You can start the 1p savings challenge any day of the year.  The most important thing is to keep going!

How much could I save in a year?

If you stick to the 1p savings challenge and save an extra penny every day for a year, you will finish the year with a savings pot worth £667.95, based on a 365 day year.

Here’s a table to show how those monthly savings start to stack up.

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Month 1 £4.96Month 7£225.78
Month 2£17.70Month 8£296.46
Month 3£40.95Month 9£374.01
Month 4£72.60Month 10£463.60
Month 5£114.76Month 11£559.45
Month 6£164.71Month 12 £667.95

A big part of the fun is ‘ticking off’ those daily savings, and there are lots of websites including MoneySavingExpert (opens in new tab) where you can download and print off a ‘tick’ sheet. This helps you keep track of where you are in the challenge, and if you miss a day, it’s easy to spot, and you can top up your fund the next day.

“It's not always easy for people to save every day, and as the amount you need to save increases towards the end of the year, you can always save and tick off random bigger amounts, (almost like Bingo), and some people even do the challenge backwards”, says money blogger Ricky Willis (opens in new tab) from Skintdad.

Doing the challenge in reverse is especially useful if you start in January as it means you’re paying less into the savings pot in the lead up to Christmas.

How should I save the money?

There are no rules on where you should save with the 1p savings challenge. Many people prefer using a large glass jar, as this way you can see those savings start to stack up, which acts as an incentive to keep going.

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However with more of us going cashless these days, for some it may be easier to do the challenge online. An online option might also be preferable for those who think they will be tempted to dip into the large glass jar throughout the year.

You could put it straight into a savings account. Rather than making small daily deposits (which your bank may not actually allow), you might want to just transfer the money to your savings account once a month. If you want a super simple option, you can set up a standing order to transfer £55.67 per month into your savings account. This equally splits the total you would save in the challenge by 12. By doing this, you will actually end up with £668.04 by the end of the year.

Alternatively, if you wanted to stick to the challenge ethos, but just transfer the money once a month, this is how much you would need to save each month. 

Swipe to scroll horizontally
Month 1 £4.96Month 7£61.07
Month 2£12.74Month 8£70.68
Month 3£23.25Month 9£77.55
Month 4£31.65Month 10£89.59
Month 5£42.16Month 11£95.85
Month 6£49.95Month 12 £108.50

“It can be hard to remember to save each day, so you can use automatic saving tools with banks or financial apps to help you”, says Jordon Cox. “If you bank with Monzo, you can set up the 1p challenge as a service to do the hard work for you each day."

This also saves scrabbling around for small change, especially during the early days of the challenge. There are also other money apps like Plum (opens in new tab) where you can set up different savings pots, one of which can be your 1p savings challenge.

Kalpana Fitzpatrick, editor of our sister brand TheMoneyEdit.com, says: “You could also consider investing your savings into stocks and shares ISA, to help your money grow more, rather than leave it lingering in low-interest savings accounts. For example, If you put a £600 lump sum into a stocks and shares ISA and your investments grew by 5%, it could be worth £765 in five years’ time, or £977 if you left it untouched for 10 years*. These are estimated figures as investments can go down as well as up.

“It’s also important to remember that you should only invest money that you don’t intend to use for at least the next five years, because investments need time to grow - so, the longer you leave it untouched, the more time it has to grow.”

You can currently save up to £20,000 in an ISA - either a cash one, where you earn an interest rate or an investment, where your  money is put to work in the stock market. ISAs are tax-efficient, so any income you make from them is tax-free.

Variations on the 1p savings challenge

The whole idea behind the 1p savings challenge is to kick start a savings habit. Starting with small amounts means you’re less likely to miss the money. Even if you can’t afford to save the specific amounts set out in the challenge, saving small amounts regularly will all add up and get you in the habit of building up your savings pot.

You can easily adapt the challenge to make it work for you. If you think you’ll forget to put aside money every day, or want to save in an online account, you can do the 52-week 1p savings challenge instead. 

The idea is the same, but instead of putting money aside each day, you tot up the daily savings once a week and put in a lump sum.

This means you will need to put in 28p in the first week of the challenge and £25.34 during the last week.

You can even adapt the 1p savings challenge for children to teach them about saving. One easy way to do this is by encouraging them to put aside just one penny a day for a whole year, which will give them £3.65 at the end of the 12 months. To encourage them to save more, you could increase this to 10p a day, which would give them £36.50 after one year.

* according to abrdn investment calculator.

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Sue Hayward is a personal finance and consumer journalist, broadcaster and author who regularly chats on TV and Radio on ways to get more power for your pound. Sue’s written for a wide range of publications including the Guardian, i Paper, Good Housekeeping, Lovemoney and My Weekly. Cats, cheese and travel are Sue’s passions away from her desk!