£5 savings challenge could leave you with nearly £7,000

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Money saving tips: Man shares one simple trick to save cash

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Many people will want to spend their money more wisely in 2023, tightening their belts after Christmas spending. However, the real challenge comes with saving without a specific goal in mind.

Having the intention to save, whether this is for a holiday, new car, or simply an emergency fund, can help Britons stay disciplined.

There are various money saving challenges to try, but one could help people to amass thousands by this time next year.

Savings challenges can vary with how much a person would like to put aside, but one popular option is the £5 savings challenge.

Each week, Britons adopting this challenge should put some money into their savings account.

On week one of the year, they start with a £5 challenge, but this builds up by an extra £5 each week.

On week 2, they can transfer £10, having saved a total of £15.

By the time they are half way through the challenge at week 26, diligent savers will be moving across £130.

This will mean they would have saved £1,755 in total so far.

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Once week 52 is reached, people will be transferring £260 into their dedicated savings account.

However, as they have been increasing the amount they are transferring each week, the total saving will be nearly £7,000 – specifically £6,890.

By the end of December, savers who have stuck to this challenge should have thousands of pounds put aside for their specific goal.

Of course, this can be difficult for those who do not have this kind of money to put away each week.

But the challenge can be adapted, increasing in smaller amounts to help the goal become more manageable.

If putting money into a saving account, savers could also be aided by the power of an interest rate.

This could give them a small amount of extra cash simply for putting money in a safe place. 

Some may choose to undertake the £5 challenge by saving their loose change or notes.

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However, they should be aware this is unlikely to benefit from the security a bank or building society account can provide.

FSCS-backed accounts offer protection up to £85,000 per person, per financial institution.

As a result, this may be something people want to consider.

Regardless of the method of saving, the challenge could help those who struggle to get motivated to put money aside. 

The £5 challenge is often considered as a slow and steady way to save money as it builds up savings over time. 

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