How the 52-Week Savings Plan Can Jumpstart Your Emergency Fund

52 week savings plan

You never know when an unexpected expense will pop up. That’s why an emergency fund is so important.

According to a report from the Federal Reserve, 46 percent of American adults can’t cover an unexpected $400 expense. But it can feel difficult to start saving when you feel like you’re already struggling to make ends meet.

The good news is that you don’t need to set aside a huge amount of money at first. If you start small, it’s a little more manageable.

One of the most popular programs is the 52-week savings plan. It’s a good way to get in the habit of saving and build an emergency fund.

What is the 52-week savings plan?

The idea is simple: During the first week of the year, you put one dollar into savings. The second week, you save two dollars — for a total of three dollars in your bank account.

By the time you get to the last week of the year, you put $52 into the account. The total amount you should have in your bank account will be $1,378 at the end of the year. That’s a healthy amount for an emergency fund. Most small emergencies can be handled with that amount.

One of the reasons this money saving challenge is so popular is because you gradually work up to saving more each week. It creates good habits and encourages you to look for ways to set more money aside.

Take the 52-week savings plan to the next level

It’s possible to modify the 52-week savings challenge to save even more money. Here are some of the modifications you can make.

Keep adding a dollar a week

Don’t stop putting money into your emergency fund once the year is over. Keep it going. The first week of the following year, add $53 to your bank account. Then, the next week, add $54.

If you can keep it going, your emergency fund will continue to grow and you’ll be better prepared for what’s next.

Start with a different amount

If you want to do the 52-week savings challenge again, consider starting with a higher amount. Instead of beginning with $1, start with $2. You can add $2 a week to your contribution and supercharge your results. This works with $5, $7, or any amount you choose.

For example, if you decide to start with $5, and then go up by $5 each week, you will end up with $6,890 by the end of the year.

It takes a little more planning to say that you’ll set aside $5 the first week, then $10, then $15, then $20. It can really force you to reevaluate your priorities and take your savings to the next level.

Use the skip around method

One of the issues with the 52-week savings plan is the psychology of adding more each week. What happens if you end up with a pressing need early on?

David Carlson, the author of Young Adult Money, has an alternative that allows you to skip around. He suggests starting with larger amounts at the beginning. This will build your bank account faster and means you can use the emergency fund to pay for unexpected costs.

You can use a checklist, like the one from A Mitten Full of Savings, to keep track of which weeks you’ve completed.

Say you start out the year optimistic. You save $50 on week one and $43 on week two. You’re already up to $93. You check those weeks off on the savings chart. Perhaps you save $45 and $52 the next two weeks. Now you’re up to $190 in the account.

But then you end up needing to spend $100 to repair your fridge. You keep saving, but perhaps you check off the $11 box and the $12 box. This skip around method allows you to front-load your saving so that you’re prepared if your budget gets a little tight.

High-yield savings account

One of the best ways to get a little extra from the 52-week savings plan is to keep the money in a high-yield savings account. All of the amounts mentioned in the 52-week savings challenge are based on what you put in.

When you keep the money in the bank and earn a return, you have the potential to get even more. Your contributions compound. It’s not a huge amount, but it’s still something.

Don’t neglect your other savings

While the 52-week savings challenge can be a great way to start an emergency fund, it’s not practical if you want to build long-term wealth. For that, you need to boost your returns with the help of a tax-advantaged retirement account.

Use this money saving challenge as part of your overall efforts for better finances, but don’t expect it to replace a plan for retirement savings.

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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (
  2. Personal LoansFixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 4.98% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 21, 2017 and are subject to change without notice. Not all rates and amounts available in all states. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 4.98% APR assumes current 1-month LIBOR rate of 1.34% plus 3.89% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

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Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
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