Do you want to save money, but you’re not sure where to start? Then it’s smart to start small! The basic idea of the penny challenge is that even saving a tiny amount can add up over time—even just a penny that you might not look at twice if you saw it on the ground.
Let’s go over how the penny challenge works, a couple different ways you can handle the logistics, and how much you can save by adding a penny a day for a year or more.
What Is the Penny Challenge?
If you’re used to finding yourself out of money at the end of the month, the 365-day penny challenge is a perfect way to get into the habit of saving, in an easy way that you’ll barely even notice.
On day 1 of the challenge, all you have to do is save one cent. Then, you’ll increase that amount by a penny a day for a year (or however long you want to keep doing it).
So, here’s what the challenge looks like in practice:
- Day 1: Save $.01
- Day 2: Save $.02
- Day 3: Save $.03
- Day 50: Save $.50
- Day 100: Save $1.00
- Day 200: Save $2.00
- Day 365: Save $3.65
I’ll spare you the scrolling of including the entire 365-day list—you get the idea! The gist of it is that the 365-day penny challenge isn’t just to save a penny a day; it’s to slowly ramp up how much you’re saving over time. By the end, you’ll be saving over $3 a day, which will help your final savings total be a lot higher (we’ll get into exact penny challenge earnings figures in the next section).
If you use cash, you could use physical coins and dollars for this challenge. Many people enjoy the feeling of watching their progress accumulate as they fill up a special savings jar.
However, if you’re like me and don’t use cash, you can easily accomplish the same thing with a bank account. If you’d like to track specifically how much you’re saving for the penny challenge instead of mingling it with other savings goals or your emergency fund, I’d recommend opening a free online savings account specifically for the penny-a-day challenge. This way, you can also earn interest on your savings—some free pennies for your penny challenge!
Check out some of my favorite savings accounts here. You can either transfer the amount every day from your main checking account, or (for less frequent work) add up the penny challenge per week and transfer once a week.
For instance, the first week goes from 1 cent up through 7 cents a day. Using an easy online sum calculator, we can simply enter 1, 2, 3, 4, 5, 6, and 7 to see that the weekly total is 28 cents. The next week, we’ll start at 8 and go through 14, for a total of 77 cents. Once you start getting into the dollar territory, just insert a decimal before the last two numbers (so week three, 15-21 cents per day, adds up to $1.26). Adding the daily numbers and doing a weekly transfer for the penny challenge can save you more time than logging in every day to transfer a couple cents to your savings account.
How Much You’ll Have If You Save a Penny a Day for a Year
Can you really save money with the penny challenge? Absolutely! The grand total for a 365-day penny challenge is a whopping $667.95.
Put that in perspective, 40% of Americans would struggle to cover a $400 emergency expense. Doing the penny challenge allows you to have that amount and more in your back pocket for a rainy day.
Penny challenge savings amounts really start becoming noticeable as you get close to the end of the year, when you’ve reached the level of saving several dollars a day. (If you literally only saved one penny a day for a year, you’d end up with $3.65.)
Recommended: Money Saving Challenges
Is the Penny Challenge a Good Way to Save Money?
First of all, any savings is good savings! If the penny challenge sounds like a good fit for your personality, that’s what matters. It offers a fun, gamified experience that can help you create a habit and turn savings into a positive thing in your mind. It can also be a great challenge to do with kids, so they can get excited about saving money too.
That said, I wouldn’t let the penny challenge limit you. The flip side of having these low daily savings targets is that you could get into the mentality of “well, it’s day 100 and I only have to save $1, so I can spend all the other money I made today!” Whenever you’re in a position to save extra money, it’s wise to do so.
So, think of the penny challenge as a jumping-off point and a way to keep you on track, not a cap on how much to save. Heck, if you want to start your penny challenge at $1 a day, be a rebel and go for it! As long as your lights are on, your bills are paid, and your household is fed, there’s no such thing as saving too much. (Check out this info on how to drastically cut your expenses.)
What to Do After the Penny Challenge
Once you’re done with the 365-day penny challenge, you’ll be used to saving money, and there are so many great ways you can take those habits forward and save even more!
If you liked the game-like feeling of the penny challenge, you could see how long you can keep it going—e.g. on day 366, save $3.66, and so on. There may come a point where you can’t keep increasing the amount, so you can either pick a flat amount (e.g. $5 a day every day), or use it as motivation to try some side hustle ideas to keep the savings snowball rolling.
When you feel confident with the amount in your savings account, you can start learning how to invest so your money is making money. Investing $5 a day comes out to over $1800 a year, plus any gains you earn from the stock market. Just make sure you fund a 6-month emergency fund before you start investing, because the stock market can go down too, and you don’t want to be caught in a tight spot if you need cash and the market is low.
Ultimately, the penny challenge is a great way to start for anyone who wants to jumpstart their bank accounts for the new year! And once you’ve seen how it adds up, you’ll probably never walk past the penny on the sidewalk again.
Have you ever tried the penny challenge or something similar? Comment below and let me know how your experience was!
Kate is a writer and editor who runs her content and editorial businesses remotely while globetrotting as a digital nomad. So far, her laptop has accompanied her to New Zealand, Asia, and around the U.S. (mostly thanks to credit card points). Years of research and ghostwriting on personal finance led her to the FI community and co-founding DollarSanity. In addition to traveling and outdoor adventure, Kate is passionate about financial literacy, compound interest, and pristine grammar.