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Saving money can feel overwhelming when your budget is already stretched thin. But the “penny-a-day” savings challenge proves that building a savings habit doesn’t always require drastic lifestyle changes.

If you want to start saving but are struggling with motivation or consistency, the penny-a-day challenge could help kickstart your efforts. Here’s how it works.

The penny-a-day savings challenge is a simple money-saving method where you increase the amount you save by one cent every day for a year. The idea is to start small and build the habit gradually.

Here’s how it works:

Day 1: Save $0.01

Day 2: Save $0.02

Day 3: Save $0.03

And so on…

On the final day of the year, you’ll save $3.65. Over 365 days, the total adds up to about $668.

Savings challenges like this can make it easier to gradually build your balance and develop positive financial habits — without requiring large lump-sum deposits or major cuts to your discretionary spending.

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To maximize the benefits of the penny-a-day savings challenge, consider pairing it with a high-yield savings account so your balance can earn interest as it grows.

Today, the best high-yield savings accounts boast rates of around 3% to 4% APY. If you can manage to find an account that offers a competitive rate with little to no fees, you can expect to have a little extra in your savings account at the end of the year without having to increase your contributions.

You can also customize the challenge to better fit your financial goals and budget. For example, some savers choose to reverse the challenge by making the largest deposits at the beginning of the year and work their way down.

Tracking your progress with a spreadsheet, budgeting app, or printable chart can make the process feel more rewarding and help keep you motivated throughout the year.

The penny-a-day challenge is just one of many savings challenges out there. Depending on your savings goal, timeline, and general preferences, there may be another strategy that works better for you.

Some alternatives to the penny-a-day challenge include:

No-spend challenge: This is a commitment not to spend money on nonessential purchases for a set period of time.

100-envelope savings challenge: The 100-envelope savings challenge involves using envelopes to save a lump sum of cash over the course of 100 days. Envelopes are labeled No. 1 through 100, with each number corresponding to the amount of cash that should be put into each one.

$5 bill challenge: Every time you receive a $5 bill, you set it aside instead of spending it.

52-week savings challenge: This is a snowball savings method that starts with saving just $1 the first week, $2 the second week, $3 the third week, and so on. By the final week of the challenge, you’ll set aside $52 for a total savings of $1,378.

$27.39 rule: With this challenge, you transfer $27.39 to your savings account every day for one year. After 365 days, you’ll have a savings account balance of just about $10,000.

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