What is the 1p Savings Challenge, and how does it work?
The viral 1p savings challenge is a great money-saving method and may well be at the top of the list of many families' New Year’s resolutions, and if not, perhaps it should be!
This money challenge comes at the perfect time, (new year, new money saving technique) and is one of the easiest savings goals systems and is a great way to help people save £671.61 in 365 days by putting away a little bit of loose change each day, so that at the end of the year the piggy bank will be able to help fund the festive food and gifts, taking off the financial pressure in December.
By saving pennies as an increasing amount of money daily, people can build up their savings pot in a manageable way that won't break the bank but could make a big difference to a family's finances.
How does the 1p Savings challenge work?
The challenge is designed to start on the 1st of January with a single penny, but it could be started later as you can easily catch up by using your spare change. You begin the challenge by saving 1p on the 1st of January, then 2p on the 2nd of January, then 3p on the 3rd of January and so on – saving what you saved the day before, then adding a penny more each day – all the way up to £3.65 saved on the last day of December, although you may well end the challenge earlier to be able to use the money for helping towards your Christmas expenses, or have some extra money for a rainy day or as an emergency fund.
It’s a fun way to save some money, and getting the kids involved is a great plan as well as they enjoy the process of the saving challenge plus it's also a good way to install a savings habit into their minds, perfect for young children as its a good financial lesson and helps to educate the child about the value of money, budgeting and savings, so it's a win-win!
So, as an example, here’s how the challenge would work:
Day 1: Put in £0.01
Day 2: Put in £0.02
Day 3: Put in £0.03
Continue until...
Day 100: Put in £1.00
Day 101: Put in £1.01
Day 102: Put in £1.02
Double it on day 200...
Day 200: Put in £2.00
Day 201: Put in £2.01
Day 202: Put in £2.02
And continue until the 300th day...
Day 300: Put in £3.00
Day 301: Put in £3.01
Day 302: Put in £3.02
On the last day (31 December), put in £3.65, and it's time to cash in your jar.
If you've stuck to the plan, you should have a grand total of £667.95 on the final day of the year!
So, what’s the best way to conduct your penny savings plan? The most logical solution would be to use a piggy bank or container to collect your loose change daily, and for many people, that works really well; however, we are all living in a more cashless society these days, and so it's entirely possible that you won't actually have the cold hard cash available to be able to put away the required cash daily, I know I rarely have actual cash in my pocket!
If that’s the case for you as well, look to online banking to do the hard work! Online banks, such as the Monzo current account, have the facility to create money pots within your account that can be set up for savings, and are ideal for this saving challenge.
The banking service Monzo, with 11 million customers, is offering the 1p challenge on its app from January 1st 2025. The app will automatically take the daily amounts from your account and add this to a savings pot, meaning you don't need to remember to do anything! You can pause or stop the challenge at any time.
It’s the easiest way to do the challenge without messing around with loose change, and it is useful as you don’t have to remember actually to make the daily addition to the money pot!
If you haven’t already got a Monzo account, you can set one up using our referral link, and you’ll get a £10 bonus when you set up your account and then make a first card payment using your account, which could be as simple as buying a drink; that bonus tenner will get you started with your savings!
If the idea of having to mess around with putting away small amounts of money every single day or setting up an online banking system doesn’t work for you, then bypass this daily challenge and do it monthly instead. You can simply transfer the monthly equivalent of the challenge to a savings account so you still have the same amount at the end of the year.
Do this by sending larger amounts to your bank monthly; transfer the figures below to your bank, or savings account:
January £4.96
February £12.74
March £23.25
April £31.65
May £42.16
June £49.95
July £61.07
August £70.68
September £77.55
October £89.59
November £95.85
December £108.50
You can send these amounts in any order you want, so if you know you’ve got an expensive month coming up, you could transfer a smaller monthly amount instead and equally, if you have some extra money one month, you could then transfer a larger months figure to your bank account instead, the choice is yours!
Equally, and this is one of the top tips I think for those who would like the extra money to play with next Christmas but don’t need the hassle of the other methods, you could just set up a standing order to your savings account for £55.66 a month for the 12 months, which would give you the same figure at the end of the challenge!
You could also up the amount to £68 a month over 10 months and then use that cash to buy Premium Bonds instead, and who knows, you might win a prize to help boost your penny challenge significantly! I like this as you’re not going to earn much interest on sending the money to your bank account as interest rates aren’t great, so you never know; you might win up to a million pounds by purchasing premium bonds, which would make Christmas 2025 pretty impressive!
Remember you won’t have your monthly payments premium bonds entered into the prize draws until the following month, so January's payment will be entered into February’s draw, February into March and so on. Allow a week for the money to hit your bank account once you withdraw your money from your premium bonds account, so withdraw that in early December or late November to have the money for Christmas!
If you’re going with the old school, daily cash method, it can be hard to remember where you’ve got to and how much money you’ve put in the pot or need to put in the pot on that day. Therefore money, saving expert Martin Lewis has come to the rescue via his Money Saving Expert website and has produced a free chart which tells you how much money to save each day and allows you to tick each day you’ve put money into the pot and so you can keep on track! You can download the free tracker as a pdf here.
Even if you don’t manage to put away all the money over the year, anything you save will be an added bonus. This cash-stuffing method is a great way to use your spare change to make a difference later in the year, maybe for booking a holiday for 2026! Even if you just have a pot to add any spare change into, as and when you have it, it’ll help you out, and these days, we can all use a little extra cash when expenses get higher, such as Christmas!