Cash Saving Challenge

Could you wear just six items from your closet in various combinations for a month? How about scale back your personal possessions to 100 things, or go a full year without buying anything new? Consumers are increasingly taking on such financial challenges in the down economy. Kelli Grant, Senior Consumer Reporter for SmartMoney.com shares five tips to tackle a money challenge.

First consider your motivation. People are taking on financial challenges because they like the idea of saving money and getting away from the consumption culture that pushes us to buy, buy, buy. But challenges can be like fad diets. Pick one that gets you excited, and look long term. Wearing only six items of clothing for a month is great; it's better if you learn how to creatively shop your closet and pledge to buy only versatile items of clothing.

Take small steps by making small reductions each month to find a workable level instead of jumping in. Like a grapefruit-juice-only diet or a too-tight budget, you're more likely to bounce back into old bad habits if you feel deprived enough that the first obstacle derails you. Aim to cut your spending or purchases in a given area by 25% per month until you reach your goal.

Don't get fixated on the numbers. Try not to be frustrated if you don't make it to the "ideal" challenge level. Although many challenges say focus on limiting yourself to a set number of possessions or expenditures, the correct figure should be one that's livable for you. Your lifestyle may prevent you from scaling back to just 100 things, but it's the overall aim of cutting out unnecessary "stuff" that's important.

Recruit other people to get in on the challenge. Public commitment to a financial challenge is important. Letting other people know you're not buying new things or eating at restaurants helps them offer support in tempting situations. They can keep you out of the mall. If your goal was to avoid making new purchases, a good network can help you with borrowing and other economical solutions.

Don't reward yourself for completing a challenge by buying more stuff. That's an indication the challenge was more of a fad and less of a meaningful change for you. The reward should be new behaviors and money saved.

For more information on challenging yourself to save money and other consumer tips click here.
Kelli Grant & Erika Wortham