As January tightens its grip on our wallets, many of us are left surveying the financial damage from festive spending. This annual dilemma is precisely what led me to a surprisingly effective solution: the 1p savings challenge, popularised by Martin Lewis and his Money Saving Expert team.
What Is The 1p Savings Challenge?
The concept is beautifully simple. You start by saving just one penny on the first day of the year. On day two, you save 2p, on day three, 3p, and so on, incrementally increasing the amount each day for 365 days. By the final day, you're putting away £3.65. Alternatively, you can reverse the process, starting with the larger sums. Whichever method you choose, the total saved by New Year's Eve is a substantial £667.95.
This method transforms saving from a daunting task into a manageable, daily habit. It's a powerful tool for building an emergency fund, saving for a holiday, or simply creating a dedicated pot for next Christmas without feeling the pinch.
My Journey: From Manual Tracking to Automation
My first attempt at the challenge in 2024 was not a complete success. While finding the spare change was easy, remembering to make the daily transfer into my savings account was not. I frequently forgot, lost track of the required amount, and eventually gave up partway through the year.
For my second attempt in 2025, I was determined to succeed. I initially used a printable tracker from the Money Saving Expert website, which helped but still felt tedious. The breakthrough came when Monzo became the first UK bank to automate the process. As an existing customer, I could use their 'Challenge Pot' feature, which automatically transferred the correct amount from my current account every single day.
This automation was a game-changer. By removing the need for daily manual action, it ensured consistency. By the end of 2025, I had successfully saved the full £670.95.
The Crucial Mistake I'll Avoid Next Time
However, my success came with a valuable lesson. While Monzo's Challenge Pot made saving effortless, it is not a traditional savings account. To earn interest on the money held within it, you need a paid Monzo account (Extra, Perks, or Max), which starts from £3 per month.
I was reluctant to pay this fee, so my accumulating savings earned no interest. I manually emptied the pot into my external savings account only a few times during the year. This was my key mistake. Had I transferred the money more regularly into an interest-bearing account, my total would have been even higher.
For the 2026 challenge, my resolution is to automate the saving but also automate the regular transfer of those funds into a high-interest savings vehicle.
How Does It Compare to Other Savings Methods?
Another popular automated tool is the 'round-up' feature offered by many banks, where your card purchases are rounded up to the nearest pound and the difference is saved. While I use this across several accounts, the amounts saved simply don't compare. In my most-used account, round-ups have only just surpassed £400 after several years—far less than the £670 generated by a single year of the 1p challenge.
The 1p challenge proves that small, consistent actions, especially when automated, can lead to significant results. It's a remarkably painless strategy to build a financial buffer for both planned and unexpected expenses throughout the year.
