Action 1: Exponential saving challenge


What is “financial stability”?

Each person has their own opinion and need around what makes their lives financial stable. Some are comfortable with minimal income, a roof over their heads and have little desire for materialistic items whereas some are happiest with brands, high value assets and the comfort of savings for a rainy day. Both are fine and both come with benefits and risk.

The key is to know what YOUR financial stability is and how this can be achieved and maintained. In order to find this balance, there are some fundamental known knowns (remember Chapter 4 “Power of Choice” and Chapter 7 “Problems v Barriers”).  The known knowns are based on a simple equation of income v outgoings. If your outgoings are greater than your income, you are NOT stable.

Exponential saving challenge

No matter of your financial position, let’s play a game of exponential saving. Exponential – “becoming more and more rapid”.

The rules of the challenge:

  1. Each day you must double the amount saved the previous day
  2. If you decide that it is not possible to safely save the amount of the day, you take a “break-day” and make no payment
  3. After a “break-day” you must halve the amount you were going to save
  4. You may have as many “break-days” as you need but each “break-day” halves the saving amount
  5. You can go no lower than $1

Here is an example using repayments off a credit card with a starting balance of -$5,000:

  • Day 1 – Pay $1 (balance $4,999)
  • Day 2 – Pay $2 (balance $4,997)
  • Day 3 – Pay $4 (balance $4,993)
  • Day 4 – Pay $8 (balance $4,985)
  • Day 5 – Pay $16 (balance $4,969)
  • Day 6 – Pay $32 (balance $4,937)
  • Day 7 – Pay $64 (balance $4,873)
  • Day 8 – Break-day (balance $4,873)
  • Day 9 – Pay $64 (balance $4,809)
  • Day 10 – Break-day (balance $4,809)
  • Day 11 – Break-day (balance $4,809)
  • Day 12 – Break-day (balance $4,809)
  • Day 13 – Pay $16 (balance $4,793)
  • Day 14 – Pay $32 (balance $4,761)
Total paid off credit card in 14 days = $239

Now, the secret is taking a moment to assess these critical questions:

  1. Can you afford to make a payment on each individual day?
  2. Can you afford not to have that $4 coffee or $16 fast food meal or $64 take-away and make a payment off your credit card?
  3. Can you afford NOT to make that payment off your credit card?
Based on the above exponential saving pattern you would clear the principal (amount excluding interest and fees) of the credit card in 40 weeks.
It is important to interpret the above pattern not as financial advice but a pattern of mindset where you take a moment to use your power of choice on a daily basis to assess and decide on the right action for you to achieve your goals and ensure you meet your responsibilities to others too. Use the spare pages of your journal to track 14 days of the exponential savings challenge.

Being in financial difficulty is a lonely place and is a significant cause of anxiety. The importance of identifying your position and empowering yourself with knowledge will filter the known unknowns and decrease or even delete the anxiety completely but it is your responsibility to seek support, advice and information to allow you the power of choice to evolve or keep revolving.

Seeking the right support is a powerful thing.