How would you make sims more challenging?

There exists heaps of challenges. Just impose some rules to your play to make it more challenging. 'Cause the game is what it is.

For me, the Sims isn't a game to be won, therefore the concept of "difficulty" is irrelevant. As @Nindigo points out, players can impose their own rules. The Sims, IMHO, is more about imagination and creativity than about playing challenges. That's the really good thing, you see. We can make it what we want and play it how we like.

i agree with @Nindigo and @NoWayJose527. the game isn't meant to be particularly easy or difficult. it's a life simulator not a puzzle game or something. it is what you make of it

The Sims is a sandbox simulation game, not an RPG, by design. It's as difficult as you make it (within the game's existing parameters of course). Don't use cheats. Do challenges that take you outside your comfort zone. Don't exit without saving if something goes not to plan.

As a control freak I like to create challenges and drama myself, I hate it when the game makes a drastic move. Unless it's some I actually wanted to happen but that is very rare when my game and I see eye to eye.

Burglary is something I absolutely want, I would just say the house has to have something worth stealing.
And My options are I could fight the thief myself or call the cops.
My thing is, Most of my sims are supernaturals, Like If a Thief broke into my werewolf's Mansion, and tried to get into their money vault, I should be able to send my wolf pack to sic and seriously maim the thief. and recover what ever the thief stole.

Same with a thief who would steal from my sorcerer's house, I should be able to use magic to trap or attack the thief.
Sims can't kill directly... My sorcerer didn't kill the thief directly, lack of air in his lungs did. o:)

A thing I've noticed that makes it a lot more challenging, is to get mods that makes the emotions more realistic and impactful with a lot less happy moodlets.

If I could have added what I wanted, then I would have added optional rewards that you could gain by performing certain tasks, that way you could have more challenging things for people who wants them, and people who just wants to play it as a sandbox, they can do that too.

For example, add aspirations that require multiple sims, create a band, create an art gallery, create a large family, have multiple successful generations or something like that. Or you could add aspirations that are basically the challenges, have an aspiration which is to have 100 babies, you could have options in the game to disable things to have the rules for the challenges, like preventing your sim from getting a job.

You could add options to add a failure state to anything the sim does, and it is dependent on the trait and their needs. If your sim have low needs when working out, they could hurt themselves if they are not active, or have any similar trait. If they get hurt, they get a negative buff which can be solved by doing other things, like getting a massage or having a rabbit hole event where you could pay to go to the hospital. If they have high needs, then they get a positive buff instead.

These are options that I think could make the game more challenging.

Honestly the sims isn't meant to be challenging. It's about as easy or hard as you make it to be. Indefinitely still want burglar's, but as per usual they are always a inconvenience more than anything. When I think challenging for the sims my mind reels back to the first sims game and that was a complete nightmare,e specially if you had more than one sim in a household because things went wrong all the time and your reward if your sims needs are able to be fairly high? A brief moment of peace.

Because needs tank so fast in that game it was hard to really enjoy a lot of things when your sims outright refused to do anything because they were in a bad mood. Not to mention there weren't any cheats for needs at all (only the one where you would have to delete your sim.)

Only thing I'd really want back in the game is higher consequences and some random events for certain actions and choices in your job. Could lose a skill point in your job or even be fired, flirting with another sim has your relationship take a more serious hit, etc etc.

I don't really play the sims for challenge.

Move a new Sim into an empty lot and cheat the money down to zero and play until you complete both the fortune aspirations before your Sim dies of old age. Make your own rules. Or ... Play with aging/death off and try going from 0 to 1 million completing aspirations and collections along the way.

Right now I am playing extreme teen with aging/death off. This means my sim can't travel to the gym to shower etc. He has to eat off the land and only travel to wash his hands, collect or fish. He can only wash his hands at the park for hygiene. He has to use the outdoor toilet near his lot in Newcrest. lol The only thing I bought my sim was the woodworking table before I zeroed out the money. Jobs are not allowed and no more build/buy until my Sim gets level 10 handiness. So he has to build everything ... even his toilet (level 10 handiness). Will see how how long it takes to get to a million just selling the stuff he makes with the workshop, gardening and selling collectibles. Only allowed to sell through his inventory system or the selling table at the flea market. No money trees either.