Taking on new challenges and developing healthy habits can be done at any time. There is however the excitement about starting a new year, a new season, or a new month that can make it the perfect time to get your finances and spending under control. One of the most fun ways to get your finances in order is with a no-spend challenge. Let's get into just how it works and why you should definitely try it out!
What is a no-spend challenge?
No spend challenges have become trendy over the past couple of years. If you’ve never heard of a no-spend challenge, it refers to a period of time in which you intentionally chose not to spend any unnecessary money. During the challenge, you’re only allowed to spend money on bills and necessities. Most people opt for no spend week or month-long challenges. Typical categories where spending is allowed include:
- Rent or mortgage
- Bills (cable, internet, utilities, phone, car, etc)
- Health expenses (insurance, doctor’s bills)
The idea is to only spend money on what you need and to eliminate all spending on non-essentials. This means saying goodbye to spending in categories like these:
- Restaurants and take out
- Coffee and drinks
- Furniture/home decor
- Hairstyling/nail appointments etc
It’s important to establish upfront what’s a need and what is not. For instance, if you don’t own a car, an Uber may be required to get to work. However, getting creative is also essential to this challenge. If you live in the city and work less than a mile away, is riding the bus an option? What about walking or riding your bike? Decide up front exactly what you’re allowed to spend money on and set limits before starting this challenge.
How a no spend challenge can improve your finances
A no-spend challenge can save you money by forcing you to refrain from unnecessary spending. However, the beauty of a no-spend challenge is more about what you learn during this time period, rather than the money you save. Here are a few of the financial benefits you’ll reap during a no-spend challenge.
1. You save more money
It’s a given, of course, but cutting unnecessary spending will inevitably lead to more money in your bank account. This means being intentionally frugal which can be a good thing. That’s more capital to invest in your new business venture, put towards your dream vacation, or putting into your savings account. Your ability to save more gives you the opportunity to accelerate achieving your financial goals.
2. You’ll identify your bad habits
When you can’t spend money anymore, you quickly become aware of all the ways you spent money in the past. As your checking account begins to grow, you’ll undoubtedly realize how you might have wasted money in the past. Maybe it was going out for rounds of drinks throughout the week when you could have saved money on cocktails at home. Perhaps it was buying yet another winter sweater that you likely don’t need. Whatever your bad habits are, a no-spend challenge will quickly bring them to light.
3. You will get clear on your goals
As you begin saving more and more money, you’re bound to get excited about your savings goals. Remember when you wanted to build a 6-month emergency fund? Or what about that credit card you keep meaning to pay down? A no-spend challenge can make these goals seem within reach once you eliminate non-essential spending.
4. You’ll find new ways to fill your time
Spending money actually takes up a lot of your time. When we’re bored, some of us like to go shopping, rent movies, or order food — even when we aren’t very hungry. When you’re not allowed to spend money, you’ll find you have more time on your hands to spend doing things that matter most to you.
Starting with a no spend month
Starting a no spend challenge with a no spend month is a great idea. A month is a fixed period of time that is not too long in which you can focus on achieving as many no spend days as possible. You can plan your no spend month alongside your budget and use it as an opportunity to really get clear on your monthly expenses and splurges.
Steps for a successful a no spend month
Below are some keep steps to help you be successful with your no-spend month.
1. Time it correctly
Choosing the right month for your no spend challenge can help you get off to a good start. If kicking it off in January feels too rushed for you, then look into another month. Be sure not to choose a month filled with birthdays, anniversaries, major holidays, or other events where you know you’ll spend money. Or, plan ahead and buy gifts in advance so you can stick to your no spend schedule.
2. Use a journal to track your urges and emotions
The urge to spend is a behavior that’s hard to unlearn. In fact, behavioral change can be extremely difficult, but it’s not impossible! Every time you feel the urge to spend, write it down in a spending journal. Explain how you’re feeling or what item or service you wish you could spend money on. You’ll be surprised how much you’ll learn about yourself by reading these entries back.
For instance, maybe you have the urge to redecorate your living room, even though you don’t really need to. By chronicling your thoughts and feelings, you might discover that your impulse has nothing to do with redecorating at all. Maybe you’re avoiding a huge work project or simply not dealing with your anxiety. Reading back on these entries can help you learn more about your spending habits.
3. Create plans for your time to stay productive
Many of us spend money when we’re bored or in social situations. You can prevent yourself from falling into these traps by staying productive. Instead of going out shopping with friends, arrange a clothing swap at one of your homes where you all bring over gently used or brand new items you wish to exchange. If you walk to a coffee shop every morning, enjoy listening to a podcast or music while walking with your own home-brewed java in tow.
4. Make spending more difficult
If you know you often struggle to stay on budget, think about your triggers. Do you often splurge and make credit card purchases you can’t afford? Keep yourself on track by deleting any saved credit and debit card information from online stores. You might even want to keep your credit cards at a parent’s house or with another friend or family member you trust. You can also make sure you leave the house without money (or only with cash for specific purchases) to prevent you from accidentally spending.
5. Post about your no spend month online
A great way to stay accountable is by letting others know about your challenge. Post about it on social media to hold yourself accountable and tell friends and family members who are likely to follow your journey. Better yet, see if any of your friends want to join you on the challenge so you can support each other throughout this no spend month. Taking some free finance courses can also help you engage with others and stay accountable.
6. If you accidentally slip up, don’t let yourself off the hook
Mistakes happen and if you find yourself accidentally buying a drink at a work happy hour, don’t give up. Admit your mistake. Write it down in your journal, tell your spouse or friends, and move on. Don’t give in to the temptation to give up because of one slip. Instead, note the amount, stick to your original plan, and keep going!
7. Set a reasonable reward for yourself upon completion
Another way to keep yourself motivated during your no spend month challenge is to set a reasonable reward to celebrate your accomplishment. To do this, think about something you spend money on that means the most to you. Maybe it’s a night out with your significant other or friends. Perhaps it’s a coffee date with your mom. Or maybe there’s a new book or blouse you’ve been eyeing. This reward should be sensible, but also meaningful.
New year, new financial goals
Completing a no spend month is a great way to kick off a new year, a new season, or a new month to set yourself up for financial success. To make your no spend challenge as easy as possible, plan ahead, think of ways to avoid your spending triggers, and share the good news with family and friends so you can stick to healthy spending habits. You can get started right now by taking one of the Clever Girl Finance savings challenges which include a no-spend challenge!