The no spend challenge
“Every moment is a fresh beginning.” – T.S. Eliot
Recently I went wedding dress shopping with a friend. She’s getting married next summer and I’m part of the wedding party so we had a lot of fun as she tried on a number of dresses before finally deciding on “the one”. Although she had a budget in mind, there were several dresses she tried on that were at the top end (or slightly outside) her preferred price range and this sparked a conversation or two about how she could “redistribute” her everyday spending over the next few months in order to cover the additional expense of the dress. As it turned out, the dress she fell in love with was well within her budget but I thought I would share one of the redistribution strategies we talked about.
Related article: A disciplined spending plan
The “no spend challenge” is a strategy that I’ve used a few times when either money was tight or I was trying to ramp up my savings for a short term goal and I know that several clients have used it too with great success. It’s especially useful if you’re trying to break a spending habit because the core idea is simply not to spend any money and that short spending breaks give you a little time to identify and reset your shopping and spending habits.
The challenge is an extremely simple strategy; in a nutshell, you try not to spend any money for as many consecutive days as possible. All spending (except paying bills) is off-limits. This not only helps you to keep more money in your bank account but it also helps you figure out where your money drifts away to when you’re not paying attention to your spending. The first step in making a change is awareness and small spending habits, such as picking up a latte on the way to work or adding a muffin to your morning coffee order can add up to several hundred dollars by the end of the year. If you love lattes or morning muffins and you want to make those expenses a part of your regular monthly spending then there’s nothing wrong with that but if you’d rather direct some or all of that money towards another financial goal then changing your spending habits can help you reach your goals faster.
Related article: Spending and the Latte Factor
One of the most powerful things about the no spend challenge is that it forces you to stay away from the stores. The first time I did this challenge my biggest “aha moment” was realizing how much time I spent randomly wandering around stores to pass the time in between appointments and after work. The danger of this is that stores are designed to tempt your senses and entice you to part with your hard-earned money (or extend your credit limit) in exchange for whatever must-have item catches your attention.
Related article: Impulsive spending can derail your finances
Just like the lattes, the morning muffins, and the mid-afternoon snacks, the cost of those spontaneous retail purchases can add up to hundreds of dollars over time. That’s not an issue if you’re buying things you really want with money that you don’t want to purpose for something else but if the majority of those “must-haves” end up sitting in the back of closets with the tags still on then it might be worth changing your retail browsing habits. From a personal perspective, I’d say that getting out of the store wandering habit has been one of the most powerful factors in helping me stay on track with my money management plan.
Just like retail stores, grocery stores do a great job of highlighting new products and great deals in order to incent us to buy. As a result, the average shopper tends to leave the store with at least one item that they didn’t intend to buy when they went in. These impulse purchases can add a significant amount to our monthly grocery bill and this is why managing our food expenses can be very lucrative when it comes to cutting spending and freeing up cash for other goals.
Not taking trips to the grocery store during the no spend challenge has two benefits; firstly, it eliminates your ability to make impulse purchases and secondly, it forces you to take a closer look at the contents of your cupboards and your freezer in order to figure out what you’re going to eat. You may be surprised to discover just how much food you have on hand; often we stock up when things are on sale, put them in the freezer and forget about them. Given how much the average family spends on groceries and eating out, the no spend challenge has the potential to free up a decent amount of money and if you follow up the challenge with fewer trips to the grocery store each week, that can reduce your spending and boost your saving even more.
No spend challenge
As with many aspects of money management, the no spend challenge works because it’s simple to do. You can do it for a day or for several days in a row (I think the longest I’ve ever managed is 5 days), you can do it once a month or a couple of times a year. I try to do it for at least one day every pay period and I find it effective because taking a break from spending makes me more conscious of what I’m spending my money on and more aware of the habits that might be undermining my savings goals. It also gives you a feeling of being in control which can be a confidence booster.
At the end of the day, I believe that managing your money well is just as much about psychology as it is about strategy and I think that the no spends challenge appeals to me because it’s a break from the everyday routine. What do you think?