Do you like testing yourself and setting up challenges that help you better your life? Then a no-spend challenge might be the perfect way to improve your personal finances!
Not everyone has the motivation or excitement when it comes to budgeting their money, which is perfectly normal.
But if you are looking to stop wasteful spending and manage your money better, then you might want to create a challenge that puts you to the test.
The cool thing about this strategy is it does not have to be boring or crunching numbers on a spreadsheet. And if you need motivation, you can include friends or family and make it into a friendly competition.
Whatever you decide to do, a no-spend challenge can be a financial game-changer. In this guide, you’ll learn everything you need to know to get started and find success.
What Is A No-Spend Challenge?
A no-spend challenge is when you restrict your spending over a period of time to just essential items. Not only does this save you money; but also helps you combat impulse buying and can change your spending habits over time.
Just think of all the extra money you could have leftover!
Whether your financial goal is to build up a solid emergency fund or get out of debt, a spending freeze can help you get there. You may think it’s extreme, but there are some enjoyable free things to do, and it also encourages you to be creative with your time.
Why Do A No-Spend Challenge?
Before beginning your no-spend challenge and planning, you need to understand your motivation for this. What is your goal? And what do want to accomplish with this challenge?
Your reasons for a spending freeze will be personal, but here are some common examples people choose to do this:
Helps stop your impulse spending
Impulse buying leads to instant gratification; which is why we’re all so addicted. But over time, many of us end up regretting purchases and throwing away the stuff we didn’t ever need in the first place. It’s a waste.
More than half of U.S. shoppers—54%—have admitted to spending $100 or more on an impulse buy, including 20% who have spent at least $1,000
When you introduce restrictive spending over your impulse buying; it gives you more time to consider the purchase and decide if it’s really necessary.
This second thought allows you to put the purchase into context, and (more often than not), decide that it’s not a worthwhile choice.
You want to reset your overall budget
Many of us can get lost in the budgeting cycle and let it all get out of hand. I’m guilty, and it can weigh heavily on your mental health, causing feelings of financial stress and lack of control.
A no-spend challenge can bring back your budgeting discipline and put things back on track. It can act like a thirty-day reset while you rehash the budget and come back stronger.
Save for a bigger purchase soon
A shopping ban is one of the easiest ways to quickly save for a big purchase. Whether you’re buying new electronics, saving for a car or property; you’re looking for extra money, fast.
A no-spending challenge could be the perfect way to generate cash quickly, but beware that it is not sustainable over the long-term.
Want to tackle bills or debt further
If you have a plan to tackle your bills or debt, but your current efforts just don’t seem to be making a dent, then a more extreme method might be required.
The no-spend challenge would divert your usual luxury spending towards making gains on either your bills, debt, or both.
It can make a huge impact where you would usually be slowly working away. Plus, no-spend may significantly shorten the payback period.
Tip: Need extra help managing bills and reducing how much your bills cost? Try a service like Trim or Billshark, which can save you hundreds of dollars.
You want to test yourself financially
How about having a little bit of fun?! Sometimes a money challenge can be a great way to test your willpower and set yourself some short-term goals. Maybe your no-spend challenge will be for a week, month, or longer.
You can even get your friends and family involved; building a community and creating competition around not spending money.
If you have a hard time sticking with plans like this, having others involved can help ensure you work on the challenge — so if you’re worried about motivation dropping off, invite friends to join in.
Some Spending Is Allowed
While it is called the “no-spend challenge” it doesn’t meant you won’t be using money for essentials. There are things you will need to still pay or purchase during your challenge.
Allowed spending on the challenge includes items such as:
- Your Mortgage/Rent
- Any Utilities
- Internet/Cell Phone
- Groceries (Unless you stack up prior)
- Gas for your car
Items that you can cut during a no spend challenge:
- Eating out, coffee, drinks
- Hair/Nail Services
- Anything else that’s not a need (vs. a want)
How To Do A No-Spend Challenge
So are you interested in the no-spend challenge and want to test yourself financially? Below are some simple tips to help your money challenge be successful.
1. Pick your timeframe
Sometimes, longer-term timeframes (while admirable), are going to be unsustainable for our money habits and general levels of motivation. So choose a time that works for you and is realistically focused towards your financial goals.
Don’t be afraid to start off small before attempting a longer timeframe for this challenge.
Common No Spend Challenge timeframes
No-Spend Challenge for 1 year
This is the ultimate test and will be incredibly challenging. It will require planning and prep and is something you probably do not want to start with. If your end goal is no-spend for 1 year, work your way through the other common timeframes first to build up your spending habits and find out how you deal with it.
2. Establish your rules
This is simply what you can or can’t spend money on, and will look different for everyone. I already shared about what you can still spend money on during this challenge. But you may want to establish more specific financial rules to follow for yourself.
- Cut out all clothes shopping
- Only 1 restaurant meal per month
- No paid date nights
- Keep birthday gifts for friends and family
3. Know Where Any Unspent Money Will Go
Another crucial first step in your challenge is to understand and decide where the money you are saving should go. Meaning, figure out how you can best put that newly saved money to use and the benefit it can have on your finances.
You might complete this challenge and then once it is over you jump right back to spending. AVOID THIS.
Instead, start putting all that money you saved towards your goals for this challenge or in other areas that will be beneficial to you. Once you get into this habit, paying yourself first becomes much easier.
Here are some popular options that you might want to consider:
- Pay off credit card debt
- Pay off student loans
- Put money towards a vacation fund
- Start investing the money for your future
- Add the money to your emergency fund
4. Include your family or spouse
When you get your family on the same page, it becomes so much easier to stick to the no-spend challenge.
Teamwork to reach a shared goal will increase your motivation, so get them to work with you on your money challenge.
Even if they don’t want to participate themselves, just knowing about your no-spend challenge will change their behavior towards spending around you, and may even help them reach a more conscious spending habit themselves.
5. Prepare ahead before you start
As mentioned, to be successful in your no-spend challenge you’ll likely have to do some planning. This might not be for you if, for example, you’ve just moved into a new home or apartment and need to buy new furniture.
But for those looking to severely cut spending for a short while, these are the sorts of things you’ll need to plan for:
- Groceries and meal plans
- Stock up your pantry before starting so you aren’t tempted to buy random items at the grocery store
- Write down activities, entertainment, and things to do (FREE things to do)
- Put aside some cash in case of an emergency
- Let friends know about your plan to not spend money
6. Put away your credit cards and debit cards
Sometimes it’s “out of sight, out of mind”. When you remove your credit or debit cards from view, it’s much easier to quit thinking about spending.
Plus, when they’re easily accessible, you don’t tend to think twice about purchases; impulse buying becomes so much easier.
So, keep them out of your wallet and purse. Put cards into a drawer or give them to a trusted family member for the period of your no-spend challenge. This way you’ll have to rely on the cash you’ve budgeted for to get you through.
7. Limit social media and checking emails
Social media can be fun, but it can also be a place to show off material objects and ‘dream lifestyles’ which can be damaging. Plus, the high frequency of ads and coupons that you can find online are all temptations and distractions that may encourage you to shop.
Staying off social media can do more than just aid your no-spend challenge, it can also bring peace and quiet as you detox from digital and focus on the real world.
This also applies to emails of stores and online stores you are subscribed to currently. Make sure to set up a separate folder where these emails go so you don’t see them in your main inbox. The other option is to unsubscribe from all emails during your spending freeze, then subscribe back later if you want.
8. Distract yourself by getting things done
If you’re thinking about spending money; you’re probably going to be spending money. So, how about trying out something new to focus your energy and attention? The no-spend challenge will complete itself!
Try something like:
9. Avoid your temptations
Where are you tempted to spend money? What areas do you tend to spend when you can? It’s important to find ways to avoid them so your impulses don’t take over.
If you can’t distract yourself or make a plan before you begin; then it’s all about changing your spending habits. Try techniques like the 30-day rule, or start finding fun new activities to get out of your usual routine.
This post was previously published on Invested Wallet.
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