A trend making its way around the internet is encouraging people to save more and spend less – much less. It’s called a no-spend challenge, and participants are finding that, by cutting all non-necessary spending for a set period of time, you can lay the foundation for awesome financial habits.
Here’s how it works.
What Is a No-Spend Challenge?
A no-spend challenge is when you commit to zero discretionary spending for a set period of time. That means you’ll only spend money on essentials, such as groceries, housing expenses, bills and gas.
Now, you can make a no-spend challenge as challenging as you want. When it comes to timing, you could stick to the challenge for a week, a month or even an entire year. But if those time frames seem too intimidating, opt to employ the challenge for weekdays or an even smaller goal of going one weekend without buying anything.
You can also set up the no-spend challenge to target a specific area you find yourself overspending. For example, if you’ve found that too much of your budget is going toward online shopping, you could commit to zero discretionary online shopping for the month.
|Acceptable Items to Purchase During a Traditional No-Spend Challenge||Unnecessary Spending to Avoid During a Traditional No-Spend Challenge|
|Groceries||Dining Out or Take-Out|
|Household Necessities (toilet paper, paper towels, batteries, lightbulbs, etc.)||Unnecessary Clothing, Beauty and Self-Care Items|
|Bills (credit cards, medical copays, rent or mortgage, insurance, etc.)||Entertainment (sporting events, theater tickets, streaming services, etc.)|
|Gas, Tolls and Parking||Gifts|
Why Do a Money Challenge Like This?
Taking a break from spending has a lot of benefits. Here’s why you should consider challenging yourself to save more by completing a no-spend challenge:
Boost Your Savings: Obviously, going a period of time without spending money will lead to more savings, which you can use:
- Toward a specific savings goal.
- To contribute to an emergency fund.
- To pay down debt.
- To up your retirement contributions.
- Toward your investment portfolio.
As you begin saving more and more money, you’re bound to discover what your savings goals are – which is another plus. Allocating funds toward your goal to pay off your debt, for example, will not only make you proud, but encourage you to set other goals (which now seem within reach).
Discover Poor Spending Habits: Limiting yourself from spending money will open your eyes to all of the ways you spent it in the past. As the challenge progresses and your savings continue to grow, you’ll realize the areas you traditionally overconsume.
Maybe you used to buy lunch instead of packing a meal with you to work. Or, perhaps you realize that brewing your own coffee at home saves you from overspending at Starbucks or Dunkin’ Donuts. Whatever your bad habits are, this no-spend challenge will quickly bring them to light.
You’ll Discover New Pastimes: As you embark on this challenge, you’ll soon find out that spending money takes up a lot of your time. When we’re not busy, we tend to consume – whether it be going to the mall, renting a movie or hanging out at a local bar.
A no-spend challenge will encourage you to find free activities that could become a pastime. For example, exploring the great outdoors, reading a book, playing guitar, spending quality time with family and friends, and so on.
You can also use your time to find free things. Check Craigslist or Facebook for items listed for free, or join your local “Buy Nothing” group, where community members offer up items they no longer want. Head to your local library to see what they will let you borrow – you may be surprised, some libraries across the country loan things like skateboards, board games, telescopes, and craft supplies.
How to Do a No-Spend Challenge
Now that you know what it is and why it’s beneficial to implement, follow these basic steps to design your own no-spend challenge:
- Create a Goal: Start by deciding how long you’ll cut spending – will it be a month, a week, a weekend, or some other time frame? On top of that, get specific on how strict your non-discretionary spending will be – what purchases are off limits?
- Plan Ahead: Some advanced planning can help you avoid spending during the challenge. You might want to:
- Plan your meals and snacks in advance and stock up on the ingredients.
- Look for no-cost ways to treat yourself.
- Create a bank of free activities you can do solo, with a friend or with your family.
- Note the resources available to you at home.
- Think about how you will respond to events and invitations that come up during the challenge.
- Communicate with Your Family/Friends: After you commit to your goal and have a plan in place, share it with your family and friends. First, it’s important for your family and friends who may be affected by your participation. Second, they can act as an accountability partner throughout the challenge. And, in the process, you may influence them to take a look at their spending.
- Determine Your “Why”: Before you kick off your spending freeze, it’s important to understand your motivation for embarking on this challenge. You’ll be much more successful, and less likely to quit, when you know your “why.” Do you have a specific savings goal you want to meet? Are you trying to develop a better relationship with money? Do you want to see where your money is going? Or do you just want to see how long you can go?
- Decide Where the Unspent Money Will Go: The last thing you want to do is successfully complete this no-spend challenge and then splurge at the end of it. Instead, determine before you start what you will do with the extra savings.
The Bottom Line
Completing a no-spend challenge is a great way to assess your financial habits, get a clear picture on where your money is going, and lay the groundwork for saving. To have the most successful spending freeze, plan ahead, get clear on your goals and think of ways to avoid your spending triggers.
If right now isn’t the best time for you to adopt this challenge, consider kicking off the new year, a new season or a new month with no spending!
Related: How to Create a Monthly Budget