A survey conducted by GOBankingRates.com last year revealed a disturbing fact: as American consumers, saving money just isn’t our thing.
Nearly one-third of the more than 5,000 people polled admitted to having a zero balance in their savings account, while 21 percent of consumers have no savings account at all. Almost two-thirds of consumers who actually hold a savings account have a balance of less than $1,000, a far cry from the six-month reserve in living expenses experts advise us to keep.
[See: 12 Ways to Be a More Mindful Spender.]
If this sounds familiar, a no-spend challenge may be just the jolt your budget needs.
Defined by Bankrate as “a commitment to spend money only on necessities: gasoline, groceries, rent, utilities, etc.,” no-spend periods are intended to jump-start a financial goal or to replenish funds that have languished due to overspending. Most consumers who attempt a no-spend challenge are also seeking long-term changes in spending habits, though some experts are critical of this expectation.
Lauren Bowling, blogger for LBeeAndTheMoneyTree.com, concedes in a recent blog post that while her no-spend challenge freed up around $500 in funds, the austere strategy is unrealistic long term. “Like any other diet or cleanse, [no-spend events] can be a good reset for the system,” she writes. “It’s fun to have a string of no-spend days; it’s not so fun to have to pare down to the bare bones and sustain it for a very long period of time.”
Still, no-spend challenges can help consumers identify their spending triggers, and realize just how much money they waste on things like takeout, happy hour and clothing purchases. No-spend challenges are, as the name suggests, challenging, so it’s important to follow these steps to set yourself up for success.
1. Set a Clear Goal
Before starting any challenge, especially one that requires you to stop something you enjoy, it’s important to set a clear objective. “I first attempted a no-spend challenge to free up cash to pay down my credit card debts,” says David Bakke, personal finance expert for MoneyCrashers.com. Bakke saved about $200, but admits it wasn’t easy. “It was a challenge at first because quite frankly, going a certain period of time without spending any money was a pretty tough transition to handle.”
[See: 10 Foolproof Ways to Reach Your Money Goals.]
Jeff Jones, financial planner at Longview Financial Advisors in Huntsville, Alabama, agrees. “Giving up something that is part of your routine can be extremely difficult,” he says. For those who feel an across-the-board no-spend challenge is too intense, consider identifying one or two categories in which you feel you spend too much and cut back in those areas. Rachel Jimenez, personal finance and business strategist and founder of TalkRaw.org, applies this strategy on a recurring basis. “I’ll try not to spend money on eating out for a week, or I’ll try not to buy new clothes for a month,” she says.
2. Prep Yourself
Bowling admits she underestimated just how much she needed to prepare for the challenge. “It feels a little strange to say that you have to plan to not spend money,” she says, “but when being on the go and paying for things out of convenience is the norm, it can be very difficult to break that pattern.” Bowling suggests clearing your calendar, planning your meals and settling on a mantra to prepare for a successful no-spend challenge.
Depending on the parameters you set for yourself, you may need to stock up on groceries and fuel up your gas tank before the challenge begins. Some may argue that increasing your spending before a no-spend event undermines the purpose of the challenge. However, if you’re attempting to reduce your dependency on takeout, it’s important to have adequate groceries from which to create at-home meals to further your goal. Otherwise, the additional hardship of creating a satisfying meal composed of condiments and stale bread will likely send you sprinting to a restaurant.
3. Get Creative
Whether you choose to stock up on supplies beforehand or just make do with what you have, be prepared to get creative. For Jimenez, the timing of her no-spend challenge was especially difficult. “I did this challenge the month of my husband’s birthday,” she says. “I had to get creative about what I wanted to get him to celebrate without spending money on gifts.”
One way to avoid spending money while enjoying yourself is to seek out free activities. Browse your town or city’s website for free upcoming events, like art walks, festivals and grand openings. Your local library likely has story time, workshops and other activities for you and your family to enjoy at no cost. An unexpected benefit to this challenge may be discovering all the local events you can enjoy for free.
[See: 10 Fun, Frugal Ways to Spend Your Free Time.]
4. Avoid Temptation
Opportunities to spend money will overflow during your no-spend challenge because, well, that’s how the universe works. Whenever you plan not to spend money, that perfect dress goes on sale or your favorite dish at a local restaurant returns to the menu. Experts remind you to stay strong, and avoid your spending triggers as much as possible. “Cut back on anything that may tempt you to spend money, such as Internet browsing or window shopping,” Bakke advises. “Leave yourself a few reminders around the house that you’re not supposed to be spending money,” he continues, “such as on your fridge or your computer monitor.”
While these steps can help you succeed in your first no-spend challenge, setbacks are inevitable when trying to create change. Jimenez reminds consumers to forgive themselves when they slip up. “Don’t use one hiccup as an excuse to give up completely,” she advises. “Just keep trying the next day.”
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4 Steps for a Successful No-Spend Challenge originally appeared on usnews.com
