The No-Spend Challenge: Should You Consider a Spending Fast?
Are you working on a savings goal or paying down debt? Doing a no-spend challenge could boost your progress.
If you’re unfamiliar with the concept, a no-spend challenge is a temporary break from your typical spending during which you limit yourself to purchasing only essentials. Many people do the challenge to save money, pay off debt, or test the waters of minimalism.
How It Works
Just as the motives behind doing a no-spend challenge vary, approaches differ also. If you’re considering taking the challenge, you’ll need to establish some guidelines.
Choose a Length and Time
A no-spend challenge can be for any length of time. Doing a “no-spend month” is popular, but some people embark upon a year-long journey or one for several months. Conversely, you could do a no-spend weekend or week.
Decide when you will take your challenge. A great time can be before or after months where your spending is high. For example, a no-spend month in January can be a great way to detox from holiday spending.
Choose a length and time that will be doable. Avoid months where you would have to make several concessions. If you pick a short term, you can always extend your challenge when you complete it.
Determine What You Can Spend On
The idea of the challenge is to spend money only on what’s needed, so you’ll need to figure out what qualifies as “essential” in your world.
Generally, you would limit your spending to the following:
- Groceries (Including household supplies)
- Housing, utilities, and other bills
- Health-related expenses
- Basic personal care items
You would eliminate any spending that falls outside those categories. For example:
- Eating Out
- Electronics and Appliances
- Home Decor
Come up with your lists of what is approved and banned based on your situation. Document those lists before you begin, as your “needs” and “wants” will get fuzzy when you’re in the midst of the challenge and feeling the temptation to spend.
Reduce Your Essentials
Even within your “approved” categories, keep your spending to the minimum. Paying your electricity bill is a must, but maybe you would drop your Netflix subscription. For food, maximize what you already have before buying groceries.
Get Everyone On Board
If you are married or have children, make sure everyone is on board. It will be next to impossible to carry out the challenge without their participation and support.
Do your best to eliminate temptations. Let your friends and coworkers know what you’re doing, especially your coffee and shopping buddies. Consider unsubscribing from emails from your favorite stores, and meal-plan to limit your desire to dine out. Do everything you can to reduce your chances of lapsing.
Plan Ahead for Exceptions
You may need to make some exceptions depending on the length of your challenge. For example, if you know you will need to replace your winter boots, then prepare to do so. What’s important is that it’s planned and not impulsive.
What to Watch Out For
Although doing a no-spend challenge has many benefits, there are some pitfalls to avoid.
Overspending Before and After
You may be tempted to “prepare” for your challenge by increasing your spending before you begin. Similarly, you may feel the urge to binge-spend afterward. Be cautious in the weeks or months surrounding the challenge to make sure you don’t undo its benefits.
Overspending on Essentials
During the challenge, you will feel the effects of forgoing your regular spending. As a result, you may compensate by overindulging in your “approved” categories, like groceries or personal care items. Be judicious in all your purchases during the challenge.
Delaying Necessary Spending
Be careful of being so extreme that you overlook when you do need to spend money. If delaying a purchase means it will be more costly later on, then you should go ahead and take care of it.
If You Lapse
Should you lapse during the challenge, don’t be too hard on yourself. Either keep going or press pause and resume it at a better time.
Besides giving your goals a boost, a no-spend challenge will also highlight your ability to forgo some items you've assumed you need. An unexpected result is often a permanent change in spending habits.
Doing an annual “no-spend month” or repeating the challenge on some recurring basis can be a healthy addition to your financial plan. Is minimalism for you?