Americans are in more debt now than ever in recorded history. Many are looking for ways to reset their budgets by combining a No-Spend Challenge with the debt avalanche method or debt snowball method and becoming debt-free. But what is a No-Spend Challenge, and can it work for you? Here’s how it works and how to ensure your challenge is a success.
What is a “No-Spend Challenge?”
A No-Spend Challenge is a self-imposed challenge where you decide not to spend money in a single category or at all. The intended goal is to reset your spending habits and prevent your urges to impulse buy or overspend. It’s especially useful for those who’ve gotten into debt due to over-spending; or those who want to redirect money towards a goal, such as saving for a vacation, wedding, or retirement.
The rules of a No-Spend Challenge
The rules behind a No-Spend Challenge are pretty straightforward but can be tailored to work best for your situation:
- Set a defined time for how long the challenge will run. Many will run the challenge for a calendar month, but there’s no set time for how long your challenge needs to be. If the idea of a month-long challenge appeals to you, but you’re not sure you can make it, try doing it in February instead of a longer month like September, or start by trying it for a week.
- Keep paying for your essentials. You’re still allowed to spend money on necessities such as bills, groceries, gas, etc. Just don’t go overboard on the essentials.
- Decide what categories you’ll stop spending in during the challenge. You can decide to cut out all non-essential purchases or from just a few spending categories. Suppose you’re feeling like you’re out of control buying new clothes but are fine with everything else. In that case, it’s okay to tailor your No-Spend Challenge to be clothing-specific (or in whichever other category you’re overspending).
- Put that money elsewhere. During the challenge, it’s good to plan how previously-spent money will be used, such as paying off credit cards or loans. Others may put it toward saving for an emergency fund or vacation or deposit it into a retirement account.
How to make a No-Spend Challenge work for you
While the actual Challenge is simple enough, it’s difficult to break the habit of overspending. Here are a few tips for successfully implementing a challenge of your own.
- Don’t feel frustrated if you mess up. No-Spend challenges are easy to implement but hard to keep going because you’re attempting to break a habit. Don’t beat yourself up if you slip. Forgive yourself for making a mistake, and start back on Day 1 with a fresh start. The beauty of a challenge like this is that you make the rules for when it begins and ends.
- You’ll have to want it for the challenge to be successful. No-Spend challenges only work when you’re motivated to make a change. If a loved one is forcing you into one, you may have difficulty keeping it going because you’re doing it for someone else and not yourself. If someone you care about is worried about your spending habits, consider why they’d feel that way and explore if there’s a problem you’re not giving attention to. You may need to speak with a mental health professional to find your money blind spots and see if it’s a bigger problem than you’ve thought initially. Using your online budget to evaluate your spending habits over the last few months can help you visually see where your spending may be out of control.
- Know why you need to do a challenge like this. There should be a clearly-defined reason why you need to cut spending and what will happen once the challenge is over. If you’re not sure why you’re doing this or what happens next, you may feel like there’s no real reason to continue or that you’re not seeing any changes occur in your spending. It’s up to you to make it work to enjoy more financial freedom in the future.
- Track your progress. To ensure you can see how limiting your spending can change your life, you’ll need data. The easiest way to get this data is by tracking your daily spending on a spreadsheet or in a notebook or your online budget. Not only will this help you see patterns in where your money goes, but it will also help motivate you by seeing how many days you’ve already made it through the challenge. Take this opportunity to see the bigger picture of what you’re doing with your money and where it will take you financially over the next few years. CalendarBudget allows you to forecast what should be in your account on any given day based on your current spending habits.
- Explore your feelings during the challenge. Money and the way we spend it carries lots of emotion, and a No-Spend challenge is a fantastic time to explore your feelings around money. You may realize that you spend money to cope with something, as a form of comfort, or because you’ve internalized someone else’s feelings on how money “should” be spent. Cutting your spending for a set length of time can help reset these emotions and support your budget and mental health.
The bottom line
Running a No-Spend Challenge is a great way to see what it’s like to be more conscious of your spending. Decide what your challenge will look like and create a plan for what categories you will cut from your budget and where that found money will go. Take it one step at a time, and don’t feel frustrated if you slip up. The beauty of a No-Spend Challenge is that you can start and stop as many times as you want. Consider using the challenge a couple of times a year or when a major purchase is coming to help keep your finances in good standing. Use your budget as an encouragement to see the positive impact your change in spending habits has on your financial future.