Have you heard of the No Spend Challenge? It’s trending these days — you may have heard stories of people attempting to adhere to this feat. What is it, and how could it help YOU? We asked ourselves the same questions and unearthed some great tips to pass along. Here they are, for you to absorb, consider, and implement as part of your financial plan this year.
What is the No Spend Challenge?
Simply this: A No Spend Challenge is when you stop spending money on things you don’t need for a specific period of time to: a) pay down debt, b) jump-start a financial goal, or c) change spending habits.
There are many advantages to taking this challenge. Whether you undertake a strict challenge, or go through the motions and implement it halfway, you can expect some or all of the following:
Save money – If you watch your spending for a full month, you’ll likely save some money.
Uncover spending triggers – “Old habits die hard.” What are your shopping habits and what can you change?
Force you to use what you have – Do you stockpile food? Vow to eat out of the freezer and pantry, get creative, and save money!
Hone in on your values – How important is that expensive cable TV package to you? Or would saving that money for a family vacation be more in line with your values?
Help get your finances in order– When you take the challenge, you’ll be wiser in the ways of your own spending.
How to Do It: Spend Less/Save More.
To start a true No Spend Challenge, you’ll adopt a frugal lifestyle. Decide what you will be calling “Necessities” and what you will NOT be spending money on and stick to it. That $4 cup of coffee may not seem like much, but it can quickly add up to $100 a month or (gasp) $1,200 a year! Figure out your spending weak spots and cut back or cut them out altogether. Go through your spending and look for items that don’t fit your values and priorities, then stop spending money on those items.
Some areas for cutting could include:
Reduce impulse buying. Ask yourself “Do I really need this?” Or postpone a purchase: “I’ll sleep on it – If I want it tomorrow or even next week, then maybe I’ll buy it.”
Cut back on fast food/dinners out. Dining out and takeout is expensive. No other way to slice this one. It’s far cheaper (and healthier) to make inexpensive, nutritious meals at home. Another area to cut which can yield substantial savings: consider bringing your lunch to work every day and you’ll likely save $5 – $10 every time you do. Multiply that over a month? $100 – $200 savings!
Vending machine boycott. Say no to expensive chips and candy bars. Save $.75 – $1.50 each trip.
Do you spend a lot of money going out with friends? Seek out fun and free entertainment through your local newspaper or community guide. Free festivals and events are always on the calendar, so you won’t have to spend every weekend at home watching Netflix. Or, invite friends over for a game or movie night—free AND fun!
Consider cutting the cord on cable TV. Can you get the programs and news you need from streaming services like Netflix or Hulu Plus? With cable TV bills averaging $103 per month, and the cost of two or three streaming services at about $37 a month, you would save almost $800 a year!
Re-evaluate deals with service providers. Can you cut the speed on your Internet service? Ask for the lowest price plan (often unpublished) and see if it works for your family. Ditto for your cell phone plan; with many plans costing as much per month as a car payment these days, surely there’s some wiggle room to reduce costs. The average family of four’s cell phone bill adds up to about $2,880 a year. You may be able to cut that in half by checking other plans!
Drive a used car. Good, reliable used cars are easier to find these days. Drive one off the lot, and save yourself thousands of dollars on your annual transportation from a smaller or nonexistent loan payment. Here’s a fun fact — even billionaire investor Warren Buffet buys his cars used.
Lower your debt. If you’re making loan payments every month, you’re definitely not going to be as successful at saving money. Reduce how much you owe so you can focus on saving for the future. Transfer your credit card balances to a low- or no-interest-rate credit card, one with 0% APR for the remainder of the year – like the Tower Mastercard Sweet Deal!
Make a budget
Your No Spend Challenge will work best paired with putting together a budget: look at how much money you’re bringing in each month, how much is going out and where it’s going. If you’re having trouble getting started, it’s time to channel your inner Nike and “Just Do It.” Try Tower’s interactive budget calculator. (Coming Soon: Tower will soon be rolling out Money Management, a free Home Banking service that helps you budget in real time. Stay tuned.)
Good luck with your challenge!
Resources: Gobankingrates.com, Investopedia.com, The Penny Hoarder, US News-Money, Your Adult Money.com, CUInsight