The no-spend challenge
Updated: Aug 4, 2020
Many people are familiar with the Whole30 diet program that millions of Americans have successfully completed since 2009. The program has been very popular, yielding positive results. For those not familiar with Whole30, it is a short term (30 day) nutrition reset. The goal is to eliminate unhealthy cravings / habits, restore a healthy metabolism, and heal your digestive tract. This is done by eliminating food groups like sugars, grains, dairy, alcohol, and legumes for 30 days. If this seems like a lot of restrictions on your eating habits… well, it is. Supposedly after a week or two, cravings start to subside, and it becomes easier as you are less dependent on the above foods.
Whole30 is designed to give your body a short-term dietary reset. Short term resets can be very healthy; for example, vacations are a way to recharge and reset from the stresses of real life. Even weekends can provide a reset from your work life. All these typically create a more positive mindset. Wondering how this ties into anything financially related? Well, there is a financial version of a short term reset, and it is called the no-spend challenge.
What is the no-spend challenge?
The no-spend challenge is the financial world’s equivalent of Whole30. The rules are fairly simple and are just as the title would imply, a challenge not to spend money on non-essential items over a certain period of time. Typically, the challenge lasts a month or longer with the intent to save money, re-evaluate, and reset your spending habits.
The hundreds or even thousands of dollars saved with this challenge should go towards increasing your net worth and not immediately be spent once the challenge is over. Starting this program early in 2019 can kickstart a year of positive change by boosting emergency funds, retirement savings, or reducing outstanding debt. Benefits also include helping to re-evaluate and reflect on your spending habits. It will cut out any non-essential expenses, offer a financial reset, and help curb your impulse purchase like eating lunch out or buying daily Starbucks drinks.
Spending categories
Since it is nearly impossible to actually spend no money, a few spending categories are allowed:
Mortgage / rent
Utilities
Insurance
Internet / phone
Groceries (as long as you do not stockpile up)
Gas
That means most other categories are to be eliminated during the challenge:
Eating out
Coffee
Clothes
Shopping
Activities
Other services that are more on the side of want than need
How to start
For those who want to kickstart 2019 savings, start debt reduction, initiate a budget clean-up, or just to challenge yourself, below are the steps to starting your own no-spend challenge:
Define your motivation and goal – This will be why you are taking on the challenge. Reasons are usually very simple such as saving extra money and allocating it towards emergency funds to prepare for unforeseen future expenses.
Select your time-frame – The time-frame can be as short as a week, a whole month, or even longer. Typically, the most progress can be made during month long challenges. If you are not sure on the time-frame, try coming up with a specific dollar amount you would like to save. Once you hit that dollar amount, your no-spend challenge can be over. For those looking to end bad habits, two months may be a good length of time to eliminate those bad habits.
Establish rules for allowed spending – We all need to eat and a roof to live under, so some expense categories cannot be eliminated. All other non-essential expenses should then be eliminated. Eating out, entertainment, and shopping are some of the main expenses that can be cut out and add up to a large monthly total. Does this mean you cannot have any fun and stay inside all month? No, just prepare ahead for weekend meals and let friends and family know what you are doing. Maybe your friends will even buy your lunch for you!
Transfer or move money into an account that is not easily accessible – After the challenge is over, make sure to move any money you saved out of your checking account and put it towards your end goal. Whether that be a savings account, Roth IRA, or some outstanding loan, this process will help ensure the funds end up in the right account and are not spent on the first day the challenge is over.
The no-spend challenge, although difficult, can be a great way to start 2019. It is always good to reflect on spending habits and see where financial improvement can be made. If you are just looking for a quick boost towards savings, this will surely accomplish that. Looking for a good time to start? February 1st is just a few days away…… The best part of a no-spend challenge, for many people, could be the fact that unlike Whole30, you still can have sugar!
Let me know how your no-spend challenge goes.
Evan Werckenthien, CFP©
Evan@EWwealth.com
Work: 317-587-0858
Cell: 317-627-2529
Disclosure:
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. E.W. Wealth Management and Cambridge are not affiliated. The information in this email is confidential and is intended solely for the addressee. If you are not the intended addressee and have received this email in error, please reply to the sender to inform them of this fact. We cannot accept trade orders through email. Important letters, email, or fax messages should be confirmed by calling 317-587-0858. This email service may not be monitored every day, or after normal business hours. Cambridge does not provide tax advice.
Source: Experian, Federal Reserve