Defining ‘Essentials’ for No Spend Month
There’s no one correct answer for how to do a no-spend month. Some people may want to cut back on everything but the bare essentials:
- Rent or mortgage
- Utilities
- Car/transportation expenses
- Insurance
- Healthcare
- Groceries
- Necessary home repairs
You may want to give yourself more leeway than that, such as allowing yourself one restaurant meal per week or a few hundred dollars in cash that you can spend on “fun” during the month. Define the rules of your no-spend month in whatever way is meaningful and doable for you. In addition, you can use tips on the ways to manage your no-spend month from Forbes:
Refocus Your Budget
Going through a no-spend month can be a useful exercise for your personal finances because it can help you take a fresh look at your budget.
If you were going to start from zero dollars per month and design a budget, what would you define as “essential” spending? Of course, you need a place to live, you need food and you need to pay for insurance and other nondiscretionary items. But you may find that your budget has gotten crowded in recent months.
Ask yourself these questions:
- Have your spending habits during the pandemic gotten out of line with your goals?
- Are you spending money automatically on gym memberships, apps, or monthly streaming subscriptions that you don’t use?
- Are you spending too much money on food delivery and takeout?
- Could you refocus your food budget based on lower-cost groceries and meals you cook for yourself at home?
- Are you doing any “unconscious spending” where you’re just buying things online that you don’t really need?
You may find that you are spending more money than you intended to spend on nonessential items that you can do without. A no-spend month can be an excellent chance to reset and refocus your budget.
Set a Goal to Reward Yourself
How do you want to use the money that you save during your no-spend month? You may want to save for a vacation, pay off debt, save for a new car, put more money into your retirement savings or children’s college fund, or reach for some other big goal with the money.
If you have a specific goal in mind for how you want to put your savings to work, you are more likely to stay motivated during your no-spend month. Look for ways to automate your savings with automatic transfers and tools to keep track of your spending and put your savings into a separate saving account throughout the month.
Watching your money grow, even for a few weeks at a time, can be an inspiring and empowering feeling. Especially if you have a clear vision for how you want your savings to be put to better use in your financial life, your month of no spending won’t feel like such a sacrifice.
No-Spend Month’ Pros and Cons
Is a no-spend month the right financial strategy for you? Before you decide to go through with a month of no spending, make sure you’re prepared.
Pros
- A short time commitment. It’s only one month. You don’t have to live in extreme frugality forever, just for a few weeks.
- Get clarity on your budget. How much are you spending per month? A no-spend month is an ideal way to find out.
- Focus on your priorities. Are you spending money on things that are most important to you, or are you just getting caught up in the rush of everyday life and spending in a way that’s not helping you reach your goals?
- Identify areas for longer-term savings. If you can go a month without spending on certain things, what if you can go a year? How much money could you save with an extra $100 to $200 per month?
Cons
- Diets don’t often work. Having a no-spend month is kind of like putting your spending on a diet. But the thing is, those kinds of short-term diets often don’t work. It can be challenging for people to change their habits overnight. It can be hard to go without spending money in a way that they’re used to.
- It’s only one month. A no-spend month can be a good way to start moving your finances in a better direction, but it may be better to take a longer-term view and make an overall plan for your budget and spending. It can be hard to sustain this level of extreme frugality. It may be better to set a budget and make more of an ongoing lifestyle change.
- Small-dollar spending is often not the most significant part of your problem. Depending on your financial situation, a no-spend month might not solve your biggest financial stresses. If you are buried in credit card debt, falling behind on loan payments, struggling to afford your rent or car payments, or otherwise having a hard time paying the bills, you likely need more help than a single month of no spending can provide. If you’re having severe financial distress, you may want to talk with your bank about mortgage forbearance or consider getting consumer credit counseling to get out of debt and get back to a place of better financial stability.
