In today’s article you’re going to learn everything you need to know about how to control spending habits.
If you are not familiar with the no-spend challenge, for sure you would start thinking that system is nothing more than a fad. Or worse, you might even think of it as nothing more than a hyped-up scam that actually does nothing to improve your bottom line.
However, when I tried out this system, I realized that this indeed helped me gain better spending power as I have more money available for things that matter.
How To Control Spending Habits:
So what is the no-spend challenge and why it has become so popular? For starters, a no-spend challenge is exactly what it is specified: a challenge wherein you are not allowed to spend money within a specific period of time.
The time can be flexible; some do the challenge in just 1 weekend, while others do it for months at a time. The length of the challenge can be extended according to your level of commitment at the time, and you can do it for as many times as you want.
People will look at this statement and shrug, because after all, how in the world are you going to live on a day-to-day basis if you are not going to spend anything? Well, you are not going to literally spend zero money during that fixed timespan.
It only means that for that time period, you are only going to spend on stuff that are actually essential for your day-to-day existence. Think of the challenge as a way to go back to basics in your financial life. When seen this way, the challenge is not as extreme as it sounds.
A no-spend challenge is great for use for specific situations, like when preparing for an important purchase, putting away that long-standing debt off your books for good, or just simply creating new means to infuse money on your savings.
Perhaps just as important, the no-spend challenge can help you learn more about your spending habits, both good and bad. This challenge is also an effective tool for assessing your financial health and the factors that might be helping or hurting it.
Now that you know about the no-spend challenge and the potential benefits that you can get from it, the next step is to learn why a lot of people end up developing bad spending habits. Learning these things will help you better understand your issues with handling money and better equip you in following the challenge.
Why People End Up Spending More Than They Should?
There are 2 general ways to make your finances match your expenses. You can adjust the amount of money that comes into your coffers and the amount of money that comes out of it. For some people, producing money (up to a certain point) is as simple as increasing one’s workload or looking for alternative profit sources.
However, it is the other side of the equation where most people seem to have problems with. Regardless of income level, a lot of people are having trouble with their expenses. In other words, people are spending more than they actually should.
Many people (most likely including you) spend more money than they probably should be spending. And you don’t have to be straddling the poverty line or be on the verge of bankruptcy (or anything of those extremes) to be overspending.
When you are paying for stuff that go beyond your means, you are spending too much. When you don’t have enough money to pay for your essentials (but have enough to buy everything else), you are spending too much. When you’re spending excessively, it creates a problematic domino effect on your finances and ability to effectively use money.
A lot of people end up overspending for one reason or another. Here is a list of the reasons why people end up spending more than they should:
1. We fall prey to impulse buying
Impulse buying can be such a tough thing to overcome. According to statistics, more than 70% of buyers make their decisions right when they see the item at the store. Impulsive decisions are generally dependent on the variables of the moment; you are more likely to buy food when you are hungry.
It is a difficult urge to overcome, especially when the perceived need is there. The problem is, too much impulse buying can put a serious dent on your earnings and savings if you’re not careful.
2. We don’t follow a budget
Not everyone does budgeting of their expenses. And while the lack of a budget alone will not explain why some people go overboard with their expenses, it can show why some people are unable to distribute their funds the right way.
When people have a budget, they have a more systematic approach in allocating their money. Without one, a person becomes more prone to overspending because they tend to spend when they feel like it and without any superimposed limits.
3. We try hard to follow trends
Another reason why people tend to spend more than they should is because we try hard to keep up with trends. People try so hard to stay “in”, that they are willing to spend potentially huge sums of money just to keep up, even if it actually ends up hurting their finances.
The urge to follow trends is a tough thing to turn down for some people, and for those who don’t have the means to afford it, can place excessive and mostly unnecessary strain to one’s budget.
4. We underestimate small expenses
Because the prices involved are just small, people tend to overlook them. For example, most people will prepare for large expenses such as house bills and utilities, but not a lot would prepare and take note of smaller expenses like meals eaten outside. When all these small bills accumulate, it can constitute a significant amount of your budget, and may limit both your immediate and long-term financial flexibility.
5. We look for short-term gratification
While there is nothing wrong with rewarding ourselves every now and then, a lot of people fall in the trap of choosing short-term gratification over longer-term needs and investments. When such “rewarding” happens one too many times or costs so much that it
affects your long-term spending, it qualifies as excessive spending. Putting too much emphasis on personal gratification can put you in financial trouble if you are not careful.
Those are just some of the bad habits people most commonly fall into when it comes to their money. One reason why the no-spend challenge is so effective is because it targets these 5 common causes of overspending. The next paragraph will discuss how you can do the challenge so you can have better financial freedom (1) in the long run.
How to Do the No-Spend Challenge
To ensure the success of your no-spend challenge, it is important that you understand the process of doing it the right way. With the right approach, you improve your chances of successfully completing the challenge and reaping all of its benefits. Here is a simplified guide on how you can perform the no-spend challenge:
1. Be prepared
A lot of people underestimate the challenges involved in performing this challenge, and that ultimately sets them up for failure. It’s never easy to just change up your spending habits on the fly.
However, with the right preparation, you can make yourself better equipped to handle the challenges it can present. Here are some tips on how you can be better prepared to take on the no-spend challenge, regardless of how long you intend to do it.
Pick up the essentials– Since you will have to cease spending for a while, it is important that you have all the stuff that you need to see through the length of your challenge. Getting all the essentials, from food to toiletries, will help you stave off the need to shop during the challenge, removing the need to spend and eliminating the possible temptation of further spending.
An emphasis on the word need must be stressed here; it’s counterproductive if you’ll be purchasing stuff in excess because you’re not going to spend for a while. Create a budget, buy what you need, and buckle down for the challenge.
Tell your family and friends– Some people may think it’s embarrassing, but there’s nothing wrong with telling people you’re close with that you’re trying to save money by cutting your spending habits. However, we think that this is the right thing to do. This would make them aware of the conditions you have for your budget. Also, they can serve as a very powerful support group to prevent you from backsliding, while also keeping you accountable for your actions.
Recall what your reasons are– You are doing this challenge for a reason. You have to constantly remind yourself of the reasons why you are doing the no-spend challenge in the first place. When you are doing things with a purpose in mind, it will help keep things into perspective, regardless of what’s happening at the moment.
You can create a board, an illustration, or even an artwork to represent why you are doing the no-spend challenge. Place it somewhere visible, so that it can serve as a constant reminder for you.
2. Plan the length of your challenge
One of the great things about the no-spend challenge is that you can adjust its length depending on how much money you want to save and how much of your spending habits you want to improve. Beyond convenience, picking the appropriate length for your challenge will help make it provide results most appropriate for your goals, as well as your level of experience.
You can choose to make your challenge last for a weekend, a month, or a year. It’s up to you. However, we advise that you start with a short length first, then gradually extend it as you get more used to it.
3. Decide which items you will not spend on
One of the elements of the no-spend challenge is deciding which items will you not spend on. Because it is virtually impossible to not spend money on everything (there are some bare essentials to spend your money on), you have to determine which items would you choose not to spend on. There are specific items that you should include in the challenge. The more items you include, the more you can potentially save at the end of your no-spend challenge.
Here are some items that are highly suggested to be included in the no-spend challenges. You can also add specific items you think you are spending too much on that are not included in this list.
Outside food– Food is a basic need for everyone. However, food is also one of the easiest ways to overspend. Eating out is more expensive (2) than you think, and can put a drain on anyone’s savings on the long run. Then when you add extra indulgences such as coffee and snacks, your bill can pile up in a hurry.
As such, it is highly recommended that you include outside food as part of your no-spend
challenge. Will you starve? Of course not. You can always prepare your own food. Even better, you can even create healthy meals that will improve your shape as well as your wallet.
Vices– Each person has his/her own set of vices. To some it is alcohol. To others it is cigarettes. And then there are people who splurge on money on various hobbies. It is common to place vices as part of the no-spend challenge, as they tend to eat up more than its fair share on people’s budgets.
It is smart to place these things as part of your no-spend list. Of course, it wouldn’t be easy to let go of these things, but it’s one of the best ways to get the results that you want. After all, this challenge is about cutting off what’s not totally necessary.
Luxuries– Everyone has their own way of enjoying luxuries. Some will try to get a massage or a spa session after a hard week’s work. Others will indulge on their favorite stuff. Others will try to load up on clothes or self-care items like makeup. While there is nothing wrong with that, those are extra expenses that can be omitted.
It is one element that you can add to your no-spend challenge to make it more effective. After all, any person can live without their luxuries.
4. Look for alternative activities
Some people would spend money like it’s a form of activity. When people get bored, they tend to spend so that they can have something to do. When they get stressed out, they try to find an activity that will help release it, and that can also cost money. One way to make the no-spend challenge work well for you is to find alternative activities that will fill up your time without causing holes in your wallet.
There are many alternative activities that you can have which cost little to no money yet effective and fun. If you are stressed out and tempted to have a meal or a drink, just have your friends and family come over to your house, and maybe you can share some home-cooked meals.
Instead of watching movies, you can pick up a book that might be collecting dust at your house. If you want to release tension, working out at home (or at the gym if you have an existing subscription) can be great release. There are many potential activities that cost little to no money, and are great to include during your no-spend challenge.
I hope that thru this article, you learned about the fundamentals of performing the no-spend challenge.
Thank you and I hope you achieve your money-saving goals today!