Use the No-Spend Challenge to Save Money Quickly
When you’re on a tight budget, the idea of achieving a new savings goal may seem impossible. How can someone, for example, save for a vacation when they live paycheck to paycheck?
For those who are already feeling cash-strapped, we understand that searching for extra pockets of funds may be disheartening. Luckily, we know a simple trick that can ease the process and kick-start your savings.
Introducing: The No-Spend Challenge
The No-Spend Challenge is a month-long, personal commitment to an intense reduction of spending. Also called a “spending fast,” this simple method can work to recalibrate your daily spending habits.
While it’s not practical to do extreme saving indefinitely, a quick challenge can do wonders for your long-term financial goals.
Here’s How the No-Spend Challenge Works:
For one month, you must commit to only spending money on the following categories:
These categories are your standard-of-living vitals that must be fulfilled during the month of your challenge. Examples of these include rent or mortgage payments, groceries, childcare, and utilities.
Boost your savings goal by choosing lower-cost alternatives to your usual spending habits.
While you are allowed to spend money on your “vitals,” we recommend practicing extreme cost reduction within these vitals for the most effective results.
In other words, boost your savings goal by choosing lower-cost alternatives to your usual spending habits.
- Take public transportation to work or join a carpool to save money on gas
- Drink the free coffee at work instead of purchasing from your local coffeehouse
- Wear sweaters and use extra blankets inside to reduce your heating bill
- Cook all of your meals instead of eating out
- Eat less meat and prepared foods to reduce your grocery bill
By being vigilant in choosing low-cost alternatives, you will maximize your challenge results.
All luxury spending is off-limits until your challenge is complete.
But What about Non-Vital Expenses?
For expenses that fall outside of your vitals, these are considered to be luxury spending. All luxury spending is off-limits until your challenge is complete. This includes streaming service subscriptions, salon appointments, pet grooming services, etc.
Unless it is medically critical for Fido to get his hair cut during your spending fast, wait until next month or learn how to do it yourself.
Tips & Tricks for a Successful No-Spend Challenge
If you decide to give the no-spend challenge a try, we have a few tips and tricks that can ease your journey. While a spending fast is challenging, it should never be unbearable.
Use the following tips to maximize your success:
Choose a Reasonable Time
Your first step toward success is choosing a reasonable time to start your month-long challenge.
If there are certain months when you are more inclined to spend money, do not choose these periods to start your spending fast. Having less spending temptations will ensure you have more successful results.
For example, the November – December holiday season is probably not a good time to start your challenge. Likewise, if a certain month is full of birthdays and get-togethers (like the uber-social summer season), you may want to avoid this period as well.
On the other hand, the time period right after a spending feast may be a perfect opportunity to get started. For example, doing a no-spend challenge during the holiday season may be impractical, but kick-starting your challenge on New Year’s Day may be ideal.
You don’t need to be a hermit in order to have a successful spending fast.
Next, consider making a public announcement about your no-spend challenge.
When embarking on a spending fast, it can be difficult to stay focused when friends and colleagues are unaware of your commitment. While your friends may act with the best intentions, receiving invitations to money-driven social events (such as happy hours or vacation getaways) will tempt you to break your fast.
Announcing your commitment will signal to your friends that it’s best to postpone their invitations until another time.
But remember – you don’t need to be a hermit in order to have a successful spending fast. You can do many social activities without ever spending money.
For example, you can –
- Go on a hike
- Invite friends over for a board game night
- Visit a free museum
- Go on a bike ride
- Visit an art gallery opening (many of these include complimentary drinks as well)
Get creative! By making your challenge exciting, you may even inspire your friends to join the fun as well.
Visualize Your Progress
Creating a visual representation of your progress is a great way to stay motivated throughout your challenge.
Committing to a month-long spending fast is quite an adjustment. If you are continuously reminded about your progress and goals, you will be less tempted to break your fast.
To begin visualizing your progress:
- Split your savings goal into smaller achievements. For example, instead of $1000, set your target to $250 per week (if feasible).
- Choose a method for visualizing your goals. You can use a digital spreadsheet, a goal-tracking app, or just plain-old paper and markers.
- Be sure to measure your progress each week and pat yourself on the back for your hard work.
Create a Post-Challenge Plan
While no-spend challenges are great for kick-starting your savings goals, they are impractical for long-term saving habits.
Similar to starting a new diet, it’s important not to starve yourself of spending luxuries (but only after your challenge is complete). If you’re too restricted in your saving, you run the risk of “binge spending” and ruining the progress you’ve already made.
Instead, protect your hard work by creating a reasonable long-term savings plan. Your post-challenge progress may not be as drastic as during the challenge, but having reasonable goals that you can stick to will ensure you continue saving successfully in the future.
Once your challenge is complete, you will need to store your new funds within a savings account. There are many accounts you can choose from, but the savings accounts have a high annual percentage yield (APY). APY measures the annual return that you will receive from your investment. The higher the APY, the greater returns you will receive from your savings account.
Browse our accounts to find the best savings option for you. In the meantime, happy savings!
Use the No-Spend Challenge to Save Money Quickly
This blog post was published by Axos Bank on December 5, 2018 and last updated on May 20, 2021.