I first heard about a spending fast a few years back while watching an episode in Oprah’s money class series. The couple stopped spending money on anything they didn’t need, and because of their sacrifice, they were able to save more than $10,000 for the year. In a nutshell, a spending fast or a spending freeze is a period of time that you do not spend any money unless you absolutely have to.
If you have ever considered a spending fast, but were afraid to try it, here are tips to help you get started!
When You Should Try a Spending Fast
Get out of debt. You can choose to do a spending fast for several reasons. Probably the most popular reason would be to get out of debt. Now that I’m trying to deal with my student loan debt, I know how hard it is to be overwhelmed in debt. Even if you’re working hard and earning money, it is sometimes hard to see that debt go down. So one way to make a dent into the debt is to go on a spending fast. Then, you can take all of the money you saved and apply it towards your debt.
Saving for a large expense. If you’re saving for something quite costly, a spending fast is a good way to bulk up those savings. Many times people that are taking time off to travel the world do this to make sure their travel budget is fully prepared. A spending fast might be good if you’re saving for a down-payment for a house, a wedding, going to graduate school, a new car, or something else that is costly.
Simplify. Besides saving money for a particular item or event or getting out of debt, there are other benefits to going on a spending fast. A spending fast can allow you simplify your life. Many people that do a spending fast say it puts things into perspective for them, and they realize how little they actually need to be happy.
Determining Between a Want and a Need
The first step is realizing how much you spend on needs versus wants and what are your current needs. You can do this by gathering your credit card statements and bank statements from the last three to six months. Highlight your needs in one color and your wants in another. You might be surprised at how much you are spending on your wants opposed to your needs.
Second, you really need to think about what is a need or a want. There is a pretty big gray area for many things. For example, cable might seem like a need, but it is most definitely a want. Even your cell phone could be a want. Sure, in most cases a cell phone is a need as it is a means to communication. But it could be possible that you are greatly overpaying for an unlimited plan with special features. So go back to those bank and credit card statements, and rethink what is really a need.
Here’s how to break down those needs:
- Housing: Mortgage and rent is definitely a need. But living in a super expensive apartment is not a need, it is a want. Do you need to be spending what you are currently spending? If you could save a few hundred dollars every month on moving to a cheaper apartment or downsizing, that dollar amount will really add up over the year. Also consider 16 Ways to Lower Your Housing Costs.
- Utilities: Gas, water, heat, and electric are needs. But you can find simple ways to lower costs for all of them. Explore How to Find the Best Deals on Electricity, How to Make Your Home More Energy Efficient, and the Nest Thermostat review.
- Food: Food is definitely a need. But here’s another one of those gray areas. Yes, food is a need, but it can also be a want in many ways. Going out to dinner, over paying on groceries, and not keeping your food purchases within a budget is a want. Skip going out to dinners, grabbing a coffee in the morning, drinking at bars, and spending too much on groceries. Find recipes that are budget friendly and learn how to save money on your groceries.
- Transportation costs: We all have to get to our jobs or to school, run errands, go to the grocery store, stop at the bank, visit the doctor, and the list can go on and on. For the most part, this is a need. But if you are able to walk but choose to drive because it’s easier, then it becomes a want. If you are driving because taking public transportation is less comfortable, that’s a want. Could you consider becoming a One Car Household?
Ultimately, before you spend every dollar, ask yourself is this a need or a want. If you could get by without it, try to avoid buying it for your spending freeze.
Tips for a Successful Spending Fast
- Make your goals clear. You’ll stick to it better if you know why you’re doing it.
- If you have them, get your spouse and kids on board so it’ll be that much easier.
- Anytime you want to buy something but reconsider, write it down. Keeping track of what you are not spending your money on, will show you how much you would have spent and how much you are now able to put towards debt or savings.
- Get your friends and family involved. It’ll make it fun to have them on board. You can also find free activities to do together, share tips and suggestions for how you are not spending money, and encourage each other to stick with it. Plus, telling them what you’re doing will make them aware and they won’t be hounding you to go out to dinner or expecting an extravagant gift for their birthday.
- Avoid unnecessary temptations like browsing clothes websites online and visiting the mall or other stores.
- Just because you are not spending money, don’t be miserable. You can sacrifice without feeling unhappy every day. Find fun, free activities in your area. Borrow books or movies from the library. Explore free hobbies like writing, reading, listening to music, playing games at home, and cooking your meals.
Would you ever try a spending fast? What are some “wants” you could do without?