“Spending money to show people how much money you have is the fastest way to have less money.” ― Morgan Housel, The Psychology of Money
A quote that explains some instances where one finds themselves asking, why they seem to never have enough money, in spite of having a steady income.
In reality, we spend on wants and needs – however, without discipline and insight into your spending habits one can easily end up with never having enough to achieve financial stability.
So, if you spend more in a specific time period and notice that you are unable to save, then the no-spend challenge is a good option.
In this article, we’ll look at another option to consider, as a way to avoid unnecessary spending by prioritising your financial obligations, as is practical to you.
To start – let’s define what a “no-spend challenge" is.
This is a challenge in which you set a specific timeframe in which you don’t unnecessarily spend money.
For example; if you have a habit of buying a soft drink that costs Ksh75 every workday, choose to not spend any money on any soft drinks for two weeks. You’ll quickly realise a good amount of money is saved and can be allotted to a weekly savings nest egg or to buying items more nutritious and cheaper, like fruits.
Next, let’s look into how to participate in a no-spend challenge, as a personal finance habit and how this works towards your financial well-being.
Firstly, it’s important to establish what’s a need and what is not, as per your financial obligations.
For example, essential spending is on items like rent, utility bills, and debt repayments whilst non-essential spending is on items you spend on because they make you feel good.
For instance, you could opt to take the meals served at your workplace over dining out, if your dietary requirements are catered to. Taking an impromptu trip because of a travel package offer, spending more on airtime to idly browse social platforms because they’re fun to watch and I’m sure we can all pick a few more feel-good habits, that add up
Once you categorise your spending into wants and needs – you now have a clear roadmap as to what the focus of your “no spend” challenge is and where you should spend that money after finishing the challenge. Here’s how:
Since everyone should have a personalised and practical financial plan, ask yourself this question; why should I take on a no-spend challenge?
Be detailed in your response. For instance, I will take on the no-spend challenge, to save money for debt repayment and get started on a minimum deposit of Ksh800 monthly in my emergency fund. This works to paint a clear picture as to why I should stick it out, and stay focused and motivated.
To expound on how much more this challenge is more of a win-win strategy, here are 5 reasons to take o a no-spend challenge:
i. You learn to value and prioritise experiences over things: By not spending money on material possessions, you can prioritise experiences and create memories that will last a lifetime.
ii. It teaches you how to differentiate between a need and want, which builds discipline and helps to set attainable and sustainable financial goals.
iii. You save money: A no-spend challenge helps you to save money and cut down on unnecessary expenses.
iv. You increase your self-awareness: that means understanding your attitudes, habits, and relationship with money. This way you identify what you need to change and improve for your financial well-being.
v. Last but not least, this challenge will test your resourcefulness.
By limiting your resources, you can boost your creativity and find new ways to solve problems and grow positively.
So, here’s a quote to keep in mind, to keep you focused,
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki
Read Also: 5 Principles of Spending You Need to Follow
This challenge is timeline based and tends to reveal where you’re most likely to be disciplined and less disciplined, financially.
With that in mind, which spender profile fits you? Here is a list of 5 common types of spenders in finance:-
i. Impulse Spenders: These refer to spenders who make purchases on a whim, without planning or considering the long-term consequences of their spending habits.
ii. Emotional Spenders: Emotional spenders use shopping as a way to cope with stress, anxiety, or other emotions. They may overspend to make themselves feel better, even if it's not financially feasible.
NB: This is slightly different from the Generous Spender: This spender profile, refers to those who enjoy giving gifts and treating others, even if it means spending more money than they typically would.
iii. Status Spenders: Status spenders are focused on the image they project to others, and often spend money on expensive items to show off their wealth or social status.
iv. Frugal Spenders: Frugal spenders are very conscious of their spending and tend to be more careful with their money. They often look for deals and discounts, and try to save money wherever they can.
v. Careless Spenders: Careless spenders don't pay much attention to their spending habits and may be unaware of how much they are actually spending. They may also be disorganised with their finances, leading to late fees and other financial problems.
You might find you check more than one of the above, and the good news is, once you determine your spender profile, you can make adjustments as needed to improve your financial situation. This can include setting a budget, tracking your expenses, and finding ways to cut back on unnecessary spending.
Word-Of-Advice: Consequently, your success depends on the duration; so, the shorter the no-spend challenge timeline, the easier it is to accomplish.
For beginners, start small. That means, going for short timelines preferably between 2-5 day no-spend challenges to avoid getting discouraged.
As you successfully complete each challenge – consider increasing the timeline to suit your financial goals.
Read Also: 6 Types of Spenders: Which One Are You?
Like everything else about planning, it has to be tailored to serve you.
For starters, remember non-essential spending refers to expenses that are not necessary for basic living and don’t significantly affect one's quality of life.
Therefore, the rules you set for the no-spend challenge should be specific - to what you can and cannot spend on, during the no-spend challenge.
Here is an example: If you choose to have a no-spend challenge in January, the needs to spend on may include school fees, rent, utility payments, groceries (etc.). The non-essentials may include weekly hangouts for drinks, regular take-out delivery, weekly nail appointments, gambling, and such.
Word-Of-Advice: All no-spend challenge rules must be in place before taking on the challenge. As such, this guides you to set a timeline that works in your favour. Take, for instance, these 5 rules, anyone can follow, in spite of your spending persona.
i. Use what you have: Instead of buying new items, use what you already have. For example, make meals with ingredients you already have.
ii. Plan ahead: Plan meals and activities ahead of time to avoid last-minute purchases.
iii. Keep track of spending: Keep a record of your spending during the challenge to stay accountable and see where you can make improvements. That means, defining your goals and setting a time limit (e.g.) Before starting a no-spend challenge for a month, to achieve your goal to pay off debt.
iv. Identify essential spending: by determining what you consider essential spending, such as bills, groceries, and transportation costs. You can set aside funds for these expenses, during the challenge.
v. Avoid non-essential spending during the challenge. For example, avoid spending on non-essential items such as luxury clothes, dining out, leisure subscriptions, and entertainment.
“Money Is A Terrible Master But An Excellent Servant - P.T. Barnum”
With the above quote in mind, it helps to remember that the no-spend challenge is not set up to negatively disrupt your quality of life, rather it serves to have you be deliberate about your quality of life.
So, when this challenge looks like an impossible task – consider these tips to get you started and successfully complete the challenge:-
If this is your next challenge - we’d love to hear about your no-spend challenge experience (feel free to share)