Money Management

No-Spend December is the Financial Reset You Need Before 2023

December 1, 2022

Are you proud of how you have been spending money this year? Do you feel like you have been wasting money, struggling to save, or just want to turn a blind eye to the consumerism of the holidays and get your financial house in order? If your answer is yes, you should try the no-spend December challenge.

A no-spend December challenge is a simple way to curb bad spending habits and make saving fun. It allows you to cut out all the nonessential expenses in your budget for the whole month. The no-spend challenge puts extra money in your pocket to help you meet your year-end saving goals, pay off some debts, or reset your finances ahead of the new year.

So how do you successfully complete a no-spend challenge? This article will explore all the steps you need to take and the benefits of a no-spend December.

What is a No-spend December?

A no-spend December challenge is when you commit to stop spending money on unnecessary expenses for the whole month to save more or get your finances back in check. You can have different reasons for performing a no-spend challenge, but it should involve lowering your expenses and having a budget surplus at the end of the month.

Taking part in a no-spend December challenge is particularly important for your finances more than any month. December is when you will likely be performing your annual financial checkup, you want to control your holiday spending, and it can be a time to drop all the bad money-wasting habits you've picked up this year.

Before starting a no-spend challenge, you first need to set rules on how hard you want to cut spending. The three most common ones are:

Stop spending altogether - This is the most challenging tier and involves going frugal. It could mean cutting out expenses in every possible part of your budget, foregoing all holiday expenses, and saving the maximum money possible.
Spending only on the essentials - In this tier, you don't make significant changes to your lifestyle. You cut expenses such as entertainment, eating out, or postponing that weekend getaway you had planned.
Stop spending on specific categories - In this tier, you simply stop spending on specific categories that can increase your expenses. You can refrain from spending money on clothes, not paying for monthly subscriptions like streaming or gym, or using public transport only.

Benefits of No-spend December Challenge

Last month, Emma tried a no-spend challenge to eliminate her bad spending habits and live healthier. Despite having breakfast at home and lunch at the office every day, Emma was still spending Ksh150 to Ksh200 daily on 10 am snacks. She could buy a glass of juice and some biscuits or cake.

She cut these costs and decided to survive only on water between her meals. At the month's end, Emma managed to save an extra Ksh3,000. She was so proud of herself that she decided to make it a new habit.

Increasing your monthly savings is just one of the benefits of no-spend challenges. Depending on your goals, a no spend December can help you:

Break poor spending habits like impulse purchases
Put extra money in your pockets so that you can reduce your debt
Learn how to leave within your means
Learn to differentiate what is worth spending money on and what isn’t
Catch up with your financial goals for the year
Learn how to track your expenses and stick to a budget
Break your consumer mindset that leads to overspending and debt

A Step-by-Step Guide for Completing a No-spend December Challenge

A no-spend challenge doesn't need to feel like a chore. When done right, it can be fun, almost like a game. Nonetheless, it requires commitment.

There will be a lot of temptations to overspend and abandon your plan, especially considering December's festive moods. You will need a strong mindset for you to achieve your objectives.

Here's how to do a no-spend December challenge without losing your mind:

#1: Identify your Goals

Before you embark on the challenge, you need to know why you are doing it. Is it your plan to cut holiday costs or develop spending habits for the next year? Having a goal will provide you with two benefits. First, you will be able to know how much spending you want to cut. And second, it will help you stay motivated.

#2: Create a Plan

How do you plan to achieve your goals? Creating a budget is the first step to having a successful no-spend challenge. Since you will have different money-spending plans, your need to create a new budget that reflects that.

Your budget will likely be more detailed as you have to plan everything from your meal plans to the holiday activities you will participate in without going financially astray.

#3: Settle the Essential Bills and Pay Yourself First

Think about all the necessary bills you must pay and pay them all at the start of the month. These bills include rent, utilities, minimum debt repayments, childcare, and insurance. Considering most of them are fixed and can't be bargained, paying them off will leave you with enough money to budget. Regarding food, you should buy wholesale and stock up for the rest of the month.

The next step you want to take is to decide how much extra you want to save by the end of the challenge, then put that away. If you plan to save Ksh5,000, save it now by paying yourself. This is a better approach than waiting for a surplus at the end of the month.

#4: Cut out Expensive Hobbies

What do you do for fun or entertainment? Are you the kind of person who travels or parties every weekend? You will need to replace these hobbies for your no-spend challenge to work.

Find better ways you can entertain yourself without breaking the bank. For instance, you can bring the party home and do it with moderation, look for cheaper ways to entertain your kids by replacing trips to the mall with a picnic in public parks, or attend free holiday events.

#5: Say Goodbye to Expensive Holiday Traditions

Three of the most significant holiday expenses you will need to cut are travelling, vacation and gifting. It is a typical Kenyan tradition to attend family reunions during the holidays. And this tradition can be expensive. If you think it will affect your no-spend challenge and prevent you from meeting your objectives, you might have to skip it. And the same goes for vacation.

When it comes to gifting, you first need to know that it's the thought that counts. You don't need to go out of your way to spend thousands to buy your loved ones presents. Think of thoughtful gifts and gift them intentionally. Finally, you should consider skipping self-gifting unless it's necessary.

#6: Track your Progress

With so much happening in December, it's easy to get carried away and forget what you are doing. Many temptations like holiday mega deals and discounts might fool you into spending. Not to mention the pressure from your loved ones that might be your undoing.

To stay focused and motivated to see through your challenge, take time every day before bed to review your spending. Record how much you have saved/spent and plan for the following day

#7: Get your Loved Ones Involved

It takes time to build good financial habits. Your first try at a no-spend December won't be a walk in the park. You will need support and extra motivation. You can ask your friends and family to join you in the challenge by explaining its benefits. If they're up for it, nice and well. If they aren't, the least they could do is support you and respect your financial boundaries.

#8: Don't go too Hard on Yourself

You should be realistic when setting goals, creating your budget, and cutting expenses. When you choose to take it to the extremes by cutting your budget by half or more, it will be hard to stick to the no-spend challenge.

You will lose momentum and slip back into old habits. To prevent this, have goals that you can achieve. You can always aim higher if you repeat this challenge next month.

WRAPPING UP

The no-spend challenge won't be easy. You need to prepare not just for pitfalls and triggers but setbacks as well. There might be days when you spend more than planned and feel like giving up on the challenge. But don’t. Get up, dust it off, learn from your mistakes, and plan to do better tomorrow.

At the end of the challenge, acknowledge all you have learned and use the lessons to be better at spending money moving forward. If there were things on your budget you are convinced you can live without, don’t include them in your 2023 budget.

Take notice of where you have learned to cut expenses and use your new money mindset to improve your finances, save more, and accomplish other goals like repaying all your debt. Finally, make no-spend challenges part of your life. You can have no-spend days, weekends, weeks, months, and even years.

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Farah Nurow is an experienced Content Writer who enjoys writing creative and educative articles meant to provoke readers' thoughts. He loves sunny weather and thick books. You can connect with him on LinkedIn.