How to Conquer a No Spend Challenge or Spending Freeze

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No Spend Challenge and Spending Freeze

If you need to improve your finances, one of the best ways to have a quick impact is to take a no spend challenge or a spending freeze (the same thing with two different names).

There are several reasons why you might want to try a no spend challenge, and we’ll look at those reasons in a minute. Conquering the challenge won’t be easy, but it can have a big and long-lasting impact on your finances.

What is a No Spend Challenge?

You may be wondering what a no spend challenge is, so before we go any further, let’s clear that up.

During a no spend challenge or a spending freeze, you will not spend any money on things that aren’t necessary. There will be a set time frame (like a week or a month) and you’ll need to avoid any expenses aside from things that are necessary during that time period.

Some people have chosen to spend no money at all, but 99.9% of the time that’s not practical or realistic. Some expenses are necessary, and you obviously don’t want to skip out on paying your mortgage or electric bill because of some challenge.

There’s also a lot of flexibility, which is one of the nice things about a no spend challenge. You can make up the rules and guidelines however you want, and we’ll look at that in more detail later in the article.

Why Try a Spending Freeze?

This idea may seem extreme, but there are several reasons why you may want to give it a chance.

It Forces You to Be Disciplined with Your Spending

If you struggle with sticking to a budget or living within your means, financial discipline is probably part of the issue. Sometimes it’s hard to make the decision to save money instead of spending. If you find that discipline is an issue for you, it’s possible that you could benefit by taking a challenge.

Choosing to accept a no spend challenge or spending freeze can force you into the discipline that you need. Of course, you’ll still need some discipline to actually follow through, but there is something about taking a challenge that gives you some extra motivation to make those sacrifices.

Cut Your Expenses

Participating in a no spend challenge will obviously reduce your expenses during that time period. If you’ve tried to cut back in the past and struggled, making an extreme move like cutting out everything that isn’t necessary could the solution.

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Build Up Your Savings Quickly

Spending less money means that you’ll have more to save. If you want or need to build up your savings quickly, this could be for you.

Regardless of whether you need to establish an emergency fund or save for some other specific reason, drastic measures to cut back on expenses will have a big impact.

Establish Good Habits

The no spend challenge or spending freeze will be for a specific length of time, but the impact can continue well after that time is over. Habits can be very powerful, in good ways and bad ways.

The no spend challenge can be really helpful for establishing some good habits that will stick with you.

Going through a spending freeze will probably open your eyes to the way that you’ve been using money. When you see positive results from the changes and sacrifices that you make, it’s likely that you’ll want to continue some of those things after the time period has ended. For example, if you stop buying your lunch at a restaurant every day for a month you may love how much extra money you have. Even after the challenge you may decide that you want to continue packing your lunch, or at least cut back on restaurant meals.

Learn What is Truly Necessary

Most of us, myself included, justify a lot of expenses because we feel that they are necessities. In reality, many of those purchase are really wants. Forcing yourself to cut out anything that isn’t absolutely necessary is a good way to train yourself about what is and what is not necessary.

Through the spending freeze, you’ll be forced to evaluate every expense or purchase to determine if it really is a need or a want. As you make cuts or sacrifices, you’ll see what it’s like to live without some of the things you’ve grown accustomed to. You may be surprised at how your opinion changes on what is a need vs. a want.

→ Related reading: 15 Frugal Living Tips to Save You Money

How to Do a No Spend Challenge

Now, let’s take a look at the steps you need to take if you want to try it for yourself.

1. Set a Time Frame

The no spend challenge will be temporary, only for a specified length of time. Here are a few popular options:

  • Weekend – A good starting point, especially if you tend to spend a lot of money on the weekends.
  • Week – A full week will be more challenging than just a weekend, but still very realistic and practical even for first-timers.
  • Month – Going a month without spending on any wants will be more challenging, but is still doable and will have a bigger impact on your results.

As you choose a timeframe, keep in mind that you can build your way up. You can start small and then try something more aggressive later.

2. Establish the Rules

The best thing about a no spend challenge is that you can do it however you want! Although it is completely flexible, you should set the ground rules before you start. Make sure you know exactly what you are allowing yourself to spend money on, and what needs to be avoided or cut out.

If you don’t establish the rules or boundaries ahead of time, you may find yourself making excuses or cutting corners later, which defeats the purpose.

While the rules are up to you, here is a common approach that you could take.

Allowed Expenses (example):

  • Groceries
  • Gas
  • Personal care items (shampoo, soap, etc.)
  • Necessary bills
  • Medical expenses
  • Gifts for other people

Expenses to Cut (example):

  • Entertainment
  • Meals at restaurants
  • Splurges
  • Clothes
  • Alcohol
  • Home goods (furniture, decor, etc.)
  • Anything that isn’t a necessity

The above lists show what a lot of people choose to allow or not allow for a spending freeze, but it’s really up to you.

One option is to focus on specific expenses. For example, you could decide to spend no money at restaurants and no money on alcohol for a month. If those are areas where you typically spend a lot of money, you can have a big impact without cutting anything else. 

Think about the things that you typically spend too much money on, and see if you can incorporate cuts in those areas into a spending freeze.

3. Make it Realistic

This is very important. A no spend challenge will not do you any good if it’s not realistic and you can’t stick to it. If you try something that’s not realistic, you’ll get discouraged when you fail and you’ll probably give up on it completely.

It’s far more effective to start with something that is challenging but still realistic. Don’t be afraid to start small if you need to.

4. Have a Plan for the Money That You’re Saving

As you cut out lots of unneeded expenses, you’ll be saving a significant amount of money. Before you start the challenge, you should think about what you’re going to do with the money.

The answer to this may be obvious, depending on your situation. For example, if your goal is to pay down debt, the money that you’re saving should obviously be used towards one of your debts.

If your purpose is to establish an emergency fund, or if you need to hold the money for a while before doing anything with it, make sure that you’re keeping the money in an account that will pay some interest. A high-yield savings account or money market account is a good option because you’ll earn some interest, but you can still access the money easily and quickly.

5. Have a Partner (if Possible)

While it’s not completely necessary, having a partner can make the journey more fun. It can also add some accountability that helps to keep you on the right track.

If you’re married or in a relationship, your spouse or significant other is an ideal partner. Obviously, that person will be impacted by this as well, so it helps if you’re both on board.

Another option is to find a friend who wants to go through the challenge at the same time as you. Your rules don’t even have to be exactly the same, but it helps if you have someone close to you who is going through the experience along with you.

6. Evaluate and Repeat

After you’ve completed your no spend challenge, take a look at the process and the results. Were you able to complete it successfully? Was it too hard or too easy? Was it too long or too short?

Evaluate the process and see what you would do differently or the same if/when you do it again.

At some point, repeat the challenge and implement any changes based on your evaluation. You could do the same challenge again or try something with completely different rules. You don’t need to do it constantly, but if you do it occasionally, you’ll be able to make more progress towards your financial goals (you’ll also establish better habits faster).

→ Related reading: 50 Things You Didn’t Know You Could Get for Free

Keys to Success

If you want to take a no spend challenge, here are a few things to focus on to increase your chances of success.

Know Why You Want to Do It

Making drastic cuts to your spending isn’t easy. It’s important to know why you want to do it, and keep that in mind throughout the process. Keeping your “why” or your motivation at the front of your mind will give you the strength to make it through when you might feel like giving up.

Have Clearly Defined Rules

Before you start, be sure that you’re setting rules to specify exactly what you can and can’t purchase. Making the rules up as you go, or relying on a lot of judgment calls is not likely to lead to success.

Without clearly defined rules you’ll find that you make excuses or justify why something is a need, even if it really isn’t.

Make it Appropriate for You

A spending freeze isn’t one-size-fits-all. Make sure that the rules you’re setting up will be a good fit for your own situation. Personalize it based on the way you spend money and the things that you need to cut back on.

You don’t have to cut out all expenses to make it a success. But you do need to recognize the areas where you need to cut back, and be sure that your rules address those areas in order to get results.

Start Small

There’s no reason why you need to jump into a major challenge right off the bat. You can if you want to, but you may find it to be more effective to start small with a challenge that you’re confident you can handle. After you’ve had success, try again and make the next one more difficult or longer. You can work your way up to bigger challenges.

Find Free Things to Do

Entertainment expenses will be cut in most spending challenges. This obviously means that you’ll need to find some free alternatives (see our lists of stay-at-home date ideas and ways to get free concert tickets).

Even aside from the times when you would normally be spending money on entertainment, keeping yourself occupied is a good way to prevent unnecessary spending. If you have some fun and free activities that you can do to keep yourself busy, you may find that you face less temptation to spend.

There are plenty of free things to do, and it really just depends on your interests (as well as factors like seasons and where you live).

Just Try It

A spending freeze can be great for your finances and financial habits, but you have to take action. Simply get started by establishing the rules for your own challenge and make it happen.

READ NEXT: 13 Awesome Money Saving Challenges

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