The no-spend challenge is a popular concept among the minimalist community and also amongst those who are pursuing to become financially debt free. To start off, I am not a minimalist, not even close. However, the topic of personal finance is of key interest to me, due to the main motivation to eventually create a life where we do not have to worry about money, and one where we have more options to use money for purposes other than just sustaining our family. Some pointers below to consider.
Point# 1 – Saving money needs to go hand in hand together with making more money. What I mean is basically you need to fulfill both requirements to eventually reach a point to be financially independent. Unless, you have inherited wealth or you are entrepreneur Elon Musk or Bill Gates.
Point# 2 – Spending money or more accurately, spending lots of money can be for many people a psychological issue. No, not that they have mental issues (unless shopping and spending money becomes an addiction), but we often find instant gratification and joy in purchasing something new, be it via online shopping or even going to low-cost shops like the Dollar Tree store shops (in Malaysia we have the RM2 shops) to buy a whole bunch of items that we do not really need, but because the items were cheap we justified buying them anyway.
Another term that is used is shopping therapy, and although it sounds fun, the implications of it can be pretty dangerous for those who do not have the finances to buffer the high expenses. Retailers love to use this term as it encourages more sales for them, but it is tragic for those who get into hard debt due to overspending. One such example I’ve observed in today’s culture is to take on a loan to finance household furniture and then having to commit to paying monthly installments to the bank. Is furniture a necessity to go into debt for?
Think of it this way, if you do not have enough money to cover the payments for the repair of a potential car breakdown that can cost you up to MYR700, you probably should not commit yourself to pay RM250 every month for a year, on a non-essential item purchase. The bottom line, you need your emergency money saved up before taking on additional financial commitments.
Some electronic goods retailers are even promoting zero interest rate monthly installment as payment terms, to make their items more attractive and accessible for the lower-income groups. But the buyer will then be locked in to pay the monthly payments, which should times get hard, may become a challenge for them to get by after forking out these expenses. In my opinion, avoid taking on loans if possible, unless it is a real necessity.
Back to the main topic, a quick note, the necessary expense of home utilities like electricity, water, internet or car petrol do not fall under the category for a no spend as these are costs to sustain the home, family and basic transportation. Although some people on these challenges do find ways to cut down on these costs by finding alternatives, for example by cycling around instead of taking the car.
For additional resources on the No spend challenge you may check out this TedX talk of a personal account of why and how this person did her no-spend challenge ( My No Spend Year | Michelle McGagh | TEDxManchester). At the very least it is a very entertaining talk to listen to.
The no spend challenge is an exercise to discipline oneself to avoid spending money without thought, on things that are not needed. It is to curb impulse buying. It makes you commit to not purchasing anything during that time period, be it a day, a week, or for a more extreme challenge, it can be a month or year. It makes you look around your home and think that hey, I can make do with what I have here with me, or I can actually go weeks without that cup of Starbucks coffee or J Co donuts. It makes you find things at home that you forgot you had before, or you tend to become more creative to find more activities that are free like taking your kids to the playground or to the park, playing board games at home or watching TV and reading books. It also prevents you from going out to the malls and then getting tempted to purchase more things.
In my opinion, the no spend challenge is a good way for those who want to save up some extra cash fast, by restricting their spending, and to have them be motivated instead with the growth of their savings during that period. Another fun fact, is that most people are really motivated by challenges, and when you word the phrase as ‘No spend challenge’ instead of ‘ No spend days’, the results turn out better as human competitiveness comes out and they try to hit that personal target that they have set for themselves. Refer to this interesting Ted Talk on How to motivate yourself to change your behavior | Tali Sharot | TEDxCambridge.
So, how does my no-spend challenge days looks like? And how do we incorporate the ‘target setting’ method to motivate myself not to spend? I have an expense tracking app on my phone, where I will record our family’s daily purchases for reference on what we spent every month You can see from the below screenshot that we had two no spend days in that particular week, mostly due to home cooking and pandemic lockdown, and if we had more of these days, the equation will lead to lower expenses at the end of the month, and more savings.
Now, what do we do with the extra money saved? You can use it to pay off debt, example by making more payments to your student loan, house loan, or get rid of your credit card loan. Maybe you can use it to finally save up your six months emergency fund. You can put that extra cash into your kids’ education fund, or invest it or put extra money into your 401K retirement savings (In Malaysia we have the Employee Provident Fund) and let it grow over time to buffer up your retirement fund. Another recommendation is that you can gift that money away to charity or help someone in need, or you can take your parents or spouse out for a nice meal and appreciate them. What I mean is, when you can control your spending, you get to decide what you want to do with that money saved up. You have more options, when you have more money. That concept itself, should be appealing enough.
This is just one of the many ways you can try out to get a step nearer to either minimalism or to have more control over yourself and your expenses. It will at least be a step nearer to building your wealth, to live without debt in order to have more choices. Another way to think about it, is that if you are willing to control your diet and exercise and build strength, you should be able to exercise that same control on your expenses.
Before I end this post, take a guess when does the no spend challenge tend to take place in the US? The answer, it falls on Black Friday, when stores are super swamped with people trying to buy and score the best deals, with some who queue for hours outside waiting to get in, a minority group of people are intentionally avoiding the shops. I guess it’s a win-win for both sides of the consumer groups then?
Final note, I want to clarify that am not saying not to spend and to be extremely frugal, but to be intentional with your choices, and subsequently your actions. I would choose to spend on selected categories that I put more emphasis on after evaluating what matters the most to me, and I skimp and save on those that I care less for. I would choose to pay for a family meal, or to take a holiday with the kids or treat our parents ona outing with all expenses paid by us, or to buy a good reliable laptop to work on, or a treadmill to take better care of my health. Maybe even a Roborock vacuum cleaner so that I can spend more time with the kids instead of cleaning the house. I would choose to put my money on the kids’ education fund and on books, and not to forget on nutritious food (some added bonus if I can find cheap good food, that would put a smile on my face).
Thanks for reading and all the best in your financial journey.