How a No-Spend Challenge Can Help (and Hurt) Your Finances
A no-spend challenge can save you money, but maybe not as much as you think.
Have you ever heard of a no-spend challenge? It’s exactly what it sounds like. You pick a day or week, and you don’t spend any money at all. You don’t pay bills, you don’t put gas in your car – you don’t buy anything. The goal of a no-spend day or week is to literally spend zero dollars.
Besides, you usually end up saving some money that you would have otherwise spent. Unfortunately, you can also end up losing out financially if you aren’t careful. Here’s what you need to know about taking a no-spend challenge:
Saving on No-Spend Days and Weeks
It makes sense that you’d save money by not spending money. In theory, no-spend days and weeks should give your bank account a big boost. If you usually eat out on a regular basis, you could easily save $10 or more per day. A stop at the convenience store to pick up a fountain drink and a lottery ticket could easily cost $5 to $10. That’s money that stays in your pocket if you commit to a no-spend challenge.
A no-spend challenge may sound awful, but it doesn’t have to be that bad.
Taking a No-Spend Challenge Too Far
While not buying anything does save you money, it doesn’t save you as much as you’d think. For starters, if you know you’re going to have a no-spend day or week, chances are that you’ll to go ahead and get some of your expenses out of the way before you start the challenge. You’ll probably go stock up on groceries so that you have enough food to make it through the week. You’ll head to the gas station and fill up your tank so that you don’t run out of gas. Many of your savings during a no-spend challenge come from items that you either purchase before or after the spending freeze. You simply move the spending from one day or week to another, which doesn’t actually save you money in the long run.
If you take your no-spend challenge to the extreme, it can actually end up costing you money.
If you forgot to pay a bill that’s about to come due prior your spending freeze and you refuse to break the no-spend rules, you’ll likely end up with a late fee.
You could also miss out on an amazing deal. For instance, if you’d saved up enough money to purchase a big-screen TV and the TV goes on sale during your spending freeze, you can’t buy it. Instead, you’ll have to either wait for another sale or pay full price after your spending freeze expires.
And worse, you may end up in trouble if a major system breaks during a no-spend week. If your air conditioner goes on the fritz and you can’t fix it yourself, you’ll have to wait until your spending freeze expires before calling the repairman. This additional time could cause further damage to your air-conditioning system, resulting in a higher repair bill.
Most people are reasonable and wouldn’t adhere to a no-spend challenge should extenuating circumstances arise. However, when you’re in a dire financial situation and you’re trying to fix your finances, you may focus more on achieving the no-spend victory than you do on realizing a long-term vision.
Our No-Spend Experience
To put this theory to the test, my wife and I decided to go through a no-spend week ourselves. Prior to starting the challenge, we paid all our bills, gassed up our cars, and stocked the pantry to ensure that we could survive, which admittedly just shifted our spending around.
However, we did save money in a few areas. We didn’t eat out during the no-spend week, which we would probably have done once or twice. So that saved us about $30. My wife had to avoid the vending machines at work, which saved us $2 or $3 during the week. I also avoided my bad habit of picking up a fountain drink at the convenience store twice. That saved us an additional $2. Unfortunately, some of the produce we had bought spoiled before we had a chance to eat it at the end of the week, which resulted in about $5 in wasted food. Overall, we came out $30 ahead, which isn’t bad for a couple that doesn’t often spend on a whim.