Looking for ways to improve your financial state is one of the best decisions you can make at the beginning of each year. Since January often comes with overwhelming expenses that could weigh you down and diminish your net worth, you need to be cautious of your spending habits. Embarking on a no spend January challenge is certainly one of the smartest techniques for cutting down costs and preserving your net worth.
For some people, a no-spend challenge at the beginning of the year is a regular ritual that helps them avoid tumultuous expenses. If you have never done this challenge before, consider trying it this January. Thankfully, this post will teach you exactly how to go about it.
What Is A No Spend January?
A no spend January is a type of money-saving challenge that entails not spending money throughout the month of January. You would have to completely cut out unimportant expenses such as new clothes, nights out, and even takeouts.
Why You Should Try A No Spend January Challenge?
The primary reason anyone should consider trying a no spend January challenge is to save money at the beginning of the year. If you are able to avoid enough expenses and save a decent amount of money in January, it might help you break bad spending habits and focus on long-term savings goals.
What Are The Rules Of A No Spend January?
The rules for executing a successful no spend January challenge are pretty simple:
- You must avoid making any purchases unless it’s an emergency.
- You need to keep track of how much you save during the challenge.
- You can prepare a small reward for yourself upon completing the challenge. It could be a nice meal, a movie ticket, or a pack of beer. But it doesn’t have to be expensive.
Benefits Of A No Spend January Challenge
Trying a no spend January challenge is important and beneficial to your financial life. Here are some reasons why you should take on the challenge:
- Preparedness For The New Year
The new year often comes with so many uncertainties, and if you are not well-prepared to pull through, chances are that you would crumble financially. If you can successfully embark on a no spend challenge in January, it will prepare your mindset for the rest of the year.
You will learn to get rid of bad spending habits and find it easier to prioritize your savings goals. But more importantly, you won’t be nervous the next time you try to do a no-spend challenge.
- Saving More Money
The most important goal behind a no spend January is to save money. By the end of the challenge, if you didn’t default, you must have saved a reasonable amount of cash.
All the money you would have spent on new clothes, outing out, or partying would be resting in your checking account. You may later decide to spend the savings on a big purchase or simply leave it in a savings account. Irrespective of your decision, you eventually would have attained your major goal – saving extra money.
- Improved Money Mindset
Embarking on a no spend January challenge and succeeding afterward has a positive impact on your money mindset. This means if you are used to spending recklessly, you may have a change of heart. You would realize how important it is to control one’s spending habits and save towards one’s money goals. Your mindset about money would be much different than it used to be.
By the way, if you need actionable tips to improve your money mindset, check out this post.
- Some Financial Lessons Would Be Learned
There are various lessons to learn from a no spend challenge. The first obvious lesson would be recognizing your ability to save money by reducing living costs. You will also understand the importance of living below your means by avoiding ridiculous expenses.
Many people struggle financially because they won’t stop living above their means. But as soon as you complete a no-spend challenge, you will be more frugal and live on less than you used to.
How To Prepare For A No Spend January Challenge
To execute a no spend January challenge successfully, here is a 5-step process you should follow:
Decide What Your Expenses Would Be
The first step is to decide where your money would go. This means you must determine what you will and not spend your hard-earned money on throughout the month of January.
You are expected to accommodate essential expenses such as groceries, utilities, rent, and medical bills. Other than these expenses, you aren’t expected to spend money on anything else, especially when it’s irrelevant. Notwithstanding, you are solely responsible for making this decision.
Announce The Challenge To Your Friends And Family
The next thing you must do is let your family and friends know about your no-spend challenge. They must understand that for the next 30 days, you are going to reduce your expenses drastically.
This is important so they won’t feel disappointed or upset when you turn down their financial requests. Besides, you can even make one of your immediate family member an accountability partner during the course of the challenge.
Build A Budget
Budgeting is key if you must successfully complete a no spend January challenge. Now is the time to build a budget if you have never created one.
A budget will enable you to see where your money goes. It also helps curb your spendings, especially when the budget only includes your basic expenses. While you embark on the challenge, a working budget will help you to stay on track and prevent you from falling off.
If you need help getting started, check out this beginner’s guide to creating a budget in 5 simple steps.
Kill Distractions And Be Resolute
Completing a challenge like this means you must avoid possible distractions. Ensure you avoid certain activities, places, or things that will prompt you to spend money unnecessarily.
For example, if you are used to online shopping, you should avoid social media and other online platforms during the challenge. You could also stop reading emails from retailers and online vendors. More importantly, you can choose to freeze your credit and debit cards to prevent spending.
Build A Plan To Keep Yourself Busy Throughout The Challenge
This is another thing you must remember when figuring out how to start a no spend January challenge. Avoiding distractions won’t be easy if you don’t have something important to occupy your mind.
To avoid boredom and the temptation to spend money, you need to occupy yourself with activities that won’t cost you any extra money. You can binge-watch a show, engage in reading books, have a picnic in the park, or attend free events in your town. There are so many other things that can keep you engaged during your free time without incurring expenses.
10 Ways To Survive A No Spend January
To make sure this challenge is feasible for you, here are 10 helpful no spend January tips you should rely on:
1. Create A Meal Plan
In the United States, an average family of four wastes about $1,500 in food every year. During your challenge, you must be able to manage your food items and prevent any form of waste. One of the most effective ways to do this is by creating a meal plan.
A meal plan is a schedule for the kind of food you prepare, as well as when you eat. Meal planning can also help you to be creative with leftover meals by preserving and consuming them later on.
2. Earn Extra Cash From A Side Hustle
Finding feasible ways to earn extra money during the challenge is crucial. With a side hustle, you can easily boost your income and improve your net worth.
By generating extra money, you can pay for essential expenses without tampering with the money in your savings account. In fact, saving money won’t seem like a burden anymore the moment you create an extra income stream. Fortunately, there are numerous things you can do even from the comfort of your home to make money.
Freelance writing, affiliate marketing, and online coaching are some of the online-based occupations you can engage in to make a decent amount of money every month.
3. Have A No-Spend January Jar
A good way to keep track of your no spend January challenge is by having a no-spend jar. Every time you fight the urge to spend money, take the cash and put it in a jar instead of going ahead to actually spend the money. If you do this consistently, you would have saved a substantial amount of money at the end of your no-spend challenge.
This practice will help you stay motivated and it also gives you a physical representation of your hard work.
4. Cancel Any Unused Subscriptions
This is one of the no spend January challenge rules you must adhere to. If you have any unused subscriptions, ensure you cancel them. Remember, most of these subscriptions are automated, which means you are debited without lifting a finger. If you don’t cancel them in time, the money would be deducted from your checking account, and this practically defies your no-spend challenge.
It’s high time you checked your gym memberships, magazine subscriptions, cable TV, online dating memberships, music/film streaming apps, food delivery services, and whatnot.
5. Be Self-Aware During The Challenge
No-spend challenges can be a great way to understand yourself much better, especially in your finances. You will uncover your interests and passions, things that make you happy, your values, and even what you intend to accomplish later in life. At the end of the challenge, you will realize these aspects of yourself and how you can be better.
But more importantly, this can help you make better financial decisions in the future.
6. Avoid Parties
It’s difficult to refuse invitations to parties. You simply see it as an opportunity to unwind and have fun. However, as soon as you begin a no spend January challenge to save money, you should avoid parties. You can decline the invitation without offending the inviter.
Even if it’s a free party, chances are that you may be tempted to spend some cash while partying with friends. When you complete the 30-day challenge, you can decide to resume parties.
7. You Must Have Built An Emergency Fund
Building an emergency fund is very important when trying to learn how to do a no spend January challenge. You might run into unexpected expenses, and if you don’t have an emergency fund to cover that up, you will have to tamper with the cash in your savings account and disrupt your no spend challenge.
Now, it’s not possible to build an emergency fund in less than 1 month. It takes several months to save up enough money for emergencies. However, by the time you would want to have the next no-spend January, you would have saved enough money in your emergency fund.
8. Don’t Use Credit Cards
One of the effective ways to discipline yourself and curb your spending during this challenge is by getting rid of your credit cards, at least temporarily.
Credit cards make it easier to spend money and live above your means. Avoiding them will increase your chances of completing your one-month no-spend challenge successfully. You might even need to hide your debit card. Use cash instead. This will make spending much more difficult.
9. Have A Partner That Supports The Challenge
If you are married, ensure your partner fully supports the no spend January challenge. This is very important because if your partner doesn’t support your decision, it would affect your goal eventually.
For example, you could be trying to avoid expenses for a month while your partner is on a shopping spree. Imagine if you have a joint checking account. That would be devastating. To prevent this, make sure you get your partner’s approval, cooperation, and support.
10. Invest All The Money You Save During The Challenge
You might be wondering what to do with the savings you realize from your no spend challenge. There are three simple things you can do: spend it, save it, or invest it. But if you don’t have any important purchase to make, then you should invest the money instead.
Open a brokerage account and buy index funds or ETFs. The best part about this investment option is that some companies allow you to invest as low as $1.
Apparently, no matter how small you saved during the challenge, you can invest it. If you aren’t interested in this idea, you can simply keep your money in a savings account, and it will gradually increase by a tiny percentage each month.
Final Notes On How To Do A No Spend January Challenge
If you are ready to learn how to save money with a no spend January challenge, don’t wait for anyone to motivate you. Just get started on your own. By following the tips and guidelines in this article, you won’t be clueless. You would probably make it through the month of January without spending any money, and this might even encourage you to adopt a frugal lifestyle.
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