Saving Money With A No Spend Challenge

Like many other Americans, I recently went through a post-holiday shock. The shock wasn’t that the holidays were over, or how many sweets I ate. No, the shock was how much money I spent. Not just prior to or during the holidays, but all year long.

Related read: Lifestyle Changes To Make To Reach Your Savings Goals

There have been months where I've overspent in several areas of my budget. Sometimes the overspending was holiday-related such as furnishing bedrooms for guests, buying food for holiday meals, etc. The rest was just careless spending such as eating out a lot, not buying deeply discounted items, and not using coupons for groceries. 
 

(This information is not meant to be financial advice and is just for educational purposes. This post may include affiliate links. Should you click an affiliate link and make a purchase I may receive a small commission at no extra cost to you.)

While that overspending didn't set me back financially or cause me to blow through my savings, it still made me think about how I was spending money and find ways to pull back on my spending. That led me to do a no-spend challenge.

Related read: 15+ Ways You Can Save Money This Year

What is a no spend challenge?

In a nutshell, a no-spend challenge is making a conscious decision to not spend money on non-essentials during a set period. This no-spending is done to help reach a particular savings goal. 

When I've done no-spend challenges in the past they helped me to identify items that I could partially or eliminate from my budget after my challenge ended

How to get started with a no spend challenge

From personal experience, I discovered that you can’t just jump into a no-spend challenge without setting some ground rules first.

First I reviewed my budget to see the areas I spent the most money. This also helped me to determine what my savings goal would be. Food, home decor, and clothing were the three areas I overspent the most - by several hundred dollars each. The other areas where I overspent it was by $5 or $10. From this, I determined that I wanted to save at least $200 a month for a total of $600.

Next, I created my challenge rules which included noting any spending exceptions. My rules are

• One fun outing with a $20 max limit is allowed
• I can spend up to $20 a month on perishable groceries 
• My eating out budget for the month is $20 max
• I can only buy items that are necessities and replacements for items I use in my daily or weekly routines
• Gas for the car and paying for utilities and my mortgage are allowed and are considered necessities

I’ve been in my no-spend challenge for about a month and a half now. It’s been interesting. I’ve had a few things pop up that caused me to spend money such as a car repair and replacing my dying hairdryer.

Outside of that I’ve pretty much I’ve been able to stick to every rule. Because of the items that popped up above I haven’t saved any money, but I have been able to cut back on spending in several line items of my budget. The biggest areas that I’ve been able to cut back on are groceries, home decor, eating out, and clothing. These cutbacks have helped to offset the costs of car repair and hairdryer replacement. Once my no spend challenge is over at the end of March, I can’t wait to see how much I’ll have saved.

Related read: How To Grow Your Emergency Savings This Year

Tips for a successful no spend challenge

Should you decide to do your own no spend challenge here are 8 few tips:

1. Create a goal. Having a goal makes the challenge real and gives you something to work towards. You can track your goal using an online tool like Personal Capital or one of these apps I share in Make Monitoring Your Finances Easier With These 5 Apps.

2. Determine how long you want to do your challenge. Typically they are done 4+ weeks at a time. So if a three-month challenge is too long for you, try a month-long challenge.

3. Write out your rules and exceptions. Put them in an easy-to-view place.

4. Cut back versus cut out. Don't feel that you need to completely cut things out of your budget. Cutting back on spending in areas can have the same impact as cutting items out of your budget.

5. Make sure your needs are covered. Either stock up on toiletries, medications, and other necessities to cover you for the no spend challenge. Or make these an exception to your rules.

6. Have an accountability partner. This could be someone you’re doing the challenge with or a friend that you’ve told.

7. Search online for free local entertainment or activities. You can do a google search or join activity Facebook groups for your area.

8. Plan your meals in advance so you can buy everything you need in 1-2 shopping trips.

8. Don’t get discouraged if you slip up. We’re all human. Sometimes you may forget or something may come up that requires you to break one of your rules.

My no spend challenge results

Halfway through my three-month no-spend challenge, I was able to cut back spending on groceries, home decor, eating out, and clothing. This was a good thing because I had a few things pop up that caused me to spend money such as a car repair and replacing my dying hairdryer. Because of the items that popped up, I wasn't on track to save the amount of money I had planned to but because I had cut back on spending in several line items of my budget the costs of the car repair and hair dryer replacement were offset.

Outside of that, I had been able to stick to every rule. That was the case for the rest of the challenge as well. I didn't end up saving $600 but got closer than I thought I would at about $480.