With the holidays coming near I want to challenge myself by getting my financial house in order. I have decided to challege myself by cutting all unnecessary expenses for ONE month. This may be harder than it seems with my little one's birthday and Halloween next month. So I've set the challenge to begin October 1st.
First, start the spending detox by setting a tangible goal -- anything from paying off credit purchases you charged, expanding your emergency fund to saving enough money to take an all-cash, paid-in-full vacation.
The rules of the exercise are relatively simple: Commit to spending only what is ABSOLUTELY necessary. That means no movies, no theater tickets, no coffee shop runs, no restaurant meals, and no shoe-buying splurges.
Or online shopping for that matter...
Researchers have found that it takes about 30 days to break a habit, so the idea of the challenge is not simply to generate some extra dollars for that one month, but also to wake you up to the reality of unnecessary spending.
What is "necessary" spending?
Most people have three big spending categories: necessary monthly outlays for things like mortgage and utilities; work-related spending, such as commuting, takeout lunches, clothing and dry cleaning; and purely recreational spending for social activities and entertainment.
Clearly, it's impossible to cut all spending for an entire month. You still must pay your mortgage or rent, car payments, insurance premiums utility bills and other essentials. But there are big expenses in each of the three spending categories where keeping costs down -- even to zero dollars -- can pay off in spades. Food is a good example. Of course you need to eat. But for one month, can you avoid relying on carry-out or restaurant meals? Start by using up your existing groceries and then being a mindful shopper when you do go to the grocery store.
Get creative with your cost-cutting. For example:
- Shop your closet for "new" outfits created out of items you haven't worn in a while.
- Organize a potluck recipe-sharing evening instead of going out with your friends.
- Give a homemade gift or offer your services instead of buying a present.
- Check for free activities in your community.
One easy way to track your spending is to sign up with a free service such as Mint.com. You can also use financial software programs, mobile phone apps, or pencil and paper -- whatever works for you.
Will you take the no-spend challenge?
Whether you choose to register with Mint or are motivated by the need to revamp your budget, let me know how you do on the 30-day financial detox diet. And I'll be sure to check-in with you along the way!