The No-Spend Challenge: Got what it takes?

“I’ll start tomorrow.”  Sound familiar?

Many of us have said those words – likely more than once – about a diet, going to the gym, house cleaning or just fill in the blank with any task or routine we’re reluctant to dive into.

But let's take a look at a challenge that you may want to start today and not “tomorrow.”

It’s called the no-spend challenge. While it’s gone viral on TikTok and YouTube, this one has some compelling benefits unlike some other challenges on those platforms.

One reason it’s easy to begin is that you can start with low expectations. You don’t have to do it for very long. Maybe try it for a week and then see – whatever gets you going. Even better, it literally pays to do it. Here’s how.

How to play the No-Spend Challenge

Spend only on the essential things you need such as groceries, housing, utilities and transportation.

What are non-essentials? If you’re honest with yourself, they’ll be easy for you to name. But, just because we’re good sports, some examples are: those online subscriptions you hardly ever use, the takeout you order when you can make your own meal, that large espresso drink you get every day, the fabulous nail polish you like to get regularly, the neat extra pair of golf gloves, etc., etc.

During the challenge, you track all your spending – say, in a spreadsheet so you can get an increasing sense of what is essential and non-essential.

Once you know how much you're spending on essential and non-essential items, make a savings goal and achieve it or beat it. It becomes more like a game than a challenge.

What that goal is depends on how much your essentials cost versus what you were spending on non-essentials. Your savings goal also depends on how long you intend to stick with the challenge. The savings goal could be $200 in two weeks or nearly double that in a month ... or a lot more or less. You can track your savings each day and try to beat yesterday’s savings.

Get started
It’s worth mentioning again that the best way to get started is not to be overly ambitious at the start. A “challenge” is not something that lasts forever. We mentioned sticking to the challenge for a week at first.

Here are some steps to get started:

• Set a weekly savings goal by adding up what you spent on non-essentials last week and the week before.
• Put that amount toward your cash reserves.

Savings are critical for financial resilience, so you can afford the unexpected when it happens, like fixing a car, paying for unforeseen medical costs or dealing with losing a job. We recommend cash reserves equate to six to 12 months of living expenses during working years and 12 to 24 months when retired.

• Be prepared to say “no” to friends when they invite you out to eat or to join them on a vacation.
• Anticipate that you will want to cheat “just this once.” The no-spend challenge is like a diet. Resist your rationalizations, even when the temptation is strong, and they’ll go away like the craving for candy. You’ll feel pretty good about yourself for having resisted when the fever breaks.

You gain more than just money

The challenge will force you to look at the spending that you do on both your essentials and non-essentials.

You can gain a solid understanding of what you can live on and what you could be saving on an ongoing basis. That savings could be going toward your 401k account, your health savings account, paying off your debt or boosting your cash reserves.

This could motivate you to extend aspects of spending discipline longer term and could enable you to create a budget that refocuses your finances on your financial goals.

Staying motivated and overcoming temptations

At some point during the challenge, you will need to decide whether you go back to your old ways or continue to abstain from certain non-essential items. It boils down to deciding whether you want to allow fleeting indulgences to chip away at your ability to achieve your financial goals.

Easier said than done when the shoes you’ve just tried on look amazing and are just a credit-card swipe away from being yours. Here’s a way to beat that urge: If they're not in your budget, don’t try on the shoes to begin with!

There are some other tips for staying on the challenge and saving through exercising better spending habits more permanently.

• Plan the challenge so the timing doesn’t include obligatory events when you may be tempted to overspend (a destination wedding or a family member’s birthday).
• Tell a trusted friend that you spend time with that you’re doing the challenge so they can help you be accountable.
• Avoid shopping malls and areas of town that have your favorite stores and restaurants.
• If you fall off the wagon, get back on. It’s similar when you fall off a bike. You can get back on and still get to your destination.
• Check in on the savings you’re accumulating – even if it’s moderate for now. Seeing your savings accumulate can be the biggest motivator to keep going.
• Save with cash if you can! We’re all so used to credit cards, but seeing the benefits of your saving in a physical sense can increase the desire to do more.

Your next steps after the no-spend challenge

Again, it’s not realistic to think you will adhere to the more extreme frugality of a no-spend challenge for the rest of your life. What it can do is help you take control of your finances with better spending habits and give you the information you need about your spending to create a realistic budget.

The best way to use those savings will depend on your personal circumstances and requires a 360-degree look at your finances. An advisor can help you with a plan that guides you before, during and after a no-spend challenge.