If you’re struggling to reset your spending habits or feel frustrated at how slowly you’re approaching a financial goal, an increasingly popular approach is to try a financial fast or spending freeze. It seems that pulling back on as much discretionary spending as possible for a week or month – and redirecting those funds towards a savings account or debt – is not only an eye-opener but also an effective way to reset habits.
“Choosing to go without something for a while – be it a subscription or alcohol – will show you if you really do miss that thing or not,” says CommBank personal finance expert Jess Irvine. Part of the appeal of a freeze is the all-in nature of it – you simply don’t allow any of those tempting click-to-purchase moments or impromptu nights out to happen. And while this approach won’t appeal to everyone, if you don’t mind a challenge, it may just help you feel more in control of your finances and get you closer to your goals.
Consider your financial goals
You’ll need something to focus on – like that trip you’re saving for or the credit card debt you’d like to pay down – to stay on track when you start to question your sanity. “The first time I did a no-spend challenge, it was out of necessity,” says Kylie Lancaster from Adelaide. “I had become a single mother and needed to make adjustments to service debts.”
Whenever she felt like wavering, Kylie reminded herself that she was not spending now to improve her future finances. For Scone residents Hamish and Eva Scott, their wedding was the focus. “When it was tough, we reminded ourselves we’d have this great reward at the end,” says Hamish, noting that some of the changes they made, like spending less on dining out, stuck.
Set boundaries
Once you’ve decided on your goals, make a list of what you’re allowed to spend money on. That might include fuel for your car, health-related costs and one coffee a day (for sanity!), while new clothes, dining out and streaming services may be off limits. You don’t need to give everything up all at once: “Set small, realistic goals first and then add more as you go,” says Brisbane-based Jane Hyles, who does a no-spend challenge every few months to bolster savings. “If you buy takeaway from the same place every week, your first goal could be to start making that meal at home and build from there.”
Build in some flex
You don’t have a crystal ball so leave yourself with a little room to move. “There are always things that pop up,” says Jane. “To handle that, I have a certain number of days that have to be no-spends and a buffer of days when I can spend if needed.” The only caveat is that the money has to come from a kitty she set up at the start of the month. “In the past, I’ve cashed in survey money and rewards that totalled about $400 so they were the funds I could spend on those buffer days.”
Share your no-spend challenge with friends and family
You know what they say about a burden shared (clue: it’s halved) so share your challenge with friends and family so they can support you. “After our first freeze, I involved my kids. It meant they got to have fun making up recipes, reselling things with me and learning about budgeting,” says Kylie. “Now as teens, both are great at saving and finding ways to make money.’’ She also recommends making it as fun as possible: “Have charts you colour for how much you’re saving and invite friends over for a pot luck.”
Take time to reflect
The real spoils of not spending – aside from the cash in your savings account – is how it can shift your overall decision-making. Once you’re back to normal, Jess says it doesn’t have to be a question of “spend or no spend” but more a question of how much to spend. “Reflect on not only if you get pleasure out of something but how much of it you need to get the benefit you’re seeking. It may be less than you think, in which case, you’ll save money.” Wherever you land, stepping back from spending for a bit will help you feel more in control of your finances.
Try this
Smart Savings
Easily set aside and save potential spare cash each pay cycle with Smart Savings in the CommBank app. Smart Savings looks at your income, bills, spending and transfers to predict how much potential spare cash you may have each pay cycle that might be put to better use. It’s your choice: you could use it to save, pay off debt, spend or invest. Your estimated amount of spare cash will be a combination of leftover money after your bills, transfers and spending are complete, plus up to 10 per cent of your usual spending categories such as entertainment, eating out and retail shopping.
Search “Smart Savings” in the CommBank app to find out more.