If you have an unexpected bill, want to take care of a new purchase with cash, build up an emergency fund or just get closer to paying off your overall debt, you might want to consider going on a spending break. How much extra money you accumulate will depend on what you normally spend in any given time period plus how long you decide to stay on your spending break. Saving $500 this month is not unthinkable for most families.
Before you get started with a spending break, you’ll need to have a plan to ensure the best success and the most savings.
The first step is to set a goal. Why will you be going on your spending break? Having a concrete goal, let’s say to pay off a credit card or pay for a family trip with cash, will help to keep you motivated during the whole length of your spending break. When the urge to spend comes around, you can deflect it by keeping your eye on the prize.
The second step is to determine how long you will be staying on your spending break. Start with the short term, because you can always extend it later. It helps to know how much your spend in any given month, because that will help you figure out how much you can save. For example, if you spend $250 a week on groceries, and you are determined to cook from the pantry for two weeks, you can save $500, less the cost of some basics, such as milk. Which brings us to the next step…
The third step is to determine what the particular rules will be during your spending break. In general, you should concentrate on not spending money on anything that isn’t essential, but this can mean different things to different families. After the regular bills are paid, mortgage, energy, etc., determine what absolutely has to be purchased during the time period, things you just can’t live without. You might be surprised at how little you actually need to buy. Most of us have a basic stockpile of food, health and beauty products, like-new clothing, etc., that we can tap into during a spending break. Most families will make an exception on spending for gas or job commuting costs, for example, so they can continue to go to work.
The fourth step is to resist the urge to stockpile items or go on a shopping splurge before you start your spending break. All this does is transfer the spending, and you might actually wind up sending more overall. The goal is to try to get by with what you have an without additional spending, and then using that money for your goal. So, get creative in the kitchen, find ways to reuse items that you already have, and cut out things that aren’t necessary.
The fifth step is use all of your resources. Involve your family in the spending break, or if you are single, designate a friend who can keep you honest. Brainstorm ways to get away with not spending, such as hunting down lost gift cards and using them for essentials, bartering, and taking advantage of free entertainment. Award bragging rights to the person with the most creative idea.
Bonus to going on a spending break? You may discover some new and creative ideas to save money that can be used on a regular basis, even after your spending break is over.