Everyone can work at saving a little more here and there, but could you complete a no spend month?
This trend is the ultimate way to save and get your account back in shape. So what is it you may ask? The no spend month is characterized by cutting unnecessary purchases completely for the duration of a month (but feel free to go longer if you think you can hang). During this month, you save money by only purchasing the basics: rent, gas, groceries, utilities, etc. Only you can decide what's truly a necessity, but the general idea is to give up on life's little luxuries. While food is a necessity—your morning smoothie purchase isn't. The idea requires not only a dedication to saving money, but a dedication to doing more stuff as cheap as possible—cooking at home, DIY-ing your manicure, and maybe even canceling your fancy gym membership and spending the next thirty days utilizing the free gym at your apartment or office.
This practice is the ultimate diet for your wallet, and not only does it help boost your savings or get you out of debt, but it can influence your spending habits in the months and years to come. Kevin Gallegos, Vice President of Phoenix Operations with Freedom Financial Network gave us tips to complete this challenge and how to budget better in general.
Start With A Budget
Gallegos recommends starting by writing out a budget, which will help you understand how much you need to spend on necessities, and help you define what exactly you consider a necessity.
"A budget is critical. But before you dive into the numbers, set and write down goals—and if you're in a relationship and/or have a family, do so with your spouse and family," says Gallegos.
Pay Bills First
One great tip for building better spending habits is to always make sure your actual needs come first. When you have groceries, bills, and debts paid, you have a more realistic view of what you can afford. During a no spend month, the leftover money can go either straight into savings, or toward a debt you've been working to pay off.
"Pay for necessities first: food, clothing and shelter. Always pay the minimum on secured debts and be sure to make any monthly student loan debt payments," says Gallegos.
Keep Track of Your Expenses
Gallegos stressed the importance of tracking your expenses. "Find out where your money goes and where you can cut back. It is very cliche to ask the question 'Can I do without that expensive cup of coffee and replace it with the free coffee at work, or the gym, or with what I can make at home?' Yet this is just the type of disciplined act that will get someone on track to saving as much as possible."
Pay With Cash
Gallegos' biggest suggestion is to "Leave the credit cards at home. Paying with cash helps ensure you stay within your budget. Studies show that people who pay with cash spend 15-20 percent less than those paying with credit cards."
Save On Food
Another huge spending cut comes just from cutting out takeout, coffee runs, and taking the extra few hours a week to grocery shop, prep, and cook your own meals. "Save on food. [It's] responsible for a large part of almost everyone's monthly expenditures. Be smart, plan, and save significantly," says Gallegos.