Quick Money Tip: Try a Spending Freeze
If you follow many personal finance or frugal living blogs, you know that the term “spending freeze” has been hot in the blogosphere the last couple of years. But just what is a spending freeze? And why should you try a short-term freeze?
What’s a spending freeze?
A spending freeze is basically a period of time during which you freeze your spending.
Now, the majority of people obviously can’t spend absolutely no money for two weeks. You’ll still have to use things that will eventually cost you money such as your electricity, water and vehicle. And you’ll still have to stock up on things – like food and personal hygiene items – that obviously cost money.
But for a period of two weeks (or whatever other interval you choose), you won’t actively spend any money. Even though you’re still racking up a few bills and spending on essentials, a spending freeze can be an amazing way to re-evaluate financial priorities, appreciate what you have and boost your savings account.
How do you start?
Lots of blogs have great in-depth spending freeze tutorials. Just Google “spending freeze tips” if you’re curious. But, basically, here’s what you need to do to start a two-week spending freeze:
Decide ahead of time where the money you save will go – either to an emergency fund, a lump-sum debt payment or something else. Otherwise, you’ll just end up blowing through that money at the end of your freeze.
Look through your freezer, fridge and pantry. Plan meals for the two weeks, and stock up on what you’ll need to make them. Ideally, you won’t grocery shop at all, but you could set aside a small amount of cash to purchase fresh items, like fruits and veggies, halfway through.
Check your inventories of other essentials – toilet paper, toothpaste, etc. – and stock up as needed.
Fill your tank up with gas (and get an extra can full if you absolutely must use more than a tank over two weeks), and pre-pay any bills that will be due.
Stop spending money for two weeks.
It’s not rocket science, but a spending freeze does take some pre-planning and lots of discipline. Now you know how to do a spending freeze, so let’s look at why you might want to do one:
- Nothing jump-starts your savings faster. Unless you’re a budgeting guru, you probably have no idea how much extra money you spend on unnecessary items every week. With a spending freeze, you effectively get all that money back so that you can put it toward your financial goals. Many families save hundreds of dollars with this method in just a couple weeks! But even $50 or $100 is worth it, especially if your spending freeze also helps change long-term financial habits.
- Get your budget back on track. A spending freeze can be very revealing. It will tell you just where you’ve been overspending on nonessentials – whether it’s your daily latte, weekly meal out or monthly shopping binge. When it comes to your budget, information is power. Understanding where you’ve been overspending – by not spending anything – is a great way to take control of your budget for the future.
- Build your anti-impulse purchase muscles. Willpower builds up the more you use it. Since you’ll spend two weeks building willpower, you’ll be better able to resist impulse purchases after your spending freeze. This alone can seriously clean up your spending!
- Learn to shop your pantry. How often do you feel that there’s “nothing to eat” in your house, even when your freezer and pantry are full? Being forced to live on what’s available for two weeks can get you in the habit of utilizing your pantry and getting creative with ingredients you have on hand. Learning to cook with what’s around – rather than letting food go to waste or just ordering pizza – is a fabulous way to cut back on grocery spending.
- Focus on what’s really important. Most people who participate in a spending freeze say the process opens their eyes to what’s important. When you aren’t spending money on stuff, your life gets a little more focused and you might spend more quality time with the people you love. Instead of masking boredom with an expensive dinner out, for instance, you could host a potluck with friends. Or instead of spending money on the latest mediocre Redbox release, you could get into the habit of reading good books from the library or start a tradition of family game nights.
Regardless, a spending freeze will put you in a more mindful, grateful frame of mind, which has consequences far beyond your checking account.
All credit to the above article goes to this U.S. News article.