Sean Pyles: Hello and welcome to the NerdWallet Smart Money Podcast where we answer your money questions in 15 minutes or less. I'm your host Sean Pyles.
Liz Weston: And I'm Liz Weston. As always, be sure to send us your money questions. Call or text us at 901-730-6373. That's 901-730-NERD. Or write or send us your voice memos at [email protected] to be featured on a future episode.
Sean: Let's get to this episode's question. It comes from Lucy who asks, "Have you guys heard of a spending fast and what tips, ideas or insights do you have on that?"
Liz: Oh, I love spending fasts. They're amazing.
Sean: For those who aren't familiar, a spending fast is kind of like a diet for your budget or like Whole30 for your budget. You cut out spending on everything but the essentials like housing, debt, payments, gas for your car, everything you need to be a functional person in your day to day life. But the new clothes, happy hour, extravagant international travel, cut all of that out. I did one this past January actually so this is really top of mind for me, and it wasn't easy because I love to buy things that I don't need. And I'll admit I maybe wasn't perfect at it, but it really did help put my spending in perspective and I saved a couple hundred dollars just by cutting out things like clothes and going out to eat.
Liz: Yeah. I do mine in February because that's the shortest month and I'm kind of lazy. But in this episode of the NerdWallet Smart Money Podcast, we're going to give you the insider tips for how to make a spending fast work for you, what to watch for along the way, and how to keep yourself motivated.
Sean: All right, let's do it. OK, so the key to any successful spending fast is setting the parameters of how long you want to do it and what you're going to be cutting out of your budget. But before you do that, I think it's really important to find your why. Are you doing a spending fast because you want to pay off your debt and have some extra money to do that? Is it because you want to build your savings or just to trim your spending overall? I basically did it to put limits on myself. I really like putting in self-control safeguards for myself so I don't spend money on things I don't really need. And going back to the why, when I was doing my spending fast to thinking, 'OK, how can I trim my own spending and really only focus on the essentials,' helped put what I was doing into perspective and put it into my bigger financial goals, which for me is just saving more money.
Liz: Yeah. I get into this spending groove over Christmas and it's easy to just keep going, so I use my spending fast to break that habit. I also like taking a closer look at where our money's actually going. If you show me where somebody's spending money, I can show you where their values are and I want our values to be things like travel and spending time together, not buying yet another coffee cup or something plastic that's going to break in a few months.
Sean: Yeah. I apparently value all sorts of shiny plastic things because my house is full of them. But it is so easy to just keep swiping and swiping. It kind of becomes a muscle memory because OK, you see something, you want it, you buy it. It's the cycle of kind of impulsively shopping. So a spending fast can be a really nice reality check and help you break that habit. So Lucy, really think about what you're hoping to get out of the spending fast and why you want to do it. And once you have that in check, then you can set the parameters for how long you want to do the spending fast. Do you want to do it for a weekend, for a month, for a year? A year is a long time.
Sean: But some people really want to dive into that, especially if they're pursuing those minimalist lifestyles. But then on the other end of the spectrum, a weekend could be a nice way to just dabble and see if it's something that you really want to do or something that you're actually capable of doing. A month seems to be about average for people, right Liz?
Liz: Yeah, I think so. I've actually read a book about somebody who did it for a year and it was super revealing. But I think for most people that monthlong period is enough to actually save some money and really get into the swing of what a spending fast is all about.
Sean: Yeah, and almost like going back to the Whole30 idea, you cut back everything but the essentials, then you can begin to kind of reintroduce it. Do you really want to go out to eat again? Do you need that happy hour on Wednesday? Once you don't have that, I think it helps you see whether you really want it again and whether you value that again, if you want to spend your money on that.
Sean: So Liz, you mentioned that you do your spending fast in February in part because it's the shortest month. Can you go into why that works best for you?
Liz: Well, I know a lot of people do it in January because they're reeling from the holidays and trying to save money then. For us, we actually tend to do some travel in January. So I want to do a month where we don't typically have a lot of travel and where there aren't a lot of big upcoming expenses, there's not back to school, there's not spring break, there's not a bunch of other things I need to worry about. So that's one of the reasons that it really helps.
Sean: So it seems like February just works best for your lifestyle because you've kind of mapped out when you're going to be spending and February just seems like the time where you have more flexibility to not spend.
Liz: Exactly. And if you've never done this before, it's important to think about in advance what you are going to keep as your must-haves. What are your needs, what are the things that you are going to spend money on no matter what. You can always carve out exceptions, but it's good to set the ground rules down before you start. Also, one other piece of this is: Consider paying cash when you can. It's really easy to spend money with plastic. I'm a big fan of plastic for the rewards, for all the benefits that credit cards can give you. But I understand that you do tend to spend more when you've got those. So having the cash in hand can make your spending a little more real.
Sean: Yeah, that really helped me. And again, it also goes back to making myself be disciplined in this way. And so I like to write out how long I'm going to be doing this for and what my rules are so I'll break out my needs versus wants. And it's basically like building a budget or a spending plan for your spending fast. You have to know first how much money you have coming in and what your bare necessities are that you have to spend money on like student loans, rent, all of that stuff. And then after you've done calculation of what you have coming in, what you need to spend money on, that leftover amount is what you should try to keep as intact as possible and that will help you make a goal for your spending fast too. At the end of that month or that two-week period, whatever it may be, how much of that extra money can you retain?
Sean: But one thing I do really think is worth pursuing is looking ahead at purchases you know you'll have to make during the upcoming spending fast so you can give yourself an allowance for that. For example, in January I had to purchase some seeds for my garden and I just had to get them going this time of year and I knew I was going to have to purchase it and it was a bit of a time-sensitive purchase. And so while I technically could consider that a “want,” it was something I had to do during this period so I made an allowance for that. And I do know that having bought the seeds now, I'll save money later and it just makes sense in terms of my overall spending plan down the road.
Liz: Yeah. And I've done that too for travel that I'd planned. So I was taking a girlfriend out during a February spending fast, I was going to do a dinner out and entertainment. And I told her that I forgot that I had this thing planned, this spending fast and she was so fascinated by it she was willing to play along. So what we did was I used a gift card that had been sitting around and we decided to swap one activity for another that was something that was free. So it was kind of really cool because when I said it to her, I wasn't sure what her reaction would be, but it was super positive and I found that with most people, they're intrigued by the idea. So if you say, 'hey, I'm doing a spending fast, I can't go out, can we do a picnic? Can we do something else?' People are really into it. They'll do a Netflix night with you at home rather than going out with the movies.
Sean: Right. I mean everyone wants to save some money here and it helps you guys get creative. I had the same thing with another friend. Instead of going out to eat, we actually did a potluck and it saved us a lot of money and it was fun and plus it's cold out right now so we can just hang out inside and not have to go out anywhere, which is really nice. But when you're making these allotments, I think it's important to consider some things that may be a little more crucial, like getting an oil change on your car. That's something that can be preventive. So if you're due for that during your spending fast, just do it. Your car will be happier and it could save you money down the road.
Liz: Anytime something comes up that you think might be a necessity, think about what are the consequences if I push this off a few weeks? If there aren't any consequences, then that's not a need. If there are, if your car is going to grind to a halt on the freeway, then you really do need to spring for the oil change, spring for the necessities.
Sean: And that does bring me to thinking about gray areas here. I think it's really important to stay as close to your spending plan and your spending fast as you want to be, that's the whole point is to challenge yourself but also give yourself some leeway to be human. If you've had a really rough day, you don't want to cook dinner and you just want to pick up some fast food for dinner, I think that's OK. Like with most things in life, give yourself some room to be flexible so you don't push yourself to achieve these unattainable goals, then you get defeated and you could just abandon the whole thing. So just try to be realistic here.
Liz: Absolutely. Remember, you are the one setting the rules for this. I would suggest that you try to challenge yourself though. With my spending fast, I try to keep the grocery shopping, which that's a need, but I try to keep it to perishables only. So I'm buying fresh produce, dairy, things like that. And otherwise, I try to cook out of our pantry, which is great for a couple reasons. One is it's not expensive, it saves us money. But also it gets me in touch with what's actually in the pantry shoved to the back. And typically not only are we doing better meals during that month, but there's also a bag of groceries that's going to go to the food bank before it expires.
Sean: Yeah, that's a really great tip. I definitely have a few bags of rice in the back of my pantry that I need to make use of, so I'll keep that in mind for next time. Thank you. But I'm wondering what other pitfalls you might see here besides being too hard on yourself.
Liz: Well, things will pop up and you need to get creative sometimes about how you're going to deal with it. Just expect that you will not do this perfectly and I think you'll be fine.
Sean: OK. Yeah, that's great. And now I want to go to a couple of quick tips that can help you set yourself up for success.
If you have a hard time staying accountable to your own rules, I suggest finding an accountability partner that's a friend who's maybe doing this with you, maybe not, but someone that you're keeping informed and so that way if they see you considering a new pair of shoes at the store, they can say, do you really want to spend that? Is that part of your spending plan? And that can help you reduce temptation and hand in hand with reducing temptation, delete the shopping apps off your phone, unsubscribed from the emails. That will just make it so that you don't even think about purchasing those things.
Liz: Ugh, deleting Amazon kills me. It's actually physically painful to take that off my phone, but getting rid of that app, getting rid of the shopping apps and the deal apps, I have a bunch of those as well. I don't want to be constantly reminded of the money that I could be spending, but I'm not. So it's really important for me to take care of that. Go through my email basket, unsubscribe from the emails that might tempt me to spend.
One other side note, I've noticed a lot of my favorite sites now, the blogs that I used to follow are really pushing product. They're pushing you to buy stuff because they make money off those affiliate links. So some of them I just don't visit during my spending fast.
Sean: Yeah, that's smart because what really helps me and what this is all getting back to is kind of increasing the barrier for you to spend any money at all. And we're just so inundated with ads in our everyday life it can be so natural just to purchase something that you see in your social media feed because it's only two clicks away. So it's really about reducing temptations so that you don't purchase whatever it may be.
Liz: Now, what do you do about stuff that you really do want to buy and know you're going to buy at some point?
Sean: Well, if I know I'm going to buy it and I know I need something for an occasion coming up, I will just mark it. I have this running notes app on my phone full of links of things that I eventually want to get. And sometimes it's helpful because I'll just forget about it and I'll find out if I really do need it or not in a couple months when I go back to that notes app to put in another link and I think that's fine just to tuck it away. And if I do need it, I'll eventually purchase it. But categorizing it, compartmentalizing it helps me keep these things separate.
Liz: That's a great idea. You're capturing the thought, but you're putting in sort of a cooling period so that in case you change your mind, you haven't spent the money, but if it's still there and you still want to buy it, you can. That's really cool.
Sean: So then at the end of your fast, I think it's really important for you to evaluate how you did. Did you meet your goal? What were the high points, the low points? Did you end up purchasing that pair of shoes? I think it's important to evaluate all of that and then again, connect it to your bigger goals. How did it help you save a little bit more money? Did you have a little bit extra cash to put toward your debt? How is it tying into the broader things you want to accomplish beyond this one-month, two-week, one-year, spending fast you're doing?
Liz: There are also some unintended benefits that come along with the spending fast that I've discovered over the years and one of the big ones is that I'm calmer. I don't realize how much time I spend shopping for deals, doing research, trying to decide the best thing to do, and there's a lot of anxiety sometimes with making purchases and making decisions. Taking that all off the table for a month is kind of delightful.
Sean: OK. Lucy, I hope this helps you craft the right spending fast for you. And with that, let's get to our takeaway tips. First step before you start, find your why. That will help keep you motivated and focused throughout your spending fast. And then, whenever you have a hard moment, go back to that why to stay focused.
Liz: The next tip, know your budget and set your rules. Decide in advance what you're going to spend money on and what you're not.
Sean: And then, after the fast, tie it to your overall spending plan and your bigger money goals. If saving money is one of them, put all the money you didn't spend over the spending fast into your savings account. You'll be really glad that you did.
Liz: And that's all we have for this episode. Do you have a money question of your own? Turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected] You can even send us voice memos of your questions. However you want to send them to us is fine. Also, visit nerdwallet.com/podcast for more info on this episode. And remember to subscribe, rate and review us wherever you're getting this podcast.
Sean: And here's our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Liz: With that said, until next time, turn to the nerds.