It is the new year, and everyone is thinking about their resolutions and plans for the year. Some may have gone into debt for the holiday season. But now some are reevaluating their financial goals for the new year. Many have considered doing a low spend or no spend challenge. What is the difference between low spend and no spend?
Low Spend
Low spend is reducing the amount of money you spend on a day-to-day basis. You can do this challenge for the whole year, or a month or a couple of months. So how do you do a low spend challenge. First assess why you will be doing a low spend challenge. What are you willing to sacrifice? What are the items that you feel comfortable spending money on. This is aside from your necessities like bills, utilities, debt payments, etc. Once you have made that assessment you can decide how much you will spend each month. The goal is to reduce your spending as much as possible and only buy what you need. With this challenge you are reduce impulse purchases and any purchases based on your wants.
No Spend
The difference between no spend and low spend is that with no spend you are only spending money on the essential or necessities. Some people mistakenly think that you cannot spend any money on a no-spend challenge. However, that is not feasible because you have to pay mortgage/rent, utilities, groceries etc. You can use this time to pay extra money towards your debts or add extra funds to your savings account if you are debt free.
Starting off the year with one of these challenges is a good way to reset your financial future for your year. What financial goals do you want to accomplish this year? Would starting a no spend or low spend challenge work for you?