Reset Your Budget with a Post-Holiday No-Spend Challenge
While the holiday season is often a time of joy and celebration, it can lead to overspending and even debt. In 2023, 34% of Americans went into debt during the holiday season. Whether you find yourself in debt after the holidays or are ready to reset your budget and start the new year from a more sustainable place, a post-holiday no-spend challenge could be just what you need.
A no-spend challenge is a time to reign in unnecessary spending and make sure your finances are on track. During a no-spend challenge you’ll spend only on your necessary expenses. By cutting out optional spending you can find extra money to pay down debt, save, or put towards other financial goals. Let’s look at how you can reset your budget with a post-holiday no-spend challenge.
Get Clear on Your Why
As you get ready to detox your spending after the holidays, it’s important to get clear on why you’re doing it. Having a clear why helps you stay motivated. It can also help you get excited to tackle your post-holiday no-spend challenge.
To get clear on your why, grab a piece of paper. Write down your goal or goals for the challenge. Be sure to be specific. Then, write down how you’ll feel when you reach your goal. Including your emotions can help you stick to your goals even when things get tough. Here is an example of a clear goal:
“I am doing this post-holiday no-spend challenge to help myself get out of credit card debt more quickly. My credit card debt is causing me stress and I am ready for it to go away. At the end of my post-holiday no-spend challenge I will have an extra $500 to put towards my credit card debt. Once I’ve made the additional payment, I will feel less stressed and proud of myself, and I will continue to find ways to accelerate my debt repayment.”
Keep this goal somewhere you can see it and come back to it often. A no-spend challenge can leave you feeling deprived. But if you focus on your why, you’ll be better able to push through the tough times.
The Difference Between Necessary and Optional Spending
If you’re ready to reset your budget with a post-holiday no-spend challenge, the first thing you need to understand is how to determine if an expense stays or goes during the challenge. To do this, you need to know the difference between a necessary expense and an optional expense.
Necessary expenses are expenses you must pay each month to keep your life moving forward. These expenses are things like your mortgage or rent, insurance premiums, utility bills, your phone bill, your internet bill, transportation costs, childcare costs, the cost of groceries and medication, debt repayments, and any other monthly expenses you must pay.
Optional spending is everything else you choose to spend your money on each month. It could include things like getting coffee on the way to work, dining out with friends, concerts or other entertainment, or any expense you enjoy, but don’t have to have.
Knowing the difference between necessary and optional spending will help you determine what is included in your no-spend challenge.
Break Your Expenses into Categories
Now that you understand the difference between necessary and optional spending, it’s time to evaluate your spending.
Review three months of bank and credit card statements to get a feel for your general spending. As you review these statements, break the expenses you see into necessary or optional. Create your no spend challenge budget by pulling out all your necessary expenses. List the expense, when it’s due (if it has a set due date), and how much it is. If the amount can vary, like it does for groceries, take the average monthly amount. Once you’ve created your necessary spending budget, you have your guide for your post-holiday no-spend challenge.
Making this budget can seem limiting as you eliminate optional expenses. Remember, this is only temporary and you’re doing it to reset your budget and make progress on your financial goals.
Set Your Post-Holiday No-Spend Parameters
As you get ready to reset your budget with a post-holiday no-spend challenge, it’s important to give yourself parameters. First, determine how long you’re going to do the challenge.
Typically, challenges like this are 30 days long. This is because it allows you a full month to take care of your necessary spending while laying off your optional spending. If a month feels too long, you can set it up for a week or two. There’s always the option to extend your challenge if it feels like it’s going well. Be sure to pick a timeframe that feels manageable but will stretch you a bit. If it’s too easy, you may not see the full effect.
Next, you’ll want to look ahead to your proposed timeframe to see if there are any big expenses or events/celebrations that you’ll have to attend. If you have a big expense, like an annual renewal, be sure you put this in your necessary expenses. If you have an event or celebration, give yourself a modest budget so you can cover the expense without derailing your plans.
Write down the parameters of your no-spend challenge and put them with your goals for the challenge. This can help you remember what is allowed and what is not while you are participating in the no-spend challenge.
Tips to Make Your No-Spend Challenge Easier
When you start a no-spend challenge, you want to do everything you can to set yourself up for success. Here are a few tips to help you have the best no-spend challenge possible.
Commit to Eating at Home
Eating out is a large expense that can really derail a budget. During your no-spend challenge, eating at home is a great alternative. To make it easy on yourself, do some meal prep.
Meal prepping is helpful because it can give you easy and fast options. Spending time preparing lunches and dinners can help you avoid eating out during the day at work. It can also encourage you to go home and make dinner when some of the work is already done.
Stop Online Shopping
It’s so easy these days to pick up your phone and completely blow your budget. During your no-spend challenge, you’ll want to avoid this. So, delete the shopping apps off your phone. This will mean you have to go on to the store’s website, even just to browse. The extra step can help you avoid online shopping. You can also unsubscribe from promotional emails, so you aren’t tempted to shop. These emails often make the sales seem so urgent that it can be hard to resist.
It’s also important to pay attention to your scrolling habit. There are constant ads across all social media platforms these days. The more you scroll, the more likely you are to buy something unnecessary. Be mindful of how you consume social media. You can even set a daily time limit to help you be successful.
Look at Your Transportation Costs
Another spot to look at as you start your budget for your post-holiday no-spend challenge is your transportation costs. It’s true that you’ll need to get to work, the grocery store, and appointments or social engagements. However, this is a good time to evaluate if you’re taking the most cost-effective ways to get there. Try carpooling to work with a coworker or grouping your errands into one outing to save on transportation costs.
Give Yourself Grace
Shifting your spending habits, even temporarily, is tough. To be successful, you need to give yourself grace. The plan may not go perfectly, and unexpected expenses will come up. The important piece is to not abandon your challenge completely. Stick to your plan as best you can, and you’ll see results.
Find Things to Do for Fun
If you start this challenge and think you can’t have any fun for the duration, you’re setting yourself up for failure. Instead, find fun things to do that are no cost or low cost. This will give you things to look forward to. It will also help break up the monotony of the challenge. It is possible to have fun without spending money.
Go for a picnic with friends—even an indoor picnic can be fun if the weather is cold. Find free activities like free nights at a local museum or gallery or other community events you can attend. Often, the idea of going out comes with a price tag, but it doesn’t have to. Finding free and low-cost activities can help you shift your perspective while still honoring your no-spend challenge.
A post-holiday no-spend challenge can help you get your spending in check after the holiday season. It can also help you make some quick progress on your financial goals for the new year. Having a quick win will build your motivation to keep going.
No-spend challenges and budget detoxes aren’t just for after the holidays. If you find your spending getting out of hand, you can do another no-spend challenge to give yourself a reset. Use no-spend challenges throughout the year to make progress on your financial goals and reevaluate your spending habits to be sure you are spending in line with your values.