January is a symbolic “turning of the page” for many individuals to start the new year fresh…with goals that we boldly make to better ourselves. Many of us just exited a hectic holiday season of celebration, too much food (and drink), and excessive spending. According to the National Retail Federation, Americans typically spend nearly $1000 on gifts, food, and decorations during the holiday season. In fact, holiday spending ranks second only to “Back to College” as the largest consumer spending event for Americans.
I know this isn’t for everybody so treat this as food for thought. I was looking for ways to cut back on my spending after the holiday season and I stumbled upon a growing movement in the “Frugal” and “Minimalism” community called No Spend January.
What is “No Spend January”?
No Spend January is exactly like it sounds. For one month, you pause all “wants” and discretionary spending. That’s it. To some this may sound terrible and to others this may be exactly what is needed to kick start savings or tackle lingering debt. “Wants” and discretionary spending is somewhat subjective so a good way to think of this type of spending is anything that you could do away with and still live. You know…grabbing drinks at the bar, eating another Chipotle bowl, buying more junk on Amazon, clicking on that advertisement for Yeti mugs on Instagram (hint – they are fake). It really does mean keeping that credit/debit card in a drawer at home and not using it for one month.
Why do it?
The benefits of No Spend January differ for everyone and we all have various reasons to adopt this challenge. The major benefits of No Spend January that I have found include:
- Save money!
- Increase investments
- Decrease consumer debt and slow accumulation of further debt
- More time with family
- Time to explore free entertainment (library, state and national parks, etc)
- Reclaim the refrigerator, freezer, and pantry space
- Decrease carbon footprint (no more Amazon boxes flown on planes and fewer trips to Target)
- Less food waste
Basic Rules
Rule #1 – Don’t spend any money for one month. This means eliminating discretionary spending such as online purchases, eating out at restaurants, going to the bar, etc.
Rule #2 – Buy only the things you absolutely “need”. Make every attempt to eat the food that you already have in your freezer, refrigerator, and pantry. If you run out of food then obviously grocery store purchases are fine. Try to use existing gift cards to make purchases such as gasoline, grocery, etc. No cheating! You can’t stockpile food the month prior to the challenge.
Rule #3 – Re-examine your subscription spending. Subscriptions can add up during the year so use this time to remove discretionary spending from your budget. Subscription sharing is an option to minimize spending. For example, YouTube TV can replace cable TV and permits FIVE users in different households on one account.
Rule #4 – Calculate the money saved and use it to pay down debt or to purchase investments. This is a must! Setup a dedicated savings account and move excess money from your checking/direct deposit into the new account. At the end of the month you can use it to pay down debt or purchase investments in a brokerage account, IRA, or HSA.
Helpful Tips and Resources for No Spend January: (or any month)
- Consider downloading Libby to access FREE movies, magazines, eBooks, and audiobooks from your local Library. The modern library is an incredible resource with an abundance of free entertainment.
- Meal planning on a budget and with existing food in your pantry can be difficult! There are tons of meal planning websites online for anyone on a budget. We like Budget Bytes.
- Track your spending like a hawk. Your bank may offer tracking services or there are a bunch of free tools available from reputable companies. A spreadsheet works as well for all you nerds.
- Get outside! We schedule weekly visits to local hiking trails, state parks, and national parks. We recently explored the Newport Cliff Walk (Newport, Rhode Island) on one of our FREE adventures.
- Use your gift cards. We recently found an old gift card in a drawer with over $80 on it. If you have any unwanted gift cards then sell it for cash. We use Cardpool and Raise to sell those unwanted gift cards we received from family members (sorry Mom).
One of many FREE activities we did in No Spend January was hiking the Newport Cliff Walk. The Newport Cliff Walk is a top attraction in New England and is part of the US National Recreation Trail. This 3.5 mile hike passes by the world famous Newport Mansions and the eastern shores of Newport. This is way better than watching Bridgerton on Netflix!
My Approach to No Spend January?
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I use up all the food in my house to make 93 meals for a family of four in January. The food pantry and the freezer are literally emptied during the month. Rice and Beans is my last resort.
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I use “Old Money” when making any purchases. Old Money is any cash on hand (I typically have less than $100) if I want to make any in-store purchases. This makes purchase decisions very deliberate for the month.
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I use existing gift cards if I exhaust my “old money” for grocery purchases, gasoline, or eating out.
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Absolutely NO ONLINE spending at all for the entire month. Period. I turn off all internet browser extensions to avoid temptation. I intentionally avoid social media, Amazon, Home Depot, and Walmart for the month.
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I invest the money saved during the month in an S&P 500 index fund. Our family of four typically spends nearly $800 on groceries and eating out in a given month so I treat this money saved as a bonus. The money could also be used to fund my emergency account for healthcare spending as well.
