What is a spending freeze? To put it simply: no more unnecessary spending. You're not allowed to spend money on anything but necessities. Use up the food you have in your cupboards. Your grocery budget is now limited to what you must buy (milk and toilet paper, for example). Think of it as “frugal living Survivor,” except the only prize at the end of the game is the money you've saved.
Why Opt for a Spending Freeze?
Personal Financial Discipline
A spending freeze is a terrific way to cultivate personal financial discipline. It pushes us to live within our means, pay off debt, and save for the future.
Saving for Future Goals
Whether you're saving for a down payment on a house, a dream vacation, or just building an emergency fund, a spending freeze can help expedite your journey toward your financial goals.
The Psychological Benefits
Believe it or not, a spending freeze also has psychological benefits. It fosters a sense of self-control, resilience, and satisfaction that comes from achieving set goals.
A spending freeze is not a long-term lifestyle by any means. The main goals of the spending freeze are:
- Get accustomed to using up what you have and making do without, which will help exercise your creative muscle and become more resourceful
- Reinforce the difference between wants and needs
- Practice delay of gratification
- Stay out of the stores, thereby reducing temptation and finding other forms of “entertainment”
Why 21 days? Research shows it takes approximately 21 days to make something a habit. During these three weeks we'll be practicing the following skills:
Questioning the Difference Between Wants and Needs
A spending freeze involves a mindset change where you begin to prioritize needs over wants. It's about cutting out the extras and focusing on the essentials. During your spending freeze, you will need to question the difference between wants and needs. Some things will be clearer than others. Yes, chances are you will need gas to get to work. No, you don't need a new necklace to match the sweater you got for Christmas.
But what about the things that aren't so obvious? Do you really need to purchase a birthday card for your brother-in-law, or can you make one? Do you really need to get your hair colored? Those gray areas (pun intended) are where your challenges lie. Try to anticipate the decisions you'll have to make in the next three weeks. Are you going to be invited out to lunch? If your child needs money for school lunch, will you have him brown-bag it instead? What will you do?
Learning to be Resourceful and Embracing Frugality
Waste Not, Want Not. You may be familiar with this phrase if you had a parent or grandparent who lived through the great depression or experienced war rationing. Prior generations demonstrated that philosophy in numerous ways and learned to be resourceful with what they had. But in today's world of abundance, why would we want to live that way?
Frugality becomes your new best friend during a spending freeze. This means finding ways to save on every possible front – from grocery shopping to utility bills. You tap into your creative side when you have to make do with what you have. It forces you to look see things in a new light, and you're forced to use your imagination. You see something's hidden potential. You'll also experience more satisfaction when creating something out of nothing. There's another great byproduct: you save lots and lots of money!
Imagination and creativity are both traits that everyone has, whether they think they do or not. Like with most skills, they get better with practice. Unfortunately, the “quick fix” of being able to run out to the store to buy whatever we need can smother our resourcefulness. The best way to get back in touch with your creative side is to put it into practice each and every day. Once honed, this skill can apply it to other areas of your life: your career, your hobbies, and even your relationships.
Practice Delay of Gratification
There are always a million things that come up on your way to achieving your goals that could distract you. Learning to just say no when you can't afford something is a skill that requires practice, but can be learned. During the freeze, you'll need strategies to resist temptations to spend. This could include avoiding shopping malls, unsubscribing from marketing emails, or finding free activities for entertainment.
Financial self-control isn't just a skill reserved for those without a lot of money. In fact, if you haven't mastered this skill early on in your financial journey, your problems are likely to only get bigger when more money comes your way. It's a big reason why people who suddenly come into a lot of cash find themselves bankrupt a few years later. They haven't learned impulse control and how to wait for the things they want. Their pocketbooks may have expanded, but their temptations also get bigger. Since they've never mastered the skill of delay of gratification they will always have problems with money.
There are all sorts of hidden benefits to delaying gratification. Food tastes better when you've waited for it. Buying a piece of furniture feels more rewarding when you've saved for it rather than put it on plastic. Relaxing in the evening feels better after putting in a hard day's work. In short: when you've earned something, you derive more pleasure from it.
The harder you work for something, the higher you tend to value it. Quick fixes are rarely satisfying (think fast-food, shoddy repair jobs, etc.). Imagine your child comes to you asking for a new bike. She's old enough to earn the money herself by saving birthday money, babysitting, or doing other odd jobs. Do you think she'll take better care of the bike if she earns the money for it herself, or it is simply given to her?
Delay of gratification is an extremely important thing to put into practice when you have children. It's one of the biggest indicators of success in life, so begin helping them practice at an early age.
Once you start seeing the connection with delay of gratification and increased satisfaction and enjoyment, you're more willing to exercise that skill and put it into practice on a daily basis. It will not only improve your financial life, but every other area of your life as well.
Challenges in a Spending Freeze
Dealing with Unexpected Expenses
Unexpected expenses can be a challenge during a spending freeze. Having an emergency fund or a plan for such situations is crucial. It's also really helpful to go over your next few weeks and try to anticipate any situations that may arise where you'll be expected to dish out some cash. Having a plan of action in place for those situations is one of the keys to your success.
Struggles in Staying Committed
Staying committed to a spending freeze isn't just about curbing your spending habits; it's about making a significant change in your lifestyle. This process can indeed be challenging. It can be likened to running a marathon, where the start is often filled with enthusiasm and energy, but as the journey continues, fatigue sets in, and so does the temptation to quit.
Human beings are naturally drawn towards immediate gratification, and the thought of postponing wants can be quite unsettling. This is where the struggles in commitment become apparent. You may start to question your decisions when the desire for non-essential items seems unbearable or when an attractive sale pops up.
It's crucial to remind yourself of the reasons behind the spending freeze. Is it to pay off a nagging debt? Save up for a home or a much-needed vacation? Or perhaps to build an emergency fund? Whenever the commitment wavers, bring your focus back to the long-term benefits. Maintain a visual reminder of your goals – it could be a picture, a phrase, or anything that reinforces your objectives. This constant reminder will serve as a motivation to keep going.
Coping with Social Pressures
In a consumer-driven society, social pressures to spend money are real and can be overwhelming. Advertising, social media, peer pressure – all can make you feel the urge to spend more to fit into societal standards or keep up with trends. This pressure can make the journey of a spending freeze even more challenging.
A common scenario might be your friends deciding to eat out at an expensive restaurant or planning a weekend trip. Saying ‘no' to such social events to stick to your spending freeze can make you feel like an outcast, and it might even invite unwelcome questions or comments.
Remember, the goal of a spending freeze is to enhance your financial health and not to win a popularity contest. It's important to assert your financial choices without feeling guilty or pressured. Be open and honest about your financial goals with your friends and family. You might be surprised to find support in unexpected places.
Furthermore, it's crucial to find low-cost or free alternatives to socializing. This can include hosting potluck dinners, going for hikes, or enjoying a movie night at home. These experiences can be just as enjoyable, if not more, without straining your wallet.
Both staying committed to your goals and coping with social pressures during a spending freeze requires strength, resilience, and focus. But rest assured, overcoming these challenges can lead to profound financial and personal growth.
Planning for Your Spending Freeze
Embarking on a spending freeze can feel daunting, but with careful planning, you can set yourself up for success. A well-structured plan is key to navigating through the freeze smoothly and achieving your financial goals. Here's a step-by-step guide to help you get started:
Step 1: List Approved Expenses
The first step in planning for a spending freeze is to outline your approved expenses. These are the essential costs that you can't avoid, such as rent or mortgage, utility bills, groceries, and healthcare. The idea here is to differentiate between ‘needs' and ‘wants'. ‘Needs' are necessities for survival and well-being, while ‘wants' are luxuries or comforts.
It's also important to consider potential emergency expenses in this step. You might set aside a small fund for unexpected costs like urgent car repairs or medical bills. This way, you're prepared and won't have to break your spending freeze.
Step 2: Set Clear Goals
Why are you initiating a spending freeze? Having a clear goal will not only motivate you but also help define the duration and terms of your freeze. It could be for paying off debt, saving up for a significant purchase, or simply wanting to adopt a more frugal lifestyle. Your goal might dictate whether your spending freeze is for a month, a quarter, or even a year. Write down your goals and keep them somewhere visible to serve as a constant reminder and motivation.
Step 3: Develop a Support System
Embarking on a spending freeze can be challenging, and it's often easier if you're not doing it alone. Let your family and friends know about your plans so they can offer support. They might even join you, turning it into a group challenge. You can also seek support from online communities where people share their experiences, advice, and encouragement. This support network can be a valuable resource, especially during moments of struggle or temptation.
By following these steps, you can set a solid foundation for your spending freeze, making it an experience that not only transforms your financial habits but also empowers you on a personal level.
You're not going to be perfect. You will be tested. Sometimes you'll be strong; other times, you won't. The spending freeze is more about the process rather than how much you can “be good” or how well you can “stick to the rules.” Some of you won't spend a dime but may not learn much. Other members will be tested and fail, but they really learn a lot. It's what you learn from your own personal journey that matters.
Reflecting on Your Spending Freeze
Once your spending freeze period concludes, it's essential not to jump straight back into your old spending habits. This is the ideal time to pause, reflect, and take away vital lessons from the journey. Here are three key areas to focus on during this reflection phase:
Take a moment to evaluate what you have achieved during the spending freeze. Did you meet the financial goals you set at the beginning? How much money were you able to save or debt were you able to pay off? It's not just about the numbers, though. Consider the non-financial achievements as well, such as the self-discipline you developed or the clarity you gained about your spending habits. Celebrating these victories, big or small, is crucial as it offers motivation to continue making mindful spending choices.
Identifying Challenges and Learning from Them
Reflect on the difficulties you encountered during the spending freeze. Was it hard to resist certain temptations? Did unexpected expenses throw you off track? Did you feel the pinch of social pressure? Each challenge presents an opportunity for learning and growth. For instance, if unexpected expenses were a problem, this might highlight the need for a more robust emergency fund. If resisting temptation was the issue, perhaps you need to work on strategies to strengthen your self-control. Use these lessons to improve your financial habits and planning in the future.
Planning Your Financial Future
Now that you've experienced living with less and the benefits of saving, it's time to think about how you can apply these principles moving forward. This could mean setting new financial goals, such as saving for retirement or investing in assets. Maybe you want to make certain aspects of the spending freeze a permanent part of your lifestyle. For example, you might decide to continue limiting dining out or subscribing to fewer streaming services. The key is to take the insights gained from the spending freeze and use them to shape a healthier, more sustainable financial future.
Reflecting on your spending freeze is not just about looking back at the journey, but also about using the experience as a stepping stone for future financial success. This period of reflection can help solidify the positive habits you've formed and prepare you to better handle your finances moving forward.