If you struggle with credit card debt, trouble covering monthly bills and other personal finance challenges, a “spending fast” could be just what the doctor ordered for your personal finances. Sound extreme? It doesn’t have to be.
You may have heard of popular (and often controversial) “detox” or “cleanse” fasts for your body such as cutting out sugar or gluten for 30 days or even consuming only fruit or vegetable juices for a few weeks. But did you know that you can apply similar fasting or cleansing practices to your financial habits to attain financial wellness?
A spending fast is more manageable than big goals
Setting a long list of new financial goals and guidelines can be intimidating, so don’t put too much pressure on yourself with spending fast restrictions. For example, instead of vowing to a lifetime of better financial habits right now, you could commit to 21 or 30 days of spending less.
Then write down ways you can save on daily and monthly spending. Maybe you could take your lunch to work every day instead of dining out. You might pause or cancel streaming subscriptions. Page through the grocery circular for sale items before you shop. Cut back on utilities usage or run several errands in one trip, for example.
You may permanently change small spending habits
Just like someone on a diet who picks at only carrots and pineapple for a week will probably binge on a carton of ice cream eventually, never spending on things you love could backfire. So, allow yourself a minor indulgence or two.
For example, if you love your morning coffee shop and muffin ritual, size your coffee down from a large to a medium and buy a box of muffins for $5 or bake your own instead of paying $4 for each one at the coffee shop. That small act alone will knock $15 to $20 off your monthly spending amount.
You’ll pay closer attention to spending
Most of us can easily spend anywhere from at least $20 to more than $50 a day without giving those purchases a thought. However, if you’re on a spending fast, you’ll notice every dollar spent. And when you set your spending fast goals, you’ll probably find several expenses or daily purchases you can do without to save money.
Tip: To become even more conscious of spending habits, pay with cash as often as possible so you actually see the money leaving your hand rather than making a painless purchase with a credit or debit card.
You can reduce credit card debt
If you’re on a spending fast for a month – or, once you get rolling, maybe even a few months – you’ll pay more attention to how much you charge on your credit card, hopefully charging less each month. Meanwhile, you may save anywhere from $100 to several hundred dollars a month or over time, which you can use to pay down existing credit card balances.
You’ll become aware of spending triggers
Even when you’re watching your spending, you might still get the urge to buy a new pair of shoes or unnecessary electronic device next time you’re bored or feeling blue. Now, however, you’re more likely to resist so you can stick to your spending fast. And next time emotions make you want to buy things, maybe you’ll go for a walk, call a friend to catch up or work out instead.
You can create better personal finance habits
Before you begin your spending fast, it’s a good idea to create a monthly budget so you know where you stand and where to cut. If you’re not up to that task yet, go ahead and start without a budget, focusing mainly on the list of daily and monthly expenses you can cut during the spending fast.
Once you see how much money you can save each month, create a monthly budget and some concrete goals such as depositing the amount you would have otherwise spent in a savings account, 401(k) or similar retirement plan.
You can build emergency savings
All that money you’re saving on your spending fast has to go somewhere, right? Whether you already have emergency savings or want to open a savings account designated for emergencies so you don’t have to use a credit card, undertaking a spending fast can help you meet your emergency savings goal.
Original source: Debt.com