Here's How a Spending Ban Can Help (and Hurt) You
If you're struggling to get your finances in order, a spending ban can be a great way to get back on track. A spending ban is a period anywhere from one week to one year wherein you refrain from all spending, other than for necessities.
A spending ban might sound a little extreme, but it is a good way to get back in touch with your financial discipline and find contentment with what you already have. But, spending bans can have some unexpected pitfalls if you're not careful. Here's how to create a successful spending ban and avoid the potential traps you might face.
Know Your Own Spending Ban Rules
Before you start, you need to make sure you define several different aspects of the ban so that you are prepared for the possible complications.
1. Decide How Long the Ban Will Be
There have been several bloggers and journalists who have described their yearlong, no-spending adventures, but the average person should plan on a shorter length of time to start. It would be very easy to burn out on a too-ambitious spending ban, so it makes more sense to start small. Michelle Singletary of The Washington Post recommends a 21-day financial fast. This is a good length of time, since it is long enough to make a serious difference in your habits and your finances, but it is not so long that you feel overwhelmed.
2. Define "Necessity"
One of the toughest parts of your spending ban is determining what constitutes as a necessity. You know that you will be refraining from unnecessary spending, and that you will of course be able to purchase needed things like food and medicine. But it can be very easy to decide that since lunch out with your coworkers is a food purchase, it counts as a necessity. So, decide ahead of time what you truly need, and what you can live without during the ban. (See also: 25 Products You Think You Need But Really Don't)
3. Plan Ahead
Take the time to think about what kinds of things you will face during your spending ban that you would normally spend money on. For instance, if you know that your child is invited to a birthday party during your spending ban, you can figure out ahead of time how you can bring a gift without spending money. You might be able to regift a gently used toy or book, or make a gift. Thinking through these issues ahead of time will make it easier to avoid a purchase of convenience.
4. Know Where the Extra Money Will Go
When you start your spending ban, you should have a goal in mind for the money you are saving through the ban. Rather than just allowing it to sit in your account, where you might spend it after the ban is over, send the money to your savings account, your debt, your retirement account, or your children's college fund. (See also: 10 Places to Stash Your Savings Besides a Bank Account)
How a Spending Ban Will Help Your Bottom Line
The ultimate goal of a spending ban is to help you determine the difference between your wants and your needs. It can be very easy to get into the habit of regarding anything that makes your life a little easier or more comfortable as a need, but that is not necessarily the case. You are much better able to correctly identify your needs if you are pausing all unnecessary spending.
In addition, the spending ban will help you learn to make do with what you have, when you might usually buy your way out of a dilemma or problem. For instance, if you have to go to a special event during the spending ban, then you will have to find something that will work within your closet, rather than buy a new outfit.
Finally, spending bans are great for helping you recognize how much you already have in your life. If you regularly buy DVDs for instance, the spending ban can help you revisit the favorite movies you already own, rather than buy new ones that you will only watch a couple of times. Taking the time to enjoy what you already have is both a great way to save money and a path to contentment.
Spending Ban Pitfalls to Avoid
Though a successful spending ban can help you save money, it can backfire on you if you are not careful.
In particular, some people find that a spending ban encourages them to overspend, rather than helping them change their habits. Such overspending might take the form of a "last hurrah" spending spree before the start of the ban. Alternatively, you might be tempted to go on a shopping binge after the end of your spending ban to celebrate.
In either case, you are defeating the purpose of your spending ban. If you feel tempted to overspend before (or after) you start you spending ban, focus on why you are committing to this ban. Keeping your motivation front and center in your mind can be a powerful tool to help you combat the urge to overspend.
The other major pitfall to be aware of is how your spending ban may affect your relationships. If you have friends or family members who are spenders, it can feel awkward to bow out of expensive events or deal with their discomfort at your ban. The best way to handle this is to have alternative activities to suggest when you have to turn down dinner or movie invitations. Being clear and honest with your friends about what you're doing and why can also help to smooth over any discomfort with your spending ban. (See also: The 9 People in Your Life Keeping You Poor)
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