Want to start the year off with extra cash in hand? Then No Spend January might be just what you are looking for. This personal finance challenge is a great way to combat the spending frenzy that happens during the holiday season and can help you pay off debt and have more money to save and invest. In 2023, consumer spending was up 1.8% on everything from eating out to buying new cars. Maybe you are looking to cut back from your typical January spending spree, or maybe you just want an extra challenge to help you reach your financial goal even quicker– whatever your reason, this is everything you need to know about No Spend January.
- What is No Spend January?
- Who should do a No Spend January?
- Why January?
- How to do a No Spend January
- Free or low-cost entertainment ideas
- Challenges you may face
What is No Spend January?
No Spend January is exactly what it sounds like. It is a dedicated month for intentional (or no spending) so that you can use the extra money you saved in whatever way you need or want to. No Spend January is a personal finance challenge where individuals commit to limiting their discretionary spending to an absolute minimum for the entire month of January. The idea behind this challenge is to start the new year by practicing frugality, gratitude, saving money, and potentially paying off holiday-related debt. It can also serve as a way to reset one’s spending habits after the typically expensive holiday season.
Who Should Do No Spend January?
Anyone can participate in No Spend January. If you are wanting to start the year with a little extra cash to invest or save, this could be a great challenge for you. Similarly, if you have been working towards some big financial goals and you need a little extra push, a no-spend month might be just the right kickstart you are looking for. Or maybe you feel yourself in a spending frenzy from the holiday season and you want to reset your habits, then this challenge would be a great fit for you!
Who Should Not Do a No Spend January?
Anyone might be able to benefit from a no-spend month, however, there are some cases where it might not be the “fit” you are looking for.
If you are looking for long-term financial change, this might not be the challenge for you. Why? A no-spend challenge is awesome to add a little extra cash to your pockets and help you reach short-term financial goals. It can also help you with recalibrating your spending habits and being intentional about budgeting, which can help you with your long-term goals. However, if you are looking for a no-spend month to completely rewire years of financial behavior, it might be a bit like putting a band-aid on a broken arm.
Additionally, if you are entering this challenge without clear goals or you find yourself constantly looking to do these types of challenges, it might not be the right fit for you. If you don’t have clear goals, the month could end up being more difficult than it needs to be and you might become burnt out from budgeting. The objective of a no-spend month is to feel empowered around your budget and your ability to control your finances, not to make you unnecessarily exhausted! In that same vein, if you are constantly looking for ways to trim the fat from your budget and find that you struggle with a scarcity mindset, it might be time to ask yourself why. Being budget-conscious is an amazing skill set to have! But life is about balance, not depravity. If you are struggling to find that balance, you might find this blog helpful.
January is the month of habit setting, new beginnings, and cozy nights in– need we say more? A no-spend month at the start of the year can help you begin the year with a little extra cash in hand and a renewed confidence that you can be the master of your finances. Plus, in most places, January is typically a gloomy month that is perfect for days spent inside reading, watching movies, and working on your favorite hobbies (puzzles, anyone?). Studies show that spending tends to go up in the warmer months because people are outside, soaking up every bit of summer with outside concerts, rooftop happy hours, and vacations galore. But January has a natural hibernation feel to it. It’s less likely you will feel FOMO and, who knows, you might even find that you really enjoy the free activities you come up with for the month and want to include them more in the rest of your year!
How to Do No Spend January
If you haven’t started budgeting, this is the time to start. Creating a detailed budget will help you identify what your necessary expenses are from your unnecessary expenses. For your no-spend month, your budget should include expenses such as rent or mortgage, utilities, groceries, transportation, and debt payments. Everything else is cut out or significantly reduced.
Cutting Non-Essential Spending
During No Spend January, you should aim to eliminate or significantly reduce spending on non-essential expenses such as dining out, entertainment, clothing, and impulse purchases. It’s up to you to decide what is necessary and what is not, but remember that this is supposed to be a challenge, Push yourself to limit unnecessary expenses as much as is comfortable (and of course, safe).
Cooking at home and meal planning will play an important role in helping you have a successful no-spend month. Having a meal plan can help you be intentional about what groceries you purchase and help minimize food waste. If you don’t usually enjoy cooking, this can be a great time to figure out recipes you do enjoy making. Pull out those family recipes and sourdough bread starters– it’s time to get cooking!
This will be a great time to pick up new hobbies or spend time doing things you love (that are low or no cost). If you are used to going out to concerts or expensive dinners with friends, you can still find fun experiences that also save you money! Since it is January, it’s likely to be cold weather. Some fun experiences to consider trying would be snow showing, reading (by the fire, of course), hosting a dinner party or potluck, or having a movie marathon complete with a hot cocoa bar. There is a list of more ideas at the end of this blog.
Use of Existing Resources
This is a great time to identify things you already have around! From shopping your own closet to cleaning out the pantry, you might be surprised at what you find right in your own home. This can also include fixing up items that need some repair. For example, if you have a button come off of your favorite trousers, try your hand at sewing it back on. Thanks to the internet, there is no shortage of skills you can learn and you will save yourself from going to buy a new pair.
Limit Sales and Temptations
January is notorious for sales. To succeed in No Spend January, it might be wise to avoid browsing online, visiting the mall, or entering stores where you might be tempted to spend.
Track Your Expenses
Keeping track of your expenses will help you stay motivated throughout the month and ultimately know if you reached your goal. You can do this by tracking your spending on your banking app, a wealth-tracking app like CoPilot, or even keeping track in an Excel spreadsheet.
Many people use No Spend January as an opportunity to kickstart their savings goals. The money saved during the challenge can go towards paying off debt, building an emergency fund, or investing and building wealth.
It might be helpful to have a community that is helping support you and cheer you on throughout the month. This could mean finding other people online who are also participating in the challenge or gathering others in your life who would want to join you. It could be fun to have your friends or family join in so that you can find creative ways to limit your spending (and maximize your experiences) together!
Free or Low-Cost Entertainment Ideas
There are lots of creative ways to fill your time without spending too much money! Here is a list of ideas to get you started:
- Community events (psst…check with the library!)
- Book club
- Take a free investing class
- Pinterest mood board or vision board for the year
- Deep clean the house (it had to be said)
- Teach your dog new tricks
- Learn to bake or cook
- Potluck dinner party
- Movie marathon
- Game night
- Snowshoeing or hiking
- Painting, knitting, or crafting
- iPhone photoshoot
- Start a business or side hustle
- Learn a new skill with TedTalks or other free educational content
- Research free museum days at your local museums
- Write letters/pen pals
- Scrapbooking from all the photos you took over the holidays
- Checking off things that have been sitting on your to-do list like sorting your mail and sewing a button on that blouse
- At-home workouts and yoga
- Get a head start on your taxes
- Learn a language
- Host a swap night with your friends for plants, clothing, books, and more
- Goal planning for the year
Challenges You May Face
Worst case scenario: You are halfway into the month, going strong, when you bump into an emergency expense. Now, obviously this could mean a myriad of things. If it is a true emergency, this is why we have emergency funds! Cutting back on the additional expenses this month should hopefully help you be able to better afford the emergency expense or replenish your emergency fund as needed.
But, if the emergency expenses aren’t concerning someone’s safety or well-being, this could be a good time to find a creative solution that doesn’t involve spending money. For instance, maybe you need new tires, but instead, you decide to take the bus to work for the remainder of the month. If you are going to end up purchasing the new tires anyway, it’s up to you if you want to do that this month or if you want to proceed with the no-spend challenge.
You Get Invited to a Party
The number one way to avoid hurt feelings is to have a conversation upfront. Don’t be shy about letting your friends and family know your financial goals for the month! If you get invited out and want to participate, there are options for you. Two great solutions are:
- You eat beforehand and join in for the outing
- You recommend a change of plans
If you want some more recommendations on navigating money conversations and friendships, listen to this podcast episode.
No Spend January is a great way to set yourself up for a financially successful year. Anyone can participate in the challenge, but it can be especially helpful to have clear goals in mind before you begin. Creating a budget and deciding beforehand what you want to limit or how you want to define “no-spend” will help you make your choices throughout the month. Find creative ways to fill your time that don’t include spending money– the process can be enjoyable!
And lastly, if you are looking to build wealth with the additional cash you saved during your no-spend month, then learning to invest might be the next right step for you. Thankfully, we have a free class for you here.