This July/August vacation, do something new and different to build positive financial habits and enhance your savings. Consider taking on a ‘No Spend Vacation Challenge’.
As you would have seen in our recent video: How to own your home by age 30 , there are many items and activities competing for your disposable income, including entertainment. However, developing healthy spending and saving habits can help you realise your dream of home ownership sooner rather than later. The money saved during this challenge could be put toward your down payment or other associated mortgage costs. Let’s dive in and explore this ‘No Spend Vacation Challenge’.
Needs versus Wants
Start by listing the costs that are needs versus those that are wants. Having this written out can also add clarity and awareness of where the money ‘disappears’ to each month, and inform heightened control of your spending. Cross-reference your bills, receipts and credit card statement to identify things you may have forgotten, and categorize them on your list into the ‘Need’ section or the ‘Want’ section. Be honest with yourself here. For example, things like rent, groceries and utilities would be ‘Needs’ whereas things like eating out, clothing and expensive phone plans would be ‘Wants’. The goal is to eliminate or reduce the spending on ‘wants’ for the duration of your challenge.
Commit to a time period
To clearly define success, it’s important to have a specific time period that you’re engaging in this challenge. Do whatever feels right for you and your circumstances. It could be something as simple as selecting a timespan like “the next 15 days” or if you’re open to it, for the remainder of the July/August period, this allows a solid span of time for you to give this a go. Once you try it out, then you can extend the challenge to a longer period.
Here are some challenge ideas referenced from the Debt Free Forties blog:
Create the Challenge Rules
Define the rules for the challenge so you can have clear boundaries of what’s acceptable. For example, identify which purchases are permitted and display this list where you and your family can see it. Decide whether you’re locking away your credit card for the duration and if so, consider setting aside cash for anticipated needs such as groceries. Then don’t be shy to share these rules with your family and friends so they can help keep you accountable and maybe they will even join in!
Set yourself up for success
Brainstorm which things will be the biggest temptations and plan for them. For example, if you anticipate being swayed by your friends when they are in the mood to go out and lime, research free activities you can put forward as alternatives, or suggest a potluck instead of eating together at a restaurant.
We hope this challenge can helps you grow your budgeting muscle. Let us know if you give it a try!