A couple of months ago I decided that I would tackle my financial “situation”. I wasn’t drowning in debts or living pay-check to pay-check. But, I had been living slightly above my means for a long time, slowly growing my debts whilst only ever making the minimum repayments, and I had a bad credit score due to some missed repayments. I didn’t want to wait until I hit rock bottom to make the big changes that I knew to be necessary for a healthy financial future. And to be honest, I was only a couple of bad events away from being in financial trouble. If I had needed major dental work, or if one of my dogs had gotten sick and I had to pay a large vet bill, I knew I wouldn’t be approved for more credit, and I had no savings. I’m lucky that I didn’t have to deal with a horrible situation before realizing I needed to make some big changes.
I started reading a lot about personal finance, budgeting, and building personal wealth. The first step was to figure out where my money was going. And then subsequently, make a monthly budget to manage my expenses and ensure I can afford my lifestyle (with my salary that is, not with credit cards).
In my research, I learned about an extreme trend where people were doing a no-buy year. Meaning that other than necessities, they would intentionally spend zero money for a whole year. No eating out, no takeaway coffee, no cinema outings, and no new clothes. The amount of money they saved over the year was huge. Some had also been able to pay back all of their credit card debts and still add extra money into savings accounts. It sounded like a really difficult, yet extremely powerful way to prioritize personal finances above all else and feel in control.
I decided I wanted to consider doing something similar. Committing to a no-buy year felt like too much. I didn’t want to set myself up to fail. Instead, I thought I’d do my own version.
When I looked at where my money was going, I realized that it was trickling out of my accounts in small amounts.
- Buying a coffee mid-morning with work colleagues
- going out for lunch once or twice a week instead of eating a packed lunch
- buying take-out or going out for dinner once a week
- going to the pharmacy to pick up a prescription and also buying a new hand cream or face-mask
- going to the thrift store to browse and buying a bunch of clothing items because at $5 or $7, why not?
- going for a walk around the block whilst at work to clear my head, and buying a snack or drink at the convenience store
I wasn’t making big purchases, and I didn’t have any subscriptions or memberships that had a big impact on my budget or anything like that. I was just simply spending a little bit of money every day.
What I came up with was the idea to ease into it by spending no money every other day. Alternate no-buy days. My first thought was that if I wanted to buy something I would just buy it the following day, and that perhaps it wouldn’t be a useful model at all. But I had a feeling that the extra day of waiting to buy something would make me consider it more carefully and perhaps I would realize I didn’t need it after all.
I decided on some ground rules. My necessities would include my bills, groceries, fuel for my car, personal care items like tampons and shampoo, and my membership to the local climbing gym ( I know it doesn’t seem like a necessity, but upon reflection, I deemed that it was a necessity for me as I get so many mental health benefits from climbing a few times a week).
Everything else was off the table.
The first day that I intentionally spent no money was an easy one, I was on annual leave from work and not faced with most of the temptations I get when I’m in my usual routine. But even so, it felt good. As I was planning for dinner I realized I was missing a couple of ingredients to make curry the way that I usually would make it. I grabbed my keys to pop down to the supermarket, then I caught myself and thought about what I could make with what I had in the pantry instead. There were actually so many different options for dinner in my pantry that it’s crazy to think I needed to spend time and money on getting more things to make something in a particular way, just because it was habitual. My curry tasted delicious without the ingredients I was missing!
My second no buy day was a little more interesting, as I was spending the day with my housemate. He needed help buying a couch so off we went to our local Ikea, which is within a shopping center. Everything about a shopping center is built to encourage spending. The campaign images in shop fronts, the window displays, the smell of roasting coffee and freshly-baked muffins, sale signs everywhere advertising 50% price reductions, etc… As we stepped inside, the first thing he asked me was whether I wanted to grab a takeaway coffee before going into Ikea. Of course, it’s such a normal thing to do. Something I would do any other day probably. But the crazy thing for me specifically is that I don’t even drink coffee. When I order coffee it’s embarrassing and I always apologize to the barista. I order decaf because I can’t handle the caffeine, but I also don’t really like the taste so I order it weak, and I don’t drink cow’s milk so I order it with almond milk instead. That’s not really coffee, is it? I may as well not be drinking it. To be honest, I just order this coffee because it’s the only coffee that I don’t mind the taste of. In Melbourne, where I live, coffee culture is really prominent and if you don’t go out for coffee, it’s easy to feel socially isolated. But no, I did not want to get a coffee. I told him about my no-buy day. His reaction? Yeah, I don’t need a coffee either. The only other thing I had to consider on that day was to make sure to validate the parking ticket at Ikea, it’s easy to forget and not care about paying $3 for parking, but since I had rules to follow now, I made sure to remember. That day I saved about $7 by not buying coffee, and not paying for parking. It’s not much, but it’s significant enough to make a difference. If you habitually spend $7-$10 a day on small things like that, you’re potentially spending $70 a week, which adds up to $3640 per year.
As I kept going with my alternate no-buy days, I realized that I was really conscious of my spending on my normal days too. I learned little lessons during my no-buy days that influenced my ability to rationalized spending on normal days. If I couldn’t buy it on no-buy day, it means I didn’t deem it to be a necessity, so why would I buy it today?
I have still spent some money on non-necessities during my normal days, and to be honest, it was often because I felt I had to. Social situations such as being invited for lunch to catch up with a friend from out of town that I hadn’t seen in 6 months, or having a BBQ with a group of friends during the holidays on a day that I didn’t have time to prepare food to bring in advance and had to buy things on the way there instead. With both of those situations, I would have liked to still participate socially but without spending. I would be happy to catch up with my friend as she ate something and then eat something I had at home later. But it’s awkward for people. I tried it once before starting alternate no-buy days, telling a friend that I just didn’t want to be spending any money that week. My friend thought I may be in a bad situation and reacted by offering me money and asking if there was anything she could do to help! It’s crazy to think that you have to be dirt poor to not want to spend money on over-priced sandwiches.
Now that my spending is structured as alternate no-buy days, it’s easier to explain to people around me that I don’t plan on spending any money. It’s also an interesting conversation topic!
I’m doing this intentionally and with purpose, I’m putting money into a savings account and paying off my debts. Who could argue that there is no value in that? I’ve got big plans in the next couple of years that include moving overseas. Having a goal to work towards is great to keep me motivated and I feel good about the fact I’m giving myself the opportunity to make big life decisions based on what I want to do, not based on whether I can afford to do it.
In the last 3 months, I’ve managed to put $4500 into my savings account. It may not be much to some, but it’s the most money I’ve ever had to my name. I’m looking forward to seeing how I go over the next year. I’m planning to take it a step further by committing to some no-buy weeks and by the end of the year some no-buy months. As I level up as a personal finance guru, I’ll post some subsequent articles on my learnings through-out this journey!