Having trouble controlling your expenditure? A spending ban can help you better control your money. Read on to learn more about it.
Ever heard of a spending ban? A spending ban, also known as a spending diet or shopping fast, is a saving method wherein you cut down drastically on your expenditure in order to get your finances in place. Whether you want to save more money to achieve your goals faster or you want to pay off your debts soon, a spending ban can help you achieve the desired results.
So, will a spending diet work for you? Will you be able to reach your financial goals by cutting down all your wants and directing the saved amount towards your goals? Or will you feel deprived and end up spending a whole lot more on impulse buys?
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Just like crash diets and high-intensity exercise programs for weight loss, a spending diet has its advantages and disadvantages. If you really need to succeed in this endeavour, you need to lay down a clear set of rules, understand why you are following it and prepare a solid plan.
Rules Of A Spending Ban
First and foremost, a shopping ban doesn’t mean you cut out all of your expenditure. You just stop spending on the non-necessities. These non-necessities vary from person to person. However, on a general note, non-necessities refer to the stuff that you survive without, like a magazine subscription, new clothes, home décor stuff, etc.
Here’s what you must do before you begin planning your spending ban:
- List down all your necessary monthly expenses. Necessary expenses include rent (if you’re living in a rented accommodation), transport/fuel, utilities, medical costs, groceries and such.
- If you have any debts (such as Credit Card bills), include the minimum payable amount as a part of the list.
- Ensure that you have an Emergency Fund before you begin your spending diet. In case you don’t have one, you’ll need to stash money into an emergency fund during the ban. Add this amount to the list as well.
- Once you’ve compiled the necessities list, tally up the cost. Compare the total with your income and determine the amount that you’ll be able to save. For example, if you earn Rs. 20, 000 every month and your monthly necessities cost Rs. 10, 000, then you have the bandwidth to save Rs. 10, 000 every month during the ban.
Here are the rules that you need to write out for your ban. Also, don’t forget to pin it somewhere visible, so that you are constantly reminded of what you’re trying to accomplish.
- Time frame – You need to set a time-frame for the ban. Ideally, we would recommend that you start small. Try it for a month and see how well you do. If you succeed, you’ll want to continue the ban. On the other hand, you are likely to give up easily if you set a long-term ban at the start.
- List down your monthly essentials – What are the necessities that you spend on every month? This includes your house rent, utilities, fuel, transportation and other such stuff. Check if you can cut down on any of these. For example, if you buy meat every week, you can probably buy meat every alternate week instead.
- Where are you going to put the saved money? – You wouldn’t want your money to rot in your bank account, would you? Besides with rising inflation rates, it isn’t wise to leave your money in your bank account. Instead, you could put all the money that you save to good use. How about using it to pay off your outstanding debts or investing it in fruitful ventures? If you set specific goals for the saved money, you are more likely to stick to the spending ban.
- Plan for contingencies – An unexpected medical emergency or a broken appliance or car can interrupt your spending ban. So, before you begin the ban, you need to have a plan for such emergency situations. Either you should have an emergency fund in place or you should dedicate a small amount of money as an emergency fund during the ban.
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Benefits Of A Spending Ban
A good thing about going on a spending ban is that you’ll have to change your habits for the entire length of the ban. For example, if you used to go to the mall and shop on weekends, you’ll have to find another time pass for weekends which involves no expenditure. Here are few other benefits of going on a spending diet:
- No more impulse buys – We all have bought stuff out of impulse and later realised that the purchase wasn’t necessary. If you strictly adhere to the ban, you’ll stop buying unnecessary stuff when you go to the mall or supermarket.
- Less waste – With a spending ban, you’ll have to make do with whatever you already have. Most of us usually end up ordering-in from restaurants and most of the fresh produce stocked in our refrigerator often ends up in the garbage. But with the ban, you aren’t allowed to spend on outside food, so you end up using up the food in your refrigerator before it becomes waste.
- Make the most of what you have – Since you aren’t allowed to spend on stuff, you have to stick to what you already own. So, if you have a party to attend, you will have to work with the clothes in your wardrobe. It’s like a challenge to make the most of what you already have.
- Time saver – With the ban in place, you’ll save a lot of time while de-cluttering and cleaning your house. Since you’ll be buying a lot lesser stuff than usual, you’ll be spending lesser time shopping and lesser time in arranging stuff in your house.
- Bid goodbye to your bad spending habits – If you stick to the spending ban for the long term, you’ll think twice before you make a purchase. You will no longer be making random purchases and it will help you save a lot of money in the long run.
Drawbacks Of A Spending Ban
A spending ban is an effective way to get your finances in place and reduce impulse buying, however, it does have its disadvantages as well. Some of them are:
- Overspending before the ban – When you plan to go on a spending ban for a month or more, you’ll feel the need to go for one last splurge session before you begin the ban. It’s like before you start a crash diet for weight-loss when you’ll want to eat all your favourite junk food. You need to resist the temptation and trust that you can get all the stuff you need even during the ban.
- Overspending after the ban – Think of this also in terms of a crash diet for weight loss. Once you’re done with the diet, you’ll be craving so much for your favourite food that you’ll overindulge. That’s exactly what can happen after a spending ban. After controlling your spending for the period of the ban, you’ll want to just go to the mall and splurge. But doing so completely defeats the purpose of the ban. Instead, you could probably treat yourself to a modestly priced reward for completing the spending diet.
- Peer pressure and tension – When you are on a spending ban, you’re going to face a lot of peer pressure especially if you have out-going friends. They are going to invite you for dinner at fancy restaurants, movies and other stuff which involves spending money. And you’re going to have to turn down all the offers. This can create a tension in your relationship. But, you can always tell them why you’re doing so and they’ll surely understand your point of view. You can also suggest alternatives such as watching a movie at home or a pyjama party at home.
- Ignoring your needs – You may get so caught up in the ban that you may start to ignore your needs along with your wants. When you are on a spending ban, you need to learn to differentiate between your needs and wants and cater to your needs at the same time. For example, fancy underwear is a want, but getting new ones to replace your worn-out underwear is a need. So, don’t ignore your needs to save more money.
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Make The Most Of The Spending Ban
If you want a spending ban that is worthwhile, it has to make lasting changes to your financial habits. No yo-yo dieting with your money. Your effort has to be worthwhile in the long run. Here’s how to make a lasting change in your financial habits even after the period of ban:
What triggers your spending behaviour? You need to identify this. What was the reason that you bought something that you didn’t need? Was it an advertisement or a promotional email or your mood? Think about all the unnecessary purchases you’ve made so far and identify the trigger. Once you’ve identified the trigger, you can figure out ways to eliminate or avoid them.
How Did It Help You?
Thinking about how much the spending ban helped you accomplish your goals will also motivate you to make responsible decisions in the future. For example, the spending diet helped you clear your Credit Card debts sooner or you were able to put more money in your investments. Keep these as a motivator and stop yourself from spending unnecessarily in the future.
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Though not the ideal solution for everyone, a spending ban is perfect for those who have trouble controlling their expenditure and shopaholics. A spending ban can help sort out your finances and also teach you how to manage money better.