What's a spending freeze?
Have you heard of a spending freeze? It's a period of time, usually a couple of weeks or even a month, where you only focus on funding your "needs." In other words, you still pay your bills, buy groceries to feed the family and take care of any medical needs. But you temporarily cut out any "wants," such as Starbucks stops, fast food visits, new clothes, etc.
Why should you do a spending freeze?
The first reason to do a spending freeze is to help you hit the "reset button" on your budget. Did the holidays leave you wishing for another paycheck, or just a little worn out financially? It's a short period of lots and lots of purchases, and it can feel like you're just spending, spending, spending. A freeze month will give you a "recovery" month.
Second, a spending freeze month can help you save a good amount of cash in a short time frame. Depending on how long you keep it going, that savings could be a couple hundred dollars or even a thousand. It's a great way to get your emergency fund started, or just to build up a little buffer. It can even help you fund a trip or a down payment on a car. Not bad, right?
Third, and potentially most impactful over time, practicing this needs versus wants exercise can help reset your money mindset.
Before we started our first spending freeze, both my husband and I had become complacent. We'd settled into a pattern of not paying too close attention to finances. It wasn't a big deal to grab a cup of coffee at Starbucks, or to pick up an $8 or $10 lunch here and there. We thought nothing of tossing an extra package of Oreos in the grocery cart. But guess what... those "no big deal" purchases add up! A $4 cup of coffee three times a week adds up to $624 a year!
After the spending freeze, $12 a week in coffee went down to about $3 a week in coffee brewed at home. Bringing lunch and using up leftovers cut down what was thrown out, versus buying when we weren't prepared, saved us big time. It kind of makes you feel like you got a raise!
How to do a Spending Freeze: The Rules
Set yourself up for success with a little planning. Here's how to get started on your spending freeze-
- Decide how long you'll do the freeze. Will it be two weeks? A month?
- Decide on the ground rules with your spouse, and shake on it. Write it down if it's easier. What's the list of "wants" you'll eliminate during the freeze? Is it doable for each of you? Are you each willing to commit to this?
- Get the cash out for your non-auto pay items. Using cash will help keep you on budget for each category.
- Plan ahead for your budget categories. What will you really need for groceries? Do you have a weekly meal plan set up to guide your grocery list?
- What's in the pantry and the freezer that you can use up, and keep off the grocery list this month? What can you get by with? This is a GREAT time to get a handle on the amount of food you really have in the house, and use things up before they expire. (I'll go into meal planning in another post)
- Tell people you're doing it. It's way easier to say "No" to going out for lunch at the office when people hear you've committed to a "spending freeze." It's just like when people do a Dry Month, and avoid drinking.
- List the stuff you want to buy as you go through the month. Every time you pass something up because of your freeze, whether large or small. A magazine. That package of Oreos. Those cute boots. Write it down somewhere. Give yourself permission to buy it once the freeze is over. (You probably won't buy half of the list!)
Now go forth, freeze your spending, and save.
Remember, what we're doing here is going back to what you truly NEED, not what you WANT. This will help you prioritize on a regular basis! Whether it's for a couple of weeks or an entire month, you might even find that you do this a few times each year. Are you with me?