The No Spend Month

One of the best methods to stay accountable for your spending is to frivolously track and be conscious of your monthly total expenditures. One way in which I do this, besides a budgeting app, is to choose one month of the year and challenge myself to get by with just the bare necessities (the simple bear necessities).

This year I did my no spend month in February and I may try and do another one in November. By making a conscious choice to limit spending to only what is required to get by, one can be inspired to permanently remove an unnecessary expenditure they have learned to live without. In addition to encouraging a minimalist lifestyle the no spend month allows one to realize their true saving power. Getting out of the paycheque to paycheque funk may really be as easy as removing all unnecessary spending for a month and reevaluating previous spending habits that we have proven to ourselves we can live without.

I challenge anyone reading this to have their own no spend month in hopes of enlightenment and a refreshed perspective on their own saving potentials.

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The Art of Saving

Whether your financial goals include retiring early, taking plenty of vacations, or buying a new toy, all working adults should agree that instituting a savings plan for these things is essential. Am I saving enough for retirement? How much do I need to sock away to go on vacation? How much is acceptable to spend on leisure items? All of these questions are quite personal and therefore differ on an individual basis, but the implemented savings plan should be essentially identical.

There are two basic saving methods (apart from not saving entirely) that one can implement to reach personal finance goals.

  1. Pay off expenses first, save the rest.

This method is by far more popular but I feel that it is inefficient in enabling one to meet their financial goals. This method prioritizes expenses over savings and enables one to save little or even nothing if it means that expenses get paid. It is no wonder that the average Canadian savings rate hovers below 6% of gross income.

2. Pay yourself first, then pay off expenses.

This system of saving is what I believe all working adults should strive towards. By prioritizing saving over expenditures one affirms the ideology that one’s own retirement, vacations, and leisure spending money are more important than other expenses. By forcing yourself to pay yourself first, and then expenses last, one cannot lag behind on savings goals. In my opinion the best way one can implement this saving strategy is through automation. That is, setting up an automatic savings contribution plan corresponding with your pay schedule.

Your own personal savings goals I cannot comment on since these are highly dependent on personal situations, but I can suggest the Pay Yourself First method of saving for those goals. If you and your significant other want to take an annual vacation that will cost roughly $3,000 you should set up automatic contributions of $116 bi-weekly to a savings account for that specific goal. If you wish to save 15% of your income for retirement you should set up an automatic contribution of 15% of your paycheque each pay period for that specific purpose.

It really is that simple.