No-spend challenges have seen a rise in popularity in recent years, largely driven by social media platforms. These challenges involve participants committing to avoid spending money on nonessential items for a predetermined timeframe.
During a no-spend challenge, individuals typically continue to pay for essential expenses such as groceries, gas, and monthly bills. Discretionary spending on items like dining out, shopping, and entertainment is generally restricted.
Participants report that these challenges help them save money and identify areas where they might be overspending. By cutting back on nonessential purchases, they can redirect funds toward financial goals.
To participate, individuals often begin by defining specific financial objectives. Common goals include building an emergency fund, opening a high-yield savings account, paying down debt, or saving for a special purchase.
According to the Urban Institute, even a small emergency fund of $250 could help reduce the risk of eviction or missing important bills. High-yield savings accounts currently offer interest rates as high as 4% APY.
Participants set their own timelines for no-spend challenges, which can range from a few days to a full year. They establish ground rules that outline approved expenses and purchases to avoid.
Approved expenses typically include monthly bills, groceries, gas, and essential personal items. Purchases to avoid often include dining out, fast food, alcohol, salon services, and entertainment or travel expenses.
Planning ahead for meals and free activities is recommended to help participants stick to their challenges. No-spend challenges are not considered long-term financial plans but can provide short-term savings opportunities.