Are You Up for the No-Spend Challenge?

If you're on TikTok—or even if you're not—you may have heard of the no-spend challenge. The idea has gone viral especially among Millennials and Gen Z. It's basically a commitment to pay for essentials only during a certain time period—two weeks, a month, a year—whatever works for you.

If you're into challenges, the idea may be intriguing. On the other hand, it could sound a little intimidating. But if you're up for it, the no-spend challenge could be a real eye-opener and potentially help you save money. It could not only help you hit the pause button on spending, it can also help you to see where your money's been going. No matter who you are or how much you earn, it could be easy to lose track. Here's a real-life example.

Several years ago, I met a client who was single, making a lot of money—and spending a lot of money. During a financial review, she asked me if I'd look at her cash flow. We discovered that not only was she overspending, but she was also using credit cards to pay her bills!

The culprit? She was enjoying life, living in the moment, and for fun, supporting a softball team she was managing. It turns out, she was pouring money into the team, paying for travel, hotels, all kinds of things for the players. She was an engineer with a good salary, but she wasn't focused on her other financial priorities, such as ensuring she had an emergency fund or was on track for her longer-term goals like retirement or becoming debt free. She figured as long as she could pay her bills, it was all good. Wrong. She realized she was in the red and had a lot of rethinking to do.

If this could happen to her, it could happen to almost anyone. That's where the no-spend challenge comes in.

On the surface, the concept is simple. You commit to spending only on things like food, housing, utilities, transportation—all the necessities of life—and to tracking your spending, down to the cup of coffee or pack of gum. Non-essentials like eating out or shopping sprees are off limits. How long you commit to it is up to you, but best to choose a time frame you think you can stick to.

That's the basic idea. But to me there's more to it because, while the exercise is simple, it also could help you:

• Get a grip on your finances and start to feel more in control. This is a chance to rethink your relationship to spending. It's a time to refocus on your priorities and what's really important to you.
• Understand where you're spending—and overspending. By keeping track, it becomes crystal clear where your money is going—what's coming in, how much you're spending, and what you're spending it on. With the numbers in front of you, you can then come to your own conclusions and make realistic decisions on where to cut back if necessary.
• Save for priority goals. These could include: 1) Contributing to your company retirement plan up to the employer match, if offered. 2) Paying down non-deductible, high-interest rate debt. 3) Creating an emergency fund equivalent to at least three to six months of essential living expenses.
• Create a realistic spending plan. Once you know what your spending habits have been, you can make a plan to change them. Set some parameters for spending that are realistic and that you can stick with. Most of all, make sure your new spending plan aligns with your most important short- and long-term goals. And don't forget to build a little fun into your budget.
• Zero in on major long-term financial goals. Spending is about short-term gratification. Pressing the pause button gives you the opportunity to think about longer-term goals. By cutting back in the short term, you'll be saving money. What will you do with it? Maybe you'll decide to put some of that savings toward important goals like saving for a child's education or saving for a down payment on a home.

Would you consider doing this for 30 days? Why not give it a try? To me, the no-spend challenge is not only eye-opening, but could help empower you financially. This new understanding could help put you in control—so you can plan where your money will go instead of wondering why you're always coming up short at the end of the month.

You don't have to deprive yourself financially forever. Think of the challenge as a refresh. Then you could make a commitment to apply this new awareness to the rest of your financial life.

Getting back to my client. Once she understood where her money was going, she made concrete changes. She told the softball team she couldn't cover their travel bills anymore, and you know what? The players decided they could do it themselves. Now in her 40s, her priorities had changed, and she decided her long-term goals were more important and needed her attention. With the money she saved, my client paid down her debts and started contributing more to her 401(k). She made a spending plan that was in alignment with her goals.

Creating a spending plan you can stick to could help you achieve a greater sense of freedom from financial stress and worry. That's a great feeling. So, are you up for the challenge?