Oct 09, 2019 / Money Tips
They say it takes 21 days to break a bad habit. And poor spending habits are among the most common bad habits of them all. Have you ever thought you were in a good financial position, only to reach the end of the month and you’re short on money? When you go back and actually look where your money went, it’s easy to find times when you could have saved instead of spent. If this sounds familiar, a financial fast can help you break bad spending habits and save more money.
Similar to an actual fast, a financial fast means deliberately monitoring and minimizing your spending to the absolute essentials. Get ready to cut back on all of those small expenses like entertainment, dining out, and new clothes. The original idea of Washington Post columnist Michelle Singletary, a financial fast is designed to help you break bad spending habits and replace them with new ones by limiting spending to the bare essentials needed to sustain life.
Start your financial fast by setting aside 21 days of limited spending. It doesn’t need to start today or tomorrow, but it should have a definite beginning and end date. Next, start trimming down your spending to only things you need—medications, food, rent, utilities and other necessities. Finally, it’s time to start building a budget to track your spending each day.
Financial fasts have several benefits including lowering debt, developing good financial habits, and helping you build a financial plan. Here are three specific benefits that may help you.
1. Reduces credit card expenses – With fewer purchases over your 21 day fast, you’ll likely use your credit card a little less. You can take the money you’ve saved to pay down the card payment, further stabilizing your finances. Or, you can find a dedicated place to put your money, like a money market account (more on that later).
2. Reduces the temptation to spend – By establishing a ground rule that you’re only allowed to purchase things you need, you can establish limits on what you want to buy. Taken over 21 days, it helps reinforce positive spending habits and minimizes the temptation for impulse buys.
3. Forces you to track spending – Much of the workforce lives below $50,000 a year (roughly 48% of workers make less than $30,000 a year), so this advice might not be as easy to implement. But for those living paycheck to paycheck, a financial fast can help you set limits through tracking your spending and laying out a budget.
There are a few steps that you can proactively take when implementing your financial fast. These tips can help you stay focused and increase your chances of successful saving.
1. Qualify needs and wants – Certain things, like a fresh pair of shoes to replace ratty old ones, might be a need, while buying a new pair of shoes because you felt like it is more of a want. Understand the difference and be practical in your spending implementation.
2. Try making payments in cash – Keeping cash in your wallet forces you to cut back on impulse buys overspending when getting groceries or other flexible costs.
3. Invest your savings – Invest the money you aren’t spending. Consider opening a money market account with your bank and deposit some or all of your saved cash.
With the holiday season approaching, there’s no better time to try a financial fast. While your financial fast might not solve all of your money problems, it can help you establish needs and wants and help you moderate them against each other. When you’re done with your fast, you can ease your way into old habits, but with the insight of how much it takes out of your budget each month.