“No Spend November” has become a thing in the personal finance community over the past few years. But you don’t have to go on a crash spending diet in order to keep your finances in check. Instead, use it as an opportunity to examine your money values.
No-spend weeks have also gained steam and can be practiced at any time. A no-spend week could be literal, whereas No Spend November is more figurative.
As generally practiced, No Spend November means you can’t buy anything extra all month. So you can buy groceries, fill the car with gas and pay your rent or mortgage, but you can’t partake in social activities that cost any money.
And you probably can’t splurge on a fancy coffee, though that’s a gray area. Does that count as a necessary food and drink expenditure or is it discretionary?
See related: 9 tips for sticking to a holiday budget
That way of thinking is missing the main point
The best way to approach No Spend November is to become more conscious about your spending. I don’t think depriving yourself of everything that’s fun is a healthy or sustainable strategy.
Start by writing down a handful of words or concepts that serve as your money values. Some possible answers are “freedom” and “security.” You could also address this with goals in mind, such as saving for retirement or your kids’ college educations. Or you could consider how money plays into your daily life.
Maybe paying someone else to clean your house is worth it to you because you dread dealing with it at the end of a busy workweek and you’d rather be present with your children. That’s an example of how money can buy you time (and a clean house).
Next, compile a daily spending log for at least seven days. It’s important to be as thorough as possible because you can learn a lot in the process. Write down everything you spend, whether it was by credit card, debit card, cash, check, Venmo, bank transfer or something else.
After a week, review this list in detail. Compare it with your money values. I think you’ll be shocked at where your money is going, and how often your spending fails to match your values.
Everyone can benefit from this, and if you have credit card debt, it’s even more important because credit card rates typically fall in the 17-25 percent range. That’s very expensive debt.
The main goal of a no-spend week or month should be to become more conscious about your relationship with money. The lessons you learn could last a lifetime if you apply them properly.
Too many people view No Spend November and no-spend weeks as crash diets. Then, much more often than not, they relapse. They were so shaken up by denying themselves that they go into buying overload and end up worse off than they were initially, like a dieter who starves themselves for a few days and then gorges on everything in sight.
See related: Don’t fall into these underspending traps
The latte factor
The latte factor is a popular personal finance tool created by the financial expert and author David Bach. The story goes that if you skip your $5 daily coffee you’ll end up with more than $2 million over 50 years (assuming you invest the money and earn a 10 percent annual return).
Too many people take this literally, however. The latte is a metaphor to me. It’s not that drinking coffee – even somewhat expensive coffee – is inherently bad. The true moral is that you should identify money leaks that don’t match your money values and cut back on those.
That’s a big difference. If you love that morning coffee and it really gets you going, puts you in a better mood, connects you with friends and fuels you to work with great purpose, then it’s worth it. What isn’t worth it are those $5, $50, even $500 money leaks that don’t add much if any value to your life.
This concept is also core to the FIRE movement (financial independence, retire early). In “Your Money or Your Life,” the 1992 book that launched this way of thinking, Vicki Robin and Joseph Dominguez wrote about life energy and encouraged readers to think about how many hours they needed to work to afford a given purchase. That’s a powerful thought.
Personal finance, more than anything else, is about choices. And practicing the discipline to make a series of (mostly) correct small decisions over and over for many years until you’re wealthy.
That’s what No Spend November should be about – matching your spending with your values. And you won’t know until you take the time to detail your money philosophy and assess how closely your spending lines up.