Tips for Going on A Spending Freeze
I generally don’t encourage going on a spending freeze. Too often people get in the habit of overspending then try to make up for it by going on a spending freeze only to go back to overspending once their freeze has ended. It becomes a vicious cycle that doesn’t end up accomplishing anything. If you’re thinking about going on a spending freeze, first ask yourself why you’re doing it. Is it because you feel guilty for overspending? Or is it because you have a large purchase coming up and you just need that extra push to make the purchase? If it’s the former, I recommend you go back to the basics. Evaluate your spending, make a budget, and get back on track. If it’s the latter, keep reading!
Determine time and money
Figure out how much money you need to save from this spending freeze and how long that will take. Seems obvious, but so many people put themselves on a spending freeze just to see how much money they’ll save by the end of it. If you have a true reason for the spending freeze then you should know exactly how much money you need and be able to calculate how long you need to be on the freeze to get that amount.
Assess your variables
You have two types of expenses, fixed and variable. Your fixed spending are things you can’t change like your rent. Your variable expenses are things you have control over, like how often you go out to eat. Decide what your variable expenses are and determine what you are willing to cut for the set time you decide.
The hardest part of a spending freeze is obviously not spending money. I’ve only been on a spending freeze once in my life and it was for 2 weeks before I bought my house to make sure I had the last bit of money for my down payment (so I wouldn’t have to take money out of my investment accounts). My strategy was simple. I calculated exactly how much I could spend on necessities and made those purchases at the beginning of my freeze. Then I put all my credit cards in a safe place in my apartment where I wouldn’t have easy access to them. Just in case of any emergencies, I allotted myself a small amount of cash.
Remember, don’t make a habit of going on a spending freeze. It should be used very rarely, and only when absolutely necessary. The more often you do a spending freeze, the less effective it will be.