When money gets tight, a spending freeze seems like it would be a good idea. There are plenty of frugal bloggers and personal finance experts who recommend spending freezes – taking a break from spending for a period of a week or even a month – as a way to save money.
But are spending freezes a good idea?
Maybe, maybe not.
The idea seems simple enough. Designate a time period in which you won’t spend any money, and then resist spending money during that time.
The problem with that is that there are so many caveats to consider. What about emergencies? What is considered an emergency? What about my regular bills that come up during that time? What about food? What about gifts? You have to consider creating all kinds of exceptions to your no-spending rules. I’ve watched many bloggers and friends craft all kinds of excuses for spending money during their “no-spend” challenges because they could not predict all the expenses that could come up during that time.
The other thing that I have noticed is that folks tend to spend money in preparation for a spending freeze. On the last day before the “no-spend” month begins, they’re loading up their pantries and filling up their gas tanks. And when the freeze is done, they’re out spending large sums of money to replenish their pantries and refill their tanks. It seems to me that if the goal of a spending freeze is to save money, you’re not really saving money this way. You’re simply pushing the expenses to other times. And as I’ve learned, there’s nothing magical about a new month when it comes to budgeting.
A spending freeze can also rock your confidence when it comes to your finances. If you’re unable to stick to stringent no-spending rules, you can feel defeated. Even if you do have a successful no-spend month, you could find yourself getting cocky about your great money-management skills and overspend the next month.
When a spending freeze makes sense
There are times when spending freezes are a good idea. For example, if you are in a true financial emergency – like facing a debilitating illness or job loss – a spending freeze can help you stretch your savings until you can get back on your feet. A quick and tough tightening of the belt can be all that you need to do to pay for an unexpected home repair or other surprise bill.
Spending freezes can also be a good idea if your motivation for doing them is to break yourself of poor habits. If you’re trying to break yourself of hitting the drive-thru window or stopping for a latte every day, then a spending freeze can help wean you off those expenditures.
Spending freezes can also be useful for developing good habits. For example, if you want to learn to be more self-sufficient, a spending freeze can help you do that. Out of food? Go fishing! Kitchen sink has a leak? Fix it yourself using info from your library or the internet. Because you’re not spending money, you learn alternative (and often greener) ways of doing things.
I’ve done a few short spending freezes, and eat-from the pantry challenges. I’ve given up eating out for a month. And I can say from experience that there are some positives to showing some financial restraint. Just don’t trick yourself into thinking they’re a great tool to manage your finances, because they’re not.
The best way to take care of your finances is to establish a system that works for you all year around. Consistency is the easiest path to financial stability.