Creating and sticking to a budget is not always easy, so how can you kickstart your motivation to better manage your finances?
According to a recent study by NAB, almost one in five adults in Australian are living pay to pay and rarely or never have any money left at the end of their pay cycle. This means that almost one fifth of the nation does not have a savings plan in place or money saved up for emergencies.
If you find that you fit into this category, then it is time to make some changes and that can start with a spending freeze. But what is a spending freeze and why should you consider trying it?
A spending freeze is a period of time during which you stop spending. Now while it is almost impossible to spend absolutely no money for two weeks as you have electricity, water and transport bills as well as groceries, the goal is to keep it to an absolute minimum. Even though you will still have a few bills and spending on essentials, a spending freeze can be an amazing way to re-evaluate financial priorities, appreciate what you have and boost your savings account.
So what do you need to start a two week spending freeze?
Decide beforehand where the money saved will go
It is important to have an end goal for the money you save so you don’t end up blowing the saving at the end of the freeze. Think about setting up an emergency fund, making a lump-sum repayment on a debt or something similar. To give you some motivation, there are a couple of calculators on our website that you might find useful. The Savings calculator allows you to input what you are able to save each week and then project it over a period of time to see what it adds to. Achieve my savings target gets you to input a target savings amount. You can then nominate a time period to see what you will need to put away each week.
Look through your pantry
How often do you go through your pantry and take inventory of what you have? Pull everything out and see how many meals you can make with what you have. Also look in the freezer to see if there is any meat/meals you can use. Plan meals for the two weeks, and stock up on what you’ll need to make them.
Fill your tank up
Before the spending freeze starts, head to the petrol station and fill up or buy enough public transport credit to last you. You can even pre-pay any bills that will be due during that time.
A spending freeze does take planning and discipline, so why should you consider doing it?
1. Jump-start your savings
Depending on how much you spend on non-essentials every week, the two week freeze could you give you a big head start on your savings. Before doing the spending freeze, you may not have any idea how much extra money you spend on unnecessary items every week. With a spending freeze, you essentially get that money back so that you can put it toward your financial goals.
2. Get your budget back on track
You may not realise how much your small expenses are really costing you. When it comes to your budget, information is power. Being able to see where you’ve been overspending – is a great way to take control of your money and improve your budget for the future.
3. Build your willpower
The more you use you willpower, the stronger it will become. After the two week freeze you may find that you are able to resist impulse buys and start to question whether you really need to purchase a particular item.
4. Learn to use your pantry
As mentioned above, many people could have dozens of meals sitting in their pantry and freezer and not even realise it. Being forced to live on what’s available for two weeks can get you in the habit of utilizing your pantry and getting creative with ingredients you have on hand. It can also help cut down on grocery spending.
5. Focus on what’s important
During the two week spending freeze, instead of spending time out shopping, you can focus on what is important to you and spend more quality time with friends and family. Instead of going out to an expensive restaurant, you can invite all of your friends over for a pot luck party where everyone contributes a dish. Instead of going to the movies, you can have a games night with your family.