2021 Is the Year To Go Big With Saving Resolutions
By: Sadie Lee
Tags: Covid 19, New Years Resolutions, Saving, Money, 2021

2021 Is the Year To Go Big With Saving Resolutions

What isn’t best for the American Economy might be Best for your personal financial health

I was always a spender. I never had a saving bone in my body. My Christmas money as a kid went towards more toys and shopping, my mall money allowance was spent in its entirety, and my college money went towards flashy clothes and ski passes.

In my early twenties, I woke up, started saving, and I haven’t stopped. I found there were many things that led me to my savings of $24,000, but part of it was a “spending freeze.”

I am an all or nothing person. But what I loved about this “spending fast” is it changed my spending habits indefinitely. I think the number of times the average American actually needs something desperately is few to none.

For my spending freeze, I wasn’t allowed to buy anything for three months except rent and groceries. I didn’t eat out, buy candles, go to concerts, and I wasn’t even buying my beers for late nights with coworkers. The three months took my spending to a whole new level, and I was able to save a few thousand. The rest of the year, I wasn’t allowed to shop for any new clothing, accessories, or really anything to adorn my body because it was my biggest expense drain.

There are 3 ways to do a “Spending Freeze”:

1. The Extreme Way

This is where you realistically budget for your TRUE essentials and only purchase the things you absolutely need like car insurance, health insurance, rent, and groceries.

2. Your Biggest Financial Drain

I don’t drink. I have a weird esophageal condition that makes drinking uncomfortable for me. I usually can see right through someone’s comment of “I don’t really have a money drain.” Having 6 drinks at the bar adds up; I know because I don’t drink.

Buying a few tech gadgets via Amazon? How about the maids who come to clean the house? What about eating out or ordering in? Yes, even fast food counts.

Find your biggest (most frequent or expensive)financial drain and limit that for a year.

3. A Combination

I chose this way because I didn’t think I could do the extreme way for a whole year. But I knew three months was possible. I also wanted to cut down on other added expenses too. So I chose to not allow myself my biggest money drain: clothing shopping for the year, and only 3 months of the more intense version.

Why I think 2021 Is the Perfect year for A Spending Challenge:

The social pressures to spend aren’t here(Thanks COVID-19…).

We have more time to cook, clean, and organize.

It’s a new year to form new habits and new changes.

The Pandemic allows us time to work on a side hustle.

Gone is the pressure for brunch, nights at the club/bar, or paying for luxury vacations!

You can avoid the awkward “we are trying to save money” conversations!

Why I prefer a Spending Fast

I once was a big “go bold or go home” person. This meant I favored extreme workouts, diets, or habit-forming challenges. The difficulty with these kinds of things is that it’s about how I physically felt in your body. Whereas shopping was a behavior that didn’t impact my sleep, mood, or physical feeling.

A spending freeze is pretty easy with the right motivation. Money is fleeting, and I didn’t realize how much money was going towards little things. A $5 latte, a scone from the bakery, an order from a dinner restaurant, new chapstick and gum from Target, a new Cosmopolitan from the checkout aisle, or a new pair of earrings I saw at checkout. I had to cut everything out to realize how much saving was truly possible.

My savings ended up in the tens of thousands, but it didn’t feel like that was possible when I spent so much every month. It took away from me asking, “Where did all my money go?”

What helped me embark on this challenge:

I Educated Myself:

Anna Newell Jones, Author of Debt-Free Living, saved for an entire year and a half and worked herself out of $25,000 of debt. After reading her book, I was so inspired that I jumped into action!

I watched videos on the importance of an Emergency Fund, the FIRE lifestyle, and “smart” vs. “dumb” purchases; I began to look at money and spending a whole new way. The first and most important piece of turning into a saver is the mental shift and new outlook on money and financial literacy.

I learned about the chemicals that go into new products, the cost of fast fashion, and the harm of consumerism on the environment.

I Looked into Minimalism

Minimalism and the aesthetic is beautiful and calming. I started to force myself to see perfume, deodorant, soap, and house products without the label. The reality is I liked the lighting of the products and the way they were organized in the store, more than the product itself. I rarely thought about how they ended up looking half-used or how I might feel if they came in a dull box with no showy lighting. I started to imagine cheap crappy products in my home. They lost appeal next to my newly organized and freshly painted home, and that helped me turn down new items.

Set Financial Goals

I wanted to save up to max out a ROTH. I am in my twenties, the most important years to save for retirement of them all. The money I put in now will return tenfold. But I can never turn back the clock, so the money has to be put in now and every year if I want to reap the benefits of saving in the future. This was my biggest motivator for the challenge, and it kept me going.

Use a friend or a partner to challenge each other

Honestly, I roped in 4 friends to do this challenge with me, and they all bailed in the first week. But this was one of the biggest teachings for me. It would have been nice to have a friend to do the challenge with me.

But I also learned that very few people are actually willing to clamp down on their budget. So all those complaints we hear about not “having enough money” or being “broke” are often self-inflicted choices. Saving is not a cakewalk and to really commit to financial freedom takes work, and you will set yourself apart from all your friends you think are too strapped for this challenge. The reality is, most people just aren’t willing to commit.

Replace spending with other things

Understanding habits is a very important piece of money management. Habits were why I spent every weekend at the mall. Habits are why I purchase Dunkin Doughnuts once or twice a week. Habits are why I would get Starbucks on my way to work. I had to swap homemade coffee or storebought doughnuts. These were small changes to my lifestyle that satiated my cravings and allowed me to continue to save!

I ended up maxing out my ROTH IRA. I didn’t stop there. I also have also saved in advance for 3/4 of the cost of my Master’s degree. Every dollar that in the past would have been lost is put to work. It took an extreme measure for me to analyze my spending habits. I changed how I used my money, and I haven’t looked back since. I have irreversibly changed my money habits for the better. The year flew by and was absolutely worth it. My go-to is now saving every penny, and I occasionally have a fluke moment where I make a purchase! I went from spending to saving and I wouldn’t change a thing.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.