No-spend challenges have become all the rage on TikTok, with financial influencers everywhere advocating consumers swear off discretionary spending for a set period of time — typically, a full month.
First, there was No Spend January. Then came Frugal February. The latest iteration? No Buy July.
Many have criticized spending challenges over what they call the promotion of “deprivation culture.” In other words, cutting out all nonessential spending may be unsustainable because it makes people feel deprived — which could further encourage spending binges in the months immediately before and/or after.
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Annamaria Lusardi, director of Stanford University’s Initiative for Financial Decision-Making, told the The New York Times that July is a particularly bad month for a no-spend challenge given summer is often allocated for relaxation. July could be “more challenging than at other, more structured times of the year.”
In general, however, more financial experts support than oppose the practice, regardless of time of year. While Leslie H. Tayne, finance and debt expert and founder of Tayne Law Group, likened No Buy July to a strict diet, she agreed with certified financial planner (CFP) and content director at SuperMoney, Andrew Latham, that No Buy July is more about disruption than deprivation.
“It’s just a month after all,” stated Latham. Some proponents even argue taking up a spend challenge in July is an effective, bi-annual check-in for assessing progress on any financial new year’s resolutions you may have made.
Here are four reasons Tayne and Latham support No Buy July.
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No Buy July Helps Consumers Take Inventory of Tiny Expenditures’ Financial Drain
It’s easy to inventory that you spent $2,000 on a new laptop; it’s harder to inventory where the heck the rest of your money went. This is because spending a few dollars on Starbucks lattes and Jamba Juice smoothies every few days may not register as a money suck in the moment — but, over 30 days, all those small purchases add up.
No Buy July helps individuals realize how much more money they would have at the end of every month if they cut back on these tiny expenditures.
“A lot of the time, consumers believe they are only spending a few dollars here and there on unnecessary items, but when they take a moment (or a month in this case) to cut out that spending, it can be eye-opening to see the impact of what feel like small purchases on their finances,” stated Tayne.
Latham agreed taking a 30-day pause gives people an opportunity to reassess their spending, furthering encouraging “reflection and intentionality.” Most people are surprised by how many unnecessary, impulse buys they accrue.
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No Buy July May Help Increase Savings
This one admittedly sounds kind of obvious, but that doesn’t make it any less important to point out. A huge perk of No Buy July is that individuals can pay themselves at the end of the month with the savings they accrue.
“Put it into a high yield-savings account,” stated Tayne. “Interest rates are still decent where this option allows the consumer to not only increase their savings but also get a return on investment.”
And who doesn’t love a two-fer?
No Buy July May Promote Debt Repayment
As a financial attorney focused on helping clients pay down debt, Tayne is particularly adamant that clients allocate funds toward a debt sum instead of spending money on unnecessary items. By cutting back spending, No Buy July helps clients prioritize credit card debt and student loan balances that will come back to bite them in the long run over their desire for superfluous items that just feel good to purchase in the short term.
“Many clients I see struggle with managing debt from impulse spending, a lack of tracking debt, along with seasonal splurges, so taking the time to cut that spending type out entirely and instead paying down debt can help reduce the overall debt sum tremendously, along with a mental break from increased bill balances,” stated Tayne.
No Buy July Gives Consumers a Sense of Pride
People often know what they have to do to help their finances, but finding the motivation to actually do it can be particularly difficult. Which is why sometimes you have to trip the system and create your own momentum.
Completing a no-spend challenge can make clients feel proud of themselves, “which can increase motivation to continue on a successful path towards learning better financial habits,” stated Tayne.
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This article originally appeared on GOBankingRates.com: I’m a Financial Expert: 4 Reasons I’m in Favor of ‘No Buy July’
