There are three inevitabilities in life: death, taxes, and spending way too much money on unnecessary impulse buys. It’s so easy to shell out $100 on a pair of pants or some fancy cocktails without even thinking about whether you can afford it. That’s why so many people have begun taking the “no spend” challenge, a trendy approach to managing personal finances by cutting wasteful spending. While this challenge is becoming increasingly popular, it still has detractors who are more skeptical about its long-term effectiveness. Here’s why people are taking the “no spend” challenge and if you should consider doing the same.

What Is a No Spend Challenge?

If you’re thinking about taking a no spend challenge, the first thing you want to do is set a personal goal. This could mean saving enough money to pass a certain threshold in your bank account or afford a new car. You’ll also want to set a timeline for yourself, whether a week, a month, or even a year. No spend challenges are meant to be temporary fixes for getting your spending back on track, rather than a permanent change. You can easily determine whether the challenge is working with regular check-ins by giving yourself a finite time frame and an exact goal.

No spend challenges aren’t as extreme as their name may imply. You’ll still spend money pretty regularly, albeit less wastefully. While taking this challenge, all of your money should go exclusively toward essential purchases such as groceries, your mortgage, and medicine. This means cutting back on expenditures such as dining out, attending concerts, or buying new furniture, even though all of those things may bring you happiness. Essentially, this boils down to going on a diet for your finances.

The Benefits of No Spend Challenges

The most obvious benefit of a no spend challenge is saving money. Think about all of the purchases you absent-mindedly make every day — $5 for coffee, $3 to add avocado onto your lunch, $20 for post-work drinks, $40 for that new shirt you’ve been eyeing, which is finally on sale. While each of these purchases may be small on their own, they add up to hundreds of dollars every week that could be put toward essential bills.

By temporarily cutting certain items out of your life, you might learn more about what daily purchases have actually been eating away at your finances. For instance, you may find that you don’t need to buy that morning cup of coffee, which could end up saving you $5 a day, $35 a week, and nearly $2k each year. Suddenly, that money is freed up to pay off a month’s rent or invest into your retirement fund. And that’s just coffee — you could save tens of thousands of dollars by cutting back on new clothing, alcohol, and other common purchases. The key to a no spend challenge is willpower. You make the decision to stop those sorts of purchases, and you stick with it.

The Drawbacks of No Spend Challenges

One of the biggest criticisms of this frugal mindset is that no spend challenges don’t set people up for long-term success. This all-or-nothing mindset makes it difficult to find a good balance between financial stability and personal happiness. If you’re taking the no spend challenge, then you’re depriving yourself of things that bring you joy in the name of paying off bills. Think of the no spend challenge like a fad diet — you may eat salads for an entire month so that you can go back to eating cheeseburgers the next month. This approach helps you lose weight in the short term, but it doesn’t actually teach you how to eat healthier.

Critics of the no spend challenge recommend taking a more moderate approach to your finances, such as creating a balanced budget at the start of every month. Meal prepping is another fantastic way to cut down on the high cost of eating out while still enjoying delicious food made at home. Or, if you want to update your wardrobe, consider visiting a secondhand store instead of buying new clothing. All of these are small ways to cut down on wasteful spending without eliminating the things that make you happy.

Advice for a Successful No Spend Challenge

In addition to setting a goal and timeframe, there are other ways to increase the chances of a successful no spend challenge. First, look at the time of year — it may be unwise to start a no spend challenge in July when you’re about to head out on summer vacation. It also probably isn’t great in December with all the holiday shopping you’ll do for your family and friends. Try to pick a month like March or October when you’re less likely to be making such lavish purchases to begin with.

If you see something you really want to buy during the challenge, don’t cave in. Instead, create a wishlist of items that you can purchase later on. That way, when the challenge is over, you can look at the list with a less impulsive mindset. Also, don’t deprive yourself of having fun during your no spend challenge. Instead, seek out more affordable means of entertainment, like free concerts in the community park. Treating yourself to these fun activities helps keep you sane and makes the challenge more likely to succeed.

Finally, start small. One of the biggest mistakes people make when embarking upon a no spend challenge is limiting themselves too much. This is especially true for those who’ve never done a no spend challenge before and may be shocked to find out how difficult it can be. Allow yourself flexibility when starting a no spend challenge, such as budgeting $100 each week for unessential items. This little bit of leeway makes transitioning into this “no spend” mindset easier and helps you adapt to a more frugal lifestyle.

“Spaving” may sound like a way to fill in potholes, but it’s actually a term related to your personal finances. This recently-coined portmanteau combines the words “spending” and “saving,” and is based on the belief that you should spend money upfront in order to save more in the long run. There are those who’d argue the opposite, however, claiming that spaving only increases the risk of falling into debt. So, is spaving a panacea for your money woes, or is it just a pitfall that too many gullible people fall victim to? Here’s what you should know and whether you should try it out.

What Is Spaving?

Think of spaving as spending more upfront to lessen the total average cost of each item. For example, you may buy two boxes of cereal to get the third free. Benefits may appear immediately or possibly even years down the line, depending on the purchase. Some critics, however, claim there are no real benefits to be had, and that spaving is no more than a clever marketing tactic that helps the manufacturer far more than it does the consumer.

Common Ways to Spave

One of the most common spaving techniques is spending “X” amount of dollars in order to get free shipping. Let’s say you’re buying a $20 item and need to spend an extra $10 for free shipping — otherwise, shipping will cost you $8. After careful deliberation, you decide to throw in another $20 item, because $40 for two items sounds way better than $28 for just one. This is the perfect encapsulation of spaving; spending more than you were initially intending to in order to lower the cost of each average item.

Other ways to spave include buying an annual subscription to a streaming service rather than paying monthly, as that lowers the total cost per month. Another method is to pay substantially more money for a high-quality product. In this case, the expectation is that better products last longer, meaning you won’t have to deal with the hassle of replacing flimsier models more frequently.

Many people also unknowingly participate in spaving by taking advantage of retail sales. Retailers often use tactics like “buy one, get one” and “spend X dollars for a free gift,” as it attracts potential customers. Anyone who pulls the trigger on a sale like that is paying more money than they intended now rather than risk paying full price after the sale ends — this too is a form of spacing.

What Are the Drawbacks?

Critics deride spaving as little more than a marketing tactic that forces the consumer to pay more money than they had initially budgeted. Spending that extra $20 to earn free shipping may seem like a win to some, but nobody is forcing you to buy that second item and spend double the original plan. In essence, spaving boils down to a fear of missing out more than anything else, as there are far better alternatives for managing personal finances. Those who spave often are also at risk of developing excessive spending habits, and in extreme cases, spaving can even lead to crippling credit card debt.

Should You Do It?

A lot of financial advisors actually warn against spaving, as the perceived savings rarely add up to a level that makes these purchases worth it. Keep in mind that retailers aren’t trying to help you save money — they’re trying to earn profits.

There are certain circumstances where minor levels of spaving are acceptable, especially when it comes to the essentials. Let’s look at toilet paper — maybe one pack isn’t enough to earn free shipping. In this case, you know you’ll need more toilet paper down the line, so adding a second package for free shipping is within the realm of reason.

But when it comes to buying new clothing or a brand new kitchen appliance, don’t allow yourself to be lured in by clever advertising techniques. Just because you see a new shirt on sale for 50% doesn’t mean you need to pull the trigger, as nobody will be forcing you to pay full price for that same shirt after the sale ends. If you find yourself tempted by situations such as these, maybe sleep on it. If you end up pulling the trigger anyway, you should pay with cash if possible, as that eliminates the potential for credit card debt.

The word luxury evokes images of fast cars, plush bathrobes, and endless spoonfuls of caviar, but luxuries aren’t just tangible items you’d find in a Hollywood mansion. A broader concept like generational wealth, for instance, is one of the greatest luxuries imaginable. Think of generational wealth as a snowball that grows larger as it rolls from generation to generation. Those who are lucky enough to inherit someone’s assets often experience a greater sense of financial stability than others, though not everyone has the good fortune to reap these benefits. The good news is that there are steps you can take today to help build this wealth and provide for future generations that are yet to come.

What Is Generational Wealth?

Generational wealth involves passing on assets over the course of several generations, which can be utilized decades down the line. Most often, these assets come from a recently deceased individual, though in some instances, they emanate from someone who chose to pass on their assets while still living. These assets include anything with a modicum of financial value — cash, stocks, property, and investments, to name a few — all of which go toward providing your children and grandchildren with greater financial security.

Create an Estate Plan

Estate planning goes a long way toward creating generational wealth, but a shockingly low percentage of Americans — roughly 32% as of 2024 — have an estate plan in place. That leaves 68% of the overall population without a strategy for what will happen to their money.

Having a will is extremely important, even if you don’t have many assets to your name. If you don’t plan, you’re letting the government decide how to handle your assets. Thankfully, there are plenty of easy and affordable ways to write a will without relying on expensive legal consultation; companies like LegalZoom charge just $69 to create a basic will. By putting an estate plan like this in place, you’re ensuring that your assets will end up in the right hands going forward.

Become a Homeowner

Owning a home is easier said than done, and not everyone has the financial means to do so. But those who can afford to become homeowners are setting up future generations for major financial success. When you pass on your home to the next generation, one of two things may happen. Maybe your descendants flip the house for a substantial amount of money. Another option is that they move into it themselves, which frees up assets to be spent elsewhere. Either way, your descendants are looking at a windfall of hundreds of thousands of dollars, which can alleviate tremendous financial stress.

Invest Long-Term

Compound interest is a wonderful tool that helps you grow your wealth without much risk. The more money you invest and the longer you wait, the greater the benefits will be in the end. If possible, you should consider investing between 10 and 15 percent of your salary into these long-term investments and letting that interest grow for as long as you can possibly allow. When you finally withdraw the investments, you can use them to pay for expenses later in life or pass them on to the next generation.

Some of the best long-term, low-risk investments include certificates of deposit, which mature over the course of three months to five years on average and offer higher interest rates than most savings accounts. Treasury bonds are another excellent option, which mature over the course of several decades and are backed by the U.S. government, so you needn’t worry about losing that initial investment. Market-wide ETFs are another strategy to consider. In this case, you’re not buying stock in one company; you’re investing in many, reducing risk in the process.

Be Open About Discussing Money

Many consider talking about money taboo, but this reluctance is causing more harm than good. It’s best to maintain an open dialogue about financial matters for a number of reasons. First, if your descendants know what they can expect to inherit, then that allows them to plan ahead and better allocate their own money. These discussions may also allow you to impart financial wisdom to future generations that only comes with experience and age. If you keep money matters too close to the vest, then your kids may end up suffering from the same mistakes you made all those years ago.

Purchase Life Insurance

Life insurance offers future generations tax-free benefits that take effect after you pass on. This can be used to pay for end-of-life expenses and provide for your family if you were the major breadwinner. Various types of life insurance plans include term life insurance that offers protection for a certain period, whole life coverage that lasts indefinitely, and universal life policies that allow you to manage the amount of money you contribute each year.

Set Up a Trust Fund

Trust funds are an excellent tool for protecting your money from being immediately squandered after your passing. Unfortunately, some financially irresponsible relatives may waste their entire inheritance in the blink of an eye. But if you set up a trust fund, you can make sure that those descendants only receive a certain amount of money each month, or that they only gain access to the account after reaching a certain age. These trust funds promote financial responsibility, increasing the odds of there being enough leftover assets in 10 or 20 years to pass down to future generations.

Issues With Generational Wealth Transfer

Generational wealth is only beneficial if the funds are managed properly. Unfortunately, an estimated 70% of families lose this wealth by the second generation, and 90% by the third generation. This loss of funds is attributable to a number of factors. Maybe it’s due to a lack of financial education, which is why it may be beneficial to bring in a financial advisor to speak with your descendants. Another issue is with the present generation, as many people feel that their kids should work for their money and don’t deserve charity. But don’t look at generational wealth as a charity case, but rather a means of supporting your loved ones financially so that they can pursue their passions without stress.