Look, I get it. We’re all rolling into 2021 utterly sick of this darn pandemic and not being able to do anything. I know personally, I’m going completely stir crazy. So it seems insane that 20201 should be a no spend year, especially when restrictions should be easing. Right?
Why 2021 Should be a ‘No Spend Year’
2021 is actually the perfect year to do a no spend challenge. Seriously.
First of all, 2020 wasn’t the same for everyone. A lot of people lost their jobs, or had business close. Even more people are struggling with all the extra responsibilities.
In 2020, your savings might have taken a hit, or even worse, you dipped into your emergency fund. Maybe you even had to take on debt to get by.
If you’re going into 2021 doing a bit better than you were doing in 2020, then it might be tempting to spend the extra. Maybe you got your job back or your investments grew. Don’t do it!
Instead, make 2021 your no spend year.
Things will still be closed
Guess what, we’ve made it to 2021 and there are still a lot of restrictions. In many parts of the world, a COVID second wave is in full swing and we’re dealing with lockdowns and heavy rules.
Even with vaccines rolling out, it’s still going to take time for things to return to normal. In fact, most experts are saying that it will take until September 2021 at least to really start to ease restrictions.
That means 2021 is not going to be a good year for travelling, partying, events, or even time with friends.
We’ll be lucky if summer 2021 events happen. Plan accordingly, or use it as a way to make your no spend year more successful.
Your savings might need a boost
Most people weren’t lucky enough to get richer in 2020. A lot of people, even in small ways, ended up saving less, or even burning what they have.
If that sounds like you, then use a no spend 2021 to boost those savings and get back to where they should be.
Even if the pandemic didn’t affect you too badly, it’s easy to see why emergency funds should be larger than the standard 3 months experts suggest.
Low interest rates
Right now, interest rates are really low. It’s a great time to consolidate debt and make a bigger impact on your payoff. If you do it right, you can save a tonne of money on interest.
But, if you’re carrying debt it does eventually have to be paid off. Take advantage of the low interest rates of today and a no spend 2021 to pay off as much debt as possible.
That way when the market rebounds and intertest rates go back up you won’t be caught paying even more.
A good time for investing
If you did manage to save money, instead of spend more, in 2020 then don’t let that go to waste in 2021. The last few years have been great for the stock market, and it’s still a great time to invest your money.
While low interest rates mean traditional savings accounts aren’t as profitable, you could put that extra money in retirement savings (to offset your income tax), stocks, or mutual funds.
Some things are really expensive
Have you noticed that the cost of goods have gone up since the pandemic? One great example is lumber – our local hardware stores are currently selling it for 3x the pre-pandemic prices.
Basic economics tells us scarcity drives up costs.
Now some expenses, like the rising costs at grocery stores, are hard to avoid. But for other consumer items 2021 is a great year to hold off buying those everyday splurges.
This article shows a few items, including clothing, that are expected to be more expensive in 2021.
Focus on what matters most
If 2020 taught us anything it’s that human connection is really important. Even introverts get lonely from time to time, and most of us missed celebrating holidays with our families.
2021 may not be back to normal, but just like last year we should see an easing of restrictions over the summer. Unlike 2020, though, we should be able to at least see our families over the holidays in fall 2021.
Instead of buying things, or spending money on expensive outings, prioritize those smaller gatherings with the people you missed. No big spending required – just time.
How to get started with a no spend year in 2021
So you’re sold – but how does it work? Here’s some tips to make your no spend year (also called a no buy year) a success:
- Make a list of rules. That should include what types of things you can and can’t buy, or how you’re going to structure your budget.
- No spend doesn’t mean everything. We sometimes need to buy things, and that’s OK. If you spend all year saving money and still visit your family for the holidays that’s a still a win.
- Get the family on board. Make sure everyone understands that this is the plan, and encourage them to participate with their own money.
- Find alternative activities. If spending money is your go to, make extra effort to come up with a list of things you’d like to do that cost nothing.
- Have a goal in mind. You need some motivation if you want to stay on track! It might be a certain savings goal, or spending a certain percentage of your income. Whatever works for you!
- Make trade offs. Cancel cable and sub for Netflix, trade services with people, or set budgets for categories you want to cut back but can’t live without.
Personally, I’m making 2021 a no spending year for out family. While it doesn’t mean we won’t spend money (we’re currently in the middle of home renovations), it does mean we won’t be spending money on things that aren’t important.