By Jessica Haynes.
Frugals. Tightwads. Spendthrifts.
Call them what you like, a community of bloggers, writers and others sick of the consumer cycle are behind a “no-spend” movement.
And with many saving thousands of dollars each year, it’s hard not to get caught up in the message.
So what does not spending actually look like? And why would Australians be interested in taking up the challenge?
Australia has a debt problem. A big one.
Data from Digital Finance Analytics has revealed 20 per cent of “middle-income” Australians have no room in their budget for unexpected expenses.
And last year the International Monetary Fund (IMF) warned that Australian households were potentially on a dangerous debt binge.
So can cutting out all unnecessary spending get you out of debt and make you financial free?
Some people certainly think so.
A London-based journalist did it for a year
Michelle McGagh, a finance journalist from London and author of The No Spend Year made headlines earlier this year after going on a no-spend challenge for most of 2016.
Inspired by the Black Friday sales, and a counter movement called Buy Nothing Day, she decided to cut out all additional spending from her budget.
While she allowed for bills, mortgage payments and a 35-pound weekly grocery allowance for her and her husband, she was not allowed to make a single luxury purchase.
This meant a year with no takeaway coffees or lunches, no pints at the pub, no haircuts, no holidays.
She didn’t even allow herself a budget for public transport, trusting her bike to get her around to work, social functions and a friend’s wedding.
So was it worth it and what delivered the biggest savings?
In the end, she saved herself just over 22,000 pounds, the equivalent of $37,000.
McGagh said there wasn’t one silver bullet that delivered the biggest saving, but a mix of frugal behaviours.
“It wasn’t cutting back on just the one thing that delivered the biggest saving, it was an accumulation of things,” she said.
“We know when we spend a big chunk of money on something — like a new car or a TV — we can see the impact that spending has on our finances.
“What is less easy to spot is the steady drip-drip of money that leaves our accounts that adds up to a huge sum over time.