Does a Spending Freeze Work?

A spending freeze is when you stop spending money for a period of time. You could lock up you credit cards and cash, avoid the mall and just stay home. How long could you go without spending money? When the federal government has a spending freeze, they just maintain a certain level of spending. They may tie spending to GDP growth or per capita spending. I just call it a budget! Can you really stop spending?

History

If you are not aware of it, many people automatically or unconsciously stop spending routinely. Every year people stop spending because they maxed out their credit cards with holiday spending. It is one of the reasons retailers have January sales to attract the shoppers who received gift cards or cash as gifts. It is also an opportunity to exchange or return gifts. The liberal return or exchange policy actually encourages people to spend more especially if things are on sale.

Compulsion or excessive spending

Psychologists or psychiatrists would have a field day with the consumer who goes for a sale item and buys more. You start off trying to save money and then you spend more than you saved. This is no surprise! You try to justify it by saying you needed it anyway. Do you really need a polo shirt in twelve (12) colors? How do you approach a sale? Is shopping a recreational activity or diversion? Are you a compulsive shopper or the thrill of the bargain too much to resist?

If you are susceptible to marketing and advertising, you may want to turn off the radio, TV and computer too. Stop reading the newspaper and throw away the direct mail too. It is hard to isolate yourself from all the possibilities! You may have to isolate from those helpful friends and family who will always share news of a sale. All this may not work if you leave your home because there are billboards or sale signs that will lure you in too. With all this stimulus, it is impossible to ignore! You need make good choices!

People who succumb to the sale siren song have all the excuses. Overspending is a compulsion! Can you control a compulsion by just not spending for a period of time? When you freeze your spending, you just buy what you really need earlier and avoid spending during the period. After you return to spending, you actually catch up. What did you achieve? It reminds me of fasting or the juice diet. You stop eating for twenty-four (24) hours in the name of cleansing and radically change your diet.

In almost all cases, you will gain the weight back! The change is too radical and it is not a habit. Lasting change requires a more gradual change and this is true for all changes. If you want to lose weight, you should make small changes such as change one small item in your diet. This is equally true for your personal finances. I fyou want to control your spending, you have to set limits! This is what we call a budget. You can also call it a spending plan if budget bothers you.

Solution

For many people, a budget is just as foreign as another language. Others find the process too difficult or restrictive to maintain it. If you do not take control of your spending, you will spend more than you ear. The result is consumer debt! Your sale savings will be eaten up very quickly when you pay upwards of 24% per year. Instead of freezing spending for a period of time, you should allocate some money for the holiday sales. This is after you put money aside for savings, retirement and your financial goals.

Final thoughts

I will never give up pizza or my financial goals! A spending freeze will not work because you will go back to your bad habits afterwards. A couple weeks or even a month of not spending will not change a habit. Cutting up your credit cards or using only cash is not a solution to overspending either! You need to change by forming better habits! A budget or spending plan is just determining what spending you need to do in order t live and achieve your financial goals. Does a spending freeze work for you?

Photo by:  Flickr