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My financial lessons from a No Spend Year

My financial lessons from a No Spend Year

by Michelle McGagh Jan 26, 2017 at 11:47

In a world of contactless payments, seemingly unlimited credit, and pressure to buy it’s not surprise that people are choosing to splurge rather than save.

Add to this the feeling, at least for younger generations, that saving for a house deposit or pension is such a gargantuan effort that it’s not even worth starting and you have a recipe for financial disaster.

We live in a world where our main role seems to be as consumers, constantly being advertised to and encouraged to buy but I don’t think this has to be the case.

After a year-long experiment where I challenged myself to spend nothing except on my standard bills and basic groceries, I know that we don’t have to be caught on the consumer treadmill and that small changes to our spending habits can make a huge difference.

On Black Friday 2015 I decided to opt out of spending for a year. I could still pay the bills I needed to live, including mortgage, utilities, and council tax, and continue to pay charitable donations.

I also needed to eat and had a basic grocery budget to cover three meals a day, essential toiletries such as soap and toothpaste, and household items like washing powder for clothes. My husband joined this part of the challenge and over the year we cut down our grocery bill to £31.60 a week on average for the both of us.

There was no budget for anything else, which meant no more takeaway coffees, pints down the pub, cinema trips, online shopping splurges or meals out. I didn’t even have a budget for bus fare so would travel everywhere on my bicycle for 12 months.

You might be asking why I would put myself through this?

There are two reasons: the first was financial. I’ve written about money and how to be sensible with it for a decade and despite not being in any debt – apart from my mortgage – I had the feeling that I was losing control of where my cash went. I was frittering away what I thought were small sums of cash, but over time they were adding up into significant sums.

A review of a year’s worth of bank statements showed I’d spent £400 on coffee in the 12 months before the challenge started, I just hadn’t appreciated just how much ‘a couple of quid’ on a coffee had added up. I wanted to take back control of my spending and put the money saved to better use: overpaying my mortgage.

The second reason to give up spending was lifestyle-based. I was sick of going to work to earn money to spend on things I didn’t really need and that weren’t making me happy. In short, I was sick of being a consumer and sick of being sold to. I wanted to jump out of the consumer cycle and challenge myself to be happy with what I had.

It wasn’t an easy challenge and there were times I wondered why I had even started, especially when I set off on my bike for another wind-whipped journey, waved my friends off on a girls’ holiday to Ibiza, or supped another pint of water in the pub.

I’m not going to go into the details of my day-to-day living over the year and the often bizarre things I got up to in the pursuit of a free night out because I want to concentrate on the financial aspects and what I learned about saving money.

As I’ve said the financial aim of the challenge was to overpay my mortgage and through a combination of earnings and income from a lodger we took in, I overpaid just over £22,000, that’s nearly 10% of our mortgage.

I’m happy about reducing my mortgage, cutting both the interest I’ll pay to the bank and the number of years I’ll be repaying my mortgage.  

I’m even happier, however, about my new relationship with money. I’m well aware now of how much of a difference even small changes to our spending can add up over time.

During my no-spend year I spoke to a lot of people about their financial habits, with many people offering information to me about how bad they were with money or where their spending vices were.

The thing that always struck me was how little people – myself included – realised just how much those small bits of money can make a big difference. At one house party a woman explained to me that her daily coffee was her ‘treat’ and it ‘doesn’t cost much’. We worked out that her daily treat cost her more than £650 a year.

I asked the woman: ‘If I gave you £650 now would you spend it on coffee?’

Her exact response is unprintable but essentially it was ‘no’!

I think the woman I spoke to is representative of many of us. We don’t think that the small sums matter but lots of small sums really do. A couple of quid on a coffee, on a cocktail, on a taxi, on a sandwich all add up to lots of pounds, all of which could be put to better us.

I’ve learned a simple lesson: short-term sacrifices can help achieve bigger long-term goals. I’m happy to give up spending small amounts now on things I don’t really need to put my money towards a longer-term goal (paying off my mortgage) that will actually make me happy.

This long-term goal will be different for everyone; it might be building up a cash buffer, saving to re-train for a new job, investing for retirement or taking the kids on a holiday of a lifetime. Whatever the longer-term goal is, I believe achieving it will make you happier than any amount of short-term spending on stuff you don’t really need.

After a year of not spending, I now know what I really need and it’s not much, and I also know my longer-term savings goals are more important to me than the short-term thrill of buying something new.

I’m no longer sucked in by the lure of advertising, I don’t cheer myself with spending, and I don’t measure my worth through the things I own.

The old adage is right: you really can’t buy happiness but you can save for a future that will be financially secure, and that definitely does make me happy.

The No Spend Year: How I Spent Less and Lived More by Michelle McGagh is out now (Coronoet, £12.99) and we've got five copies to give away. Email us at money@citywire.co.uk and we'll pick some names out of a hat!

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Comments  (27)

  • Gleaner: 

    You'll be the richest lady in the graveyard and be following the same lifestyle to boot.

    12:46 on 26 January 2017

  • Keith Hilton: 

    Congratulations on surviving that for a whole year. You didn't have to give up on the cinema, just open a Club Lloyds account for free tickets.

    12:50 on 26 January 2017

  • steven fieldfare via mobile

    For Keith Hilton

    You pay for the "free" cinema tickets with at least a £3 monthly account fee; mitigated only by 2% interest on £5k of the savings held on account.

    But car free surely only works for urbanites?

    13:13 on 26 January 2017

  • Eli via mobile

    There is no greater psychological pleasure in life than looking at your bank statement and seeing your savings increase. Then you live every moment of your life free of the worry of being unable to pay your expenses. It's a serenity and peace of mind that money can't buy, and cannot be explained in words!

    13:19 on 26 January 2017

  • Law Man: 

    It is said that consumer spending is needed to grow the economy and so increase share prices for us investors.

    As individuals, we need to curb spending to have the money to invest to pay for old age.

    So, a case of say unto others 'Do as I do not do'.

    13:46 on 26 January 2017

  • samplewriter: 

    My small accumulation .happened more by fate than from anything else .both my cards got hacked into from what I thought were innocent web sites .

    Saving rather than spending gives you more freedom to make long term decisions rather than see and buy as so many people do nowadays having this extra power over your expenditure is good for you it takes stress out of your life.

    14:39 on 26 January 2017


    Oh dear ....pass me the how to make your own coffin in 3 easy moves ...instructions

    14:42 on 26 January 2017

  • Anonymous 1: 

    Well I for one applaud your efforts, and achievements over the last year. But most importantly I applaud your goal of overpaying your mortgage.

    That's what I did as soon as I realised just how much interest I would save, how many years it would shorten the repayment period as a result, and that I would have true financial freedom and independence from the moment it was paid off.

    As far as I'm concerned it's the single most important thing anyone can do if they have a mortgage.

    What did I do with the money I saved? Well a year after paying off the mortgage I bought a boat, and haven't looked back since. All those huge payments that were previously going to pay the mortgage every month, now go straight into savings for early retirement.

    Sorry Gleaner, I disagree with you profoundly. This lady really has her head screwed on. But she's in a tiny minority; with personal debt now over a £trillion, not many others have figured it out

    14:43 on 26 January 2017

  • kathleen wood: 

    Look after the pennies and the pounds will look aftr themselves! Well done Michelle.

    14:52 on 26 January 2017

  • Raj K: 

    Not sure why people have a go at her. Some people don't like to spend on things that others do and they are happy leading a very simple life.

    14:54 on 26 January 2017

  • Know-it-all: 

    Good for you.........I'm old enough to remember credit squeezes in the 70's when it was second nature to get any credit you had DOWN! Thank God for the Standard Life endowment policies backing up my mortgage arrangements. Come the Millenium, mortgage was paid off.

    15:27 on 26 January 2017

  • J Thomas: 

    All your efforts are most commendable Michelle. The only problem is if everyone acted in the same manner the whole economy would grind to a halt. There would be no work or profits for business, and no taxes collected. Within a year you, and everyone else, would be unemployed and you would be homeless as huge taxes would need to be imposed on capital assets as opposed to incomes.

    A balanced lifestyle is best, with low debts, and a moderate standard of consumption.

    Enjoy life, this isn't a dress rehearsal.

    15:41 on 26 January 2017

  • M Hellman via mobile

    I think she did enjoy her year. Good for you. Being in London makes it a little easier ie many brilliant free attractions to attend. Getting the mortgage paid off is pure elation.

    20:46 on 26 January 2017

  • richard tomkin: 

    Thanks Michelle : I have been on sardines for a year now,so I have great sympathy for financial journalists and will always be thinking of you.

    20:55 on 26 January 2017

  • Micawber: 

    Well done, Michelle. A bit extreme maybe, but the lessons are well learned that will really start you off on the savings and investment track - of which the first part is saving by spending wisely. You might like this site if you don't know it already: http://www.retirementinvestingtoday.com/

    22:28 on 26 January 2017

  • Micawber: 

    I applaud especially this bit: "I’m no longer sucked in by the lure of advertising, I don’t cheer myself with spending, and I don’t measure my worth through the things I own." Right on.

    22:31 on 26 January 2017

  • JohnR: 

    More power to you Michelle, not a moment too soon either given the way things are likely to start heading.

    22:36 on 26 January 2017

  • Jim Thompson: 

    Well done Michelle.

    I thought things would never be the same after the credit crisis of 2008/9, but here we are again living in a materialistic way, buying loads of rubbish we don't need.

    Your efforts are a bit extreme for me, but you make a good point. My mantra is to enjoy life but live within our means.

    12:30 on 27 January 2017


    Spose you've sold your Whitbread shares then Tommo.. and how many of 'others' funds own WPP etc etc etc.................the sheer hypocrisy.... staggering...are you going to censor this one as well?.....suffer little children

    13:05 on 27 January 2017

  • Jim Thompson: 

    No Cueball, I haven't sold WTB. I would invest in BATS but that doesn't mean I smoke. If people want to buy expensive treats on a regular basis that's up to them. It's just not for me that's all, am a only a part time anti-consumerist. My dad used to work for WPP, then called J Walter Thompson, how do you like that for hypocrisy!

    13:19 on 27 January 2017



    13:50 on 27 January 2017

  • J Thomas: 

    Michelle and her approach would work if only a very few people followed her example. Once a large number of consumers stop spending however you very quickly fall into a deflationary death spiral, leading to a great depression as witnessed in the 1930's.

    You then find as people witness mass unemployment that not only luxuries become unaffordable, but also the necessities mentioned such as toothpaste, etc.

    You would then find Michelle that your job and book are also 'luxuries' which people cannot afford.

    Your pension would lose over 90% of its value as there are no profits to support share prices, and many FTSE companies would simply go bust.

    Faced with no income tax receipts governments would be required to levy annual capital taxes on your home, the property market would collapse and most people with a mortgage would very quickly become homeless.

    Remember Michelle, money makes the world go round.

    15:30 on 27 January 2017



    15:57 on 27 January 2017


    Yer Know ..joking aside...you 'positives' are taking an awful lot for granted health wise...believe me you can't bring those 'healthy years back ...I find it pitiful...

    16:08 on 27 January 2017

  • magic beans: 

    'Oh dear ....pass me the how to make your own coffin in 3 easy moves ...instructions'

    Brilliant. Just planted a living willow hedge to retain a crumbling stream bank. Its going to need regular pruning and been wondering what to do with all the willow wands.

    10:25 on 29 January 2017

  • samplewriter: 

    This article brings into focus how most of us handal expenditure and reasons for what we do to .

    Many times in our lifetime we wish that our path in past years had been different .

    People often get into a lifestyle where tomorrow is the same as today this thought pattern if not checked and changes made can at times cause people to lose control of spending .

    so articles such as this are necessary to make us think.

    11:23 on 29 January 2017

  • DJC1362: 

    spend a little, save a little, waste a lttle that's my motto

    13:03 on 31 January 2017

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