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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 email@example.com and we'll pick some names out of a hat!