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Beat inflation with a low spend month

Beat inflation with a low spend month
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Autumn is a great time to do a low spend month. Summer holidays are over, Christmas is approaching, and it’s cosy enough to stay in. This year, with inflation rising, a low spend month might just save your budget from going out of control.

What is a low spend month?

A low spend or no spend month is a way to save money or rescue your finances from difficulties. During a low spend month, you only pay your bills and buy absolute essentials, like food. A low spend involves staying at home unless going out is free. It’s a bit like lockdown, but for a different reason and without lots of deliveries. It’s a spend-lockdown if you like

How can a low spend month help you survive inflation?

UK inflation has increased rapidly from 2% in July to 3.2% in August. It is difficult to tell whether price rises are set to continue, or whether we are experiencing a temporary blip due to coronavirus measures and other factors.

Some economic forecasters are predicting further pressure on living standards to come, while others are more optimistic. It makes sense to freeze unnecessary spending for a while until the mist clears. A period of inflation is not a good time to rely on savings or miss debt repayments. A low spend month is a tool to help you stay on track during times of economic uncertainty.

What are the rules for a low spend month?

Everyone has different priorities and financial commitments, so each household needs to make its own rules. Basically, you still spend money on essentials, but you refrain from buying even small luxuries or treating yourself to entertainment that isn’t free. During a low spend month, needs are still allowed, but wants are off limits or postponed.

It’s a good idea to write down the rules so that everyone involved is on board. If a low spend month seems like a game, no one feels depressed or deprived. A simple way is to create a chart showing acceptable and forbidden spending, perhaps including rewards and forfeits.

Doesn’t inflation affect essentials too?

Unfortunately, just cutting out recreational spending will not avoid the effects of inflation entirely, but it’ll certainly help. At the moment, inflation is particularly affecting food and drink, transport and energy.

There are ways to save on essentials too during a low spend month:

  • Save on fuel by walking as much as possible, if you are able.
  • Switch energy provider to a less expensive tariff, and cut down on your energy use.

It’s still possible to save on groceries when inflation is beginning to bite. Aim for cheaper but not lower quality products as it’s not healthy to save on nutrients.

How can you limit the effect of inflation on essentials?

An easy and fun way to spend less on a weekly shop without squinting at prices in detail and agonising over pennies is to set a low spend price ceiling.

Decide on an upper amount to spend, £30 perhaps, and make a list of not more than 30 items. Walk around the supermarket, in person or online, and put 30 items in your trolley that cost less than £1. If there are essentials that cost more than £1, adjust your list by lowering the number of items. That way, the economy and the supermarket are setting prices, but you are counteracting that with your own limits.

Are there other benefits of a low spend month?

A low spend month has many advantages beyond surviving inflation. Here are some of the other upsides:

  • Discovering free days out in your area
  • Cutting back on alcohol and junk food
  • Teaching children to think about their spending and save money
  • Correcting a period of overspending, or dealing with an unexpected expense, without resorting to a credit card
  • Learning about your spending habits and gaining greater control over them.
  • Saving and building an emergency fund.

Inflation is often caused by an increase in demand. By keeping your money in your wallet you’re doing something, however small, to bring that demand down.

Could you be rewarded for your everyday spending?

Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. The Motley Fool makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.

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