With the cost of living creeping up, now is the perfect time to take action by starting a Low Spend Year.
I’ll be doing one myself, starting in April. In my opinion, April is a great time to start as it’s the beginning of a new financial year. My salary will change, and it’s also the start of a new allowance for saving and investing.
It also feels a bit more doable starting a new project in the Spring when the sun is out and flowers are blooming, as opposed to dark and dreary January.
What is a Low Spend Year?
A Low Spend Year is when you intentionally decide to cut your spending over the course of a year.
You might be familiar with its more extreme cousin, a No Spend Year. This is where you refrain from spending on any non-essentials (or only within strict rules). For example, you might only allow yourself to buy a beauty product to replace one that you have run out of.
In contrast, a Low Spend Year is a more moderate version, so you could allow yourself to spend in all categories, but set yourself smaller budgets than you would normally have.
Why do a Low Spend Year?
Some of the benefits of doing a Low Spend Year are:
- It can enable you to adjust to the rising cost of living without going into debt
- You could save a life-changing amount of money (by paying off debt, or turbo-charging your saving for a house deposit)
- It could mean that you can reduce your working hours, or even for one parent to stay at home
- It encourages you to find new, creative ways to save money
- The planet should benefit too (unless you are primarily saving through buying less eco-conscious things).
- You may learn more about what you really value, and feel more content with what you have and the simple pleasures in life
My own motivation for doing it is partly to combat the rising cost of living, and partly to increase the amount I’m able to save and invest, as going down to four days a week has really impacted my ability to do that.
From April we will qualify for pre-school funding so I’d really like to save what we would normally have spent on childcare rather than see it all go into higher everyday costs. I’m also still thinking a lot about going freelance so that I can work during school hours only, and getting used to living on a lower budget will give me confidence that we will manage if and when I take the leap.
By doing a Low Spend Year, I am hoping to save and invest between £500 and £1000 a month into my Stocks and Shares ISA.
What are the rules to a Low Spend Year?
A Low Spend Year is most effective if you make up rules – or guidelines – that will work for you. As I said, it’s more moderate than a No Spend Year, with the idea being that it’s sustainable. In theory, you should be able to do it without feeling like you are depriving yourself, or “oversaving and underliving”.
Here are some of the things to think about when you set your own personalised guidelines:
- Will the Low Spend Year impact your spending only, or will you be applying it to all of the spending in your household, i.e. trying to get your partner on board? I’ve decided it will be much less stressful if I just focus on my own spending (i.e. spending on myself and my contribution to our household’s variable spending)
- Which categories of spending will you reduce and what will your budget be? As an example, I’ve decided to keep spending the same amount on some non-essentials that really help us as a family, such as cleaning. I’ve pinpointed three broad areas of spending that I will focus on cutting down on:
- Food eaten at home, including groceries and takeaways: My partner does most of the food shopping, but I usually do one weekly shop and pay for any takeaways. Under the Low Spend Year, my monthly budget for this will be £100
- Stuff (clothes, books, household items) for my children and me: My monthly budget for this will be £50
- Family experiences (including days out, food out): My budget for this will be £100, which will include any spending on holiday, but not the holiday accommodation, which has already been paid out of a sinking fund.
- Are there any types of spending you will remove completely? For example, if you are paying for any subscriptions that you don’t get a lot of value from, can you cut them completely? If you spend a lot on books, can you set a rule that you will only get books out from the library or swap with friends for the year?
- What if you earn extra money (e.g. through side hustles) where will it go? If you have a big financial goal, such as paying off debt, you might decide that any extra money is best placed going towards that goal. Or, you could use it to increase your budget in one of your spending categories. Personally, I’m being flexible about this and will decide as and when any additional money comes through.
Your own guidelines will depend on your motivation for doing the Low Spend Year, but I’d recommend setting them up so they are challenging but don’t feel like a punishment.
How do you prepare for a Low Spend Year?
Write down your motivation
We’ve looked at the different benefits of doing a Low Spend Year, but it’s really important to be clear on why you are doing it and the impact it will have on your life.
Changing your spending over the course of a year can be enough to change your financial future – what will it mean to you? Write this down – or record a short video of yourself explaining why you want to do this – so that you can come back to it if you are ever feeling demotivated.
Create or update your monthly budget
A good first step is to make sure your monthly budget is up to date and includes any cost increases to fixed spending (such as your mortgage or rent, energy bills etc) so that you can set some provisional budgets for your variable spending.
This is a critical step whether your motivation is to make ends meet despite the rising cost of living, or to put more money towards an additional financial goal.
If your aim is to create a surplus that you can put towards a financial goal, then this will help you estimate what that amount will be, which should be really motivating if you are ever feeling the pinch.
If you have not created a budget before, this article on how I do it may help.
Make sure that you are putting aside enough each month to go into a sinking fund for recurring, but not monthly expenses, as covered in the point below.
Plan out your other annual expenses
Make sure that you are not taken by surprise by an expense that comes around every quarter, or ever year, by plotting out your recurring costs such as:
- insurance renewals
- phone contracts expiring
- moving off your mortgage deal
- road tax
By putting these onto an annual calendar you achieve two things:
- You are ready and waiting to shop around for better prices when contracts come up for renewal rather than being automatically moved onto a higher tariff.
- You can calculate what any one-off costs will be and start putting enough aside each month to be able to cover them when they come up.
Set your own rules
Once you know what’s possible from a budget perspective, create your own set of personalised rules, covering the areas mentioned before.
Be crystal clear which categories you are targeting, and what your budget is for those areas to be able to meet your financial goal. It can be overwhelming to think you are cutting spending on “everything” and counterproductive to cut out everything that you enjoy.
Create strategies to slash spending
This is where things start to get fun, as you can start to unlock the creativity that a Low Spend Year can bring.
Think about skills you could pick up that could help save you money over the year or resources that are currently untapped.
For example, if food spending is one of your areas, some of your strategies could be:
- Stocking your freezer with quick meals you can pop in oven when you are tempted to get a takeaway
- Growing your own salad and herbs
- Cooking extra at dinner to take your leftovers to work the next day
- Learning to make the most of your freezer to reduce food waste by following experts like Kate from thefullfreezer on Instagram.
- Download the Too Good To Go app and Olio to pick up cheap or free food that would otherwise go to waste.
- Researching other ways to save money on food, like reading this post on what we do as a family!
If you usually spend a lot on clothes, but are going “low spend” in this area, then you could:
- Find out if there are any Swishing events near you, or organise one with your friends
- Learn darning or visible mending
- Explore your local charity shops and online secondhand sellers such as Thrift+ and Vinted (if you haven’t already!)
- Sign up to apps that will allow you to earn vouchers for clothing shops like M&S and John Lewis such as Free Jackpot (affiliate link) and I-say. I just used these to get my son his next set of trousers.
- Unsubscribe from marketing emails from companies that you don’t want to be tempted by.
One of the areas I’m targeting is buying drinks and snacks when I’m out with my son at the playground. I can easily spend £5 each time we go on a coffee, babycino and cakes. This works out to £20 a month, or one quarter of my monthly “family experiences” budget. We love the experience of having a drink and sweet treat, but not enough to justify that much of our Low Spend budget. I’ve realised it’s just as enjoyable if I bring a coffee and snacks from home – and usually a bit healthier – although it does mean being more organised.
Prioritise hobbies and wellbeing
Another great way to cut spending is to pick up (or rediscover) some inexpensive hobbies to keep you feeling good (and busy!). This will help you avoid spending out of boredom, anxiety or any other emotions that may usually trigger spending for you.
For me, I’ll be doing more yoga, meditation and walking outside. I’ve also committed to spending at least 15 minutes a day on projects that will give me more work freedom in the future. I limit this to 15 minutes so that it’s achievable, although it is a nice way of tricking myself as I usually end up spending longer.
Explore ways to increase your income
A Low Spend Year is a perfect time to increase your income as you’ll appreciate that extra money so much more when you are working hard to reduce your outgoings. You can either put it towards your goal, or increase your budget that month in one of your spending areas. I know I’ll probably put any extra money towards a gifts or holidays sinking fund, as I think my current budgets for those areas will be particularly challenging.
If you are looking for inspiration, I keep a page regularly updated with easy side hustle ideas.
What’s great about the Low Spend Year is that it’s long enough to set up some great habits, if you can focus on making these habits as easy and rewarding as possible.
If your motivation for doing this is a financial goal then track your progress in a way that you find enjoyable. I’ve always liked to see visible progress (think colouring in charts!), but you might prefer regularly going back to your original motivation statement that you wrote or recorded at the start.
Being part of a community that is doing the same thing can also make all the difference. I’ll be recording my progress using the hashtag #lowspendyear on Instagram to stay accountable.
For lots more ideas of ways to save and earn during the Low Spend Year, see this post on 50 Eco-Friendly Ways to “Grow the Gap”.
And after the Low Spend Year?
Well, let’s see how it goes, but I’m hoping that my Low Spend Year turns into an easier lower spend lifestyle. The less I can spend on things that don’t matter to me, the more time I can spend doing the things that do.