My Low Spend Year came to an end at the end of March, last month.
I had decided to do it for a few reasons, which I go into in more detail here. The main one was to be able to invest more than I had ever done before, ideally using up my full ISA allowance. My ultimate motivation for investing is to have the financial freedom to work more flexibly, spending more time with my kids and following my interests.
To be honest, the last few months didn’t feel like a Low Spend Year as we had some unexpected costs such as a leak in our bathroom as well as the bathroom in our rental .
We also had a huge tax bill that we weren’t expecting because we thought my partner was paying this each month out of his salary so we had to scramble to cover that.
For the last few months I also completely stopped tracking my expenses, or thinking about staying within budget. This was because in February, I found out I would be paid a bonus for the year and that it would enable me to reach my major financial goal for the year, which was to use up my full Stocks and Shares ISA allowance.
Another reason I drifted away from it was that I am naturally a very frugal person and I don’t think it suits my personality to be overly focussed on saving money, especially when I’ve already reached my goals.
That said, I don’t have any regrets about doing a Low Spend Year. It was a good experience for me because it allowed me to understand my spending better. In this post, I am going to review what I liked about the Low Spend Year and what I would do differently if I did it again. Here we go.
Table of Contents
WHAT HAVE I LEARNT?
Understanding my spending better: using buckets, not categories
Before the Low Spend Year, I used to track my spending, but I didn’t really know where I was spending the most in terms of my discretionary income, so I used to track all of my fixed costs and then have one extra figure for all of the discussion discretionary spending such as clothes or eating out.
With the Low Spend Year I had split the spending into three buckets. These were Groceries and Eating Out, Stuff and Family Experiences.
Having these broad buckets actually worked really well for me. By combining groceries and eating out I could see the benefit of spending a little bit more at the supermarket if it meant that we would be less inclined to waste money on food for convenience.
Having a “stuff” bucket also worked well because this is one area that’s really easy to cut down if you shop secondhand or wait until you have vouchers to buy something.
Finding new ways to save
One of the big successes of the Low Spend Year was using many years’ worth of unused air miles and converting them to Nectar points to buy things that I needed for the house that I didn’t want to get secondhand.
I also saved a lot by using vouchers that I got in recognition awards at work for other household items. In the past getting things for home and for the garden has been one of my weak points, especially in spring and summer when you start daydreaming about having guests over and entertaining in the garden.
As I was starting the Low Spend Year in April I didn’t want to fall into that trap early on, so I decided that any household spending would come purely from the air miles or from vouchers from work, unless I could get something secondhand.
Figuring out what I want to spend MORE on
One of the biggest learnings for me during the Low Spend Year is how little I spend on family experiences. This is partly because we do a lot that is low cost like going to the park, which is great, but a learning for me is that we don’t spend enough, compared to what we are spending on other things.
Experiences create memories that last forever and the time that we have with our children is very limited. If I hadn’t been tracking the spending so closely and had a themed bucket that focuses on experiences I would not have realised this.
Longer term planning
Another good thing about the Low Spend Year was that it encouraged me to think about the longer term horizon rather than thinking about how I could meet my needs in the cheapest way for that month. I thought about longer term savings, so we would buy good quality household products that would last us for the whole year, even if it meant spending more that month.
By the end of the year I had invested more than I had ever done before, which has really boosted my confidence that we can do this financial independence thing, as a family.
Less wasteful in the kitchen
For the first time this year we really got control of our food waste: cooking smaller portions; eating our leftovers while they are still fresh and relatively appetising; buying favourite foods that we know we will eat; cooking what needs eating first.
We have also been ordering really good quality eggs in bulk and using them as the basis of lots of meals. One of my favourites is egg over rice with some chilli oil and pickled cucumber. Although these eggs are quite expensive as eggs go, they are a cheaper form of protein than meat or fish would be.
The “voucher rule”
As I had decided this year that I’d only buy home items with vouchers, this forced me to wait much longer than I normally would before getting something. People talk about the 72-hour or 30-day rule…I would wait many months before getting something, which was absolutely fine because these were luxuries anyway, not things that we needed. I really learnt to appreciate the differences between wants and needs.
WHAT’S BEEN CHALLENGING?
I’m becoming more and more conscious of the fact that all my life a lot of feelings of anxiety and desire for control are very wrapped up with my money mindset. I feel very grateful that we have a lot of financial stability now and undoubtedly this focus on money that I’ve had has helped with this, however this attachment to frugality can also feel very restrictive and negative.
About nine months into the Low Spend Year, when I knew that we were going to reach our goals anyway, I just had to stop feeling like I was on a financial diet. For me, setting myself a year-long challenge was too long. Once I knew I had reached my goals and had also created long term habits, like shopping at cheaper supermarkets, I wanted to loosen up a bit.
I am naturally a very frugal person, whose comfort zone has always been saving. Tracking my spending over a longer period has brought me new habits and insights, but it’s not good for my sense of wellbeing to be overly focussed on spending for long periods.
If I was advising someone else on doing a challenge like this, I’d suggest either trying it for a shorter period, maybe a season or two, or stopping when you have reached a certain financial goal.
I won’t be doing another Low Spend Year challenge, but I would still like to set myself the same investing goal (using up my ISA allowance).
This time I’ll be automatically transferring £1600 each month to my ISA and rather than transferring what is left at the end of the month. I’ll also be making a mortgage overpayment each month.
To make sure I can do both of those things and cover all of our living costs, I’ll be shifting my focus more to increasing my income, rather than lowering my spending.
And to increase our income, I’ll:
- focus on my career, making sure I’m continuing to be paid fairly and meeting my objectives;
- continue to grow my blogs;
- increase investments into dividend-paying ETFs and index funds;
- finish off selling everything we don’t love and use (which also helps us to enjoy our house more).
I’ll continue habits like buying secondhand clothes and waiting a long time for any home purchases, but I’ll also enjoy having no budget for buckets like family experiences, as long as we can afford our plans.
FINAL THOUGHTS ON THE LOW SPEND YEAR
I think I feel the same way about the Low Spend Year as I might feel about a bungee jump. I’m glad I did it, but I don’t feel the need to ever do it again. In hindsight, I would rebrand it a “spending reset” – where you track spending more closely and set budgets to stimulate creativity, but for a shorter period of time.
I’m very grateful and fortunate that we have disposable income to invest and can even think about early retirement. I would like to really appreciate and enjoy that, particularly while my children are still so young, and a challenge like this does risk taking away from that, at least for me.