The One Month Challenge

I used to waste tons of money on silly little things. I did it so often and so regularly that I didn’t even realize that it was adding up to a huge dent in my finances. A pack of Tic-Tacs here, a CD there, a DVD here, a new book there… it wasn’t long before I was dropping hundreds of dollars a month on silly things and not putting together the bigger picture.

When I reached my financial rock bottom and decided to change things, I realized it wouldn’t be easy to immediately change my habits, so I took a “one month challenge” to see what exactly my money was going on. I kept a little notebook in my pocket and I recorded everything I spent in a single month, from a pack of Tic-Tacs to a book at Borders to an itemized grocery list to song purchases on iTunes. I kept a spreadsheet of every expense, including every single item I bought at the grocery store, item by item, and everything else.

At the end of the month, I went through and marked things as either essential or non-essential, then I totaled each amount. What I saw then truly shocked me: I had spent more on items I labeled non-essential than on items I had labeled essential. This meant that more than half of the money I brought in in an average month was completely wasted. Even scarier? I spent more money than I brought in.

I then repeated the “one month challenge,” except this time I made a strong effort to ask myself whether each purchase was essential or not. By simply asking myself that question for every single purchase, my non-essential purchases went way, way down. At the end of the second month, when I tallied up my spreadsheet, I knew the news would be good and it was: my frivolous spending was about 20% of my non-frivolous spending, and I still had about 40% of the money I brought in that month. That 40% paid off a good chunk of one of my remaining credit cards.

This experiment provided such a personal shock to me that I now ask myself before every purchase: do I really need this? If the answer is no, then I literally put it back on the shelf and give myself a few minutes worth of breathing time. Almost always, I don’t pick the item up again.

If you’re drowning, try taking the one month challenge! At the start of a month, begin a spreadsheet that includes every single expense you have in a month. I’d recommend going so far as itemizing receipts, listing each item that you buy and what it cost. At the end of the month, mark each item as essential or non-essential and total each, then compare those amounts to what you brought in for the month. If the non-essential amount is anywhere close to the essential amount, you have a lot of fat that you can cut from your spending diet!

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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