Why you need to go on a financial detox
8 min read
There are all sorts of detoxes out there, ranging from the commonly found health detox (which has actually been debunked as a myth), to digital detox, home detox, and relationships detox. Apart from removing all the toxins from your body, the term ‘detox’ is also used as a catchall phrase for removing something harmful from your life nowadays. But for all the fuss over detoxes, there’s one sort of detox that hasn’t been talked about enough – the financial detox.
Why you should go on a financial detox
Is the thought of going 30 days without spending any money terrifying to you? We’re not talking groceries or necessities, those are needs after all. We mean all those other impulsive purchases in between. If your answer is yes, that’s precisely why you need to do this. It doesn’t have to be 30 days, you can go for any amount of time you feel comfortable with. Try starting small with 7 days or go big with a year like Cait Flanders did. It’s up to you.
We’re days away from the New Year, so if you’re thinking your finances are looking a little burdened, it might be a good idea to kick start the year with a financial detox. If you’re not financially well, you may be prone to anxiety, worry, and fear. A financial detox could be just what the doctor ordered.
While going on a financial detox might not make you a millionaire overnight, it can be the start of a life-changing habit. Realizing that you have the ability to do something can inspire you to go for long-term change. It can even be the start of achieving the Australian dream of owning your own home!
Look back on your spending
Identify what your biggest spend was on. While the huge purchases are definitely hurting your pocket, the small but cumulative purchases are usually the main culprits. A lot of us are guilty of unconscious spending, which means that we aren’t mindful of where our money is going.
Decide what to give up
Rather than be overly ambitious and aim to stop all spending, we suggest you start small and cut off one thing from your life. Is it those food deliveries you get 3 times per week? Do you spend too much on clothes that you never wear? Are those books cluttering your home? Too many video games? Take a look at your bank statements and choose a category to give up.
Or you can go all in. Try using January for your financial detox and take a month to #buynothingnew.
Come up with a plan
Too much clothes shopping? Unsubscribe from retailers’ newsletters. Delete all the online boutique apps. Are you buying too many books? Borrow books from the library instead! Eating out too much? Take this chance to learn how to be a better cook. Prep meals instead of eating out and bring packed meals instead of buying lunch when you’re at work.
Learn to use the word no. It’s your biggest asset for a financial detox.
Review your finances
While you’re there, take the time to look back on your finances and review them. Are you drinking a lot of take away coffee? Curb that unconscious spending. Prioritize long term savings rather than short term happiness like buying that cup of morning coffee or rewarding yourself. If you’re paying off your home loan, look at your interest rates. Are you paying more than you should? You could always refinance your loan. All these will help you save in the long run.
Put what you saved into a savings account
If you saved $20 from not eating out, put that into your savings account. Alternatively, put a fixed amount of money for every week that you manage to restrict yourself.
Wait it out
Instead of buying that tee on impulse, force yourself into a waiting period before making any purchasing decisions. After 2 weeks, you might find that you don’t need that tee as much as you thought you did. Now you have less clutter and extra cash too!
Encourage your family and close friends to do the same too
This way, you’ll have encouragement and it will help with your spending habits too. For example, you and your girlfriends can opt for a home cooked meal as opposed to a fancy night out with drinks.
Leave the credit card home
Also, bring only the amount of money you need! This will deter you from buying anything unnecessary and you won’t end up with food that you don’t need. If Arnold Schwarzenegger can handle his finances using cash, then you can too. It just make the process of spending a lot more visual and you’ll find it that little bit harder to part with your hard-earned.
Financial detox too much to being with? Start with our financial wellness challenge.