How Do They Afford That?The idea of a 'no buy' or 'no spend' year seems to be gaining traction - but is it actually possible to go a full year without discretionary spending? Join Canna Campbell - a financial planner for 20 years - and Fear & Greed's Michael Thompson as they look at why and how a no-buy year might work to help combat spending.
Welcome to How Do They Afford That? The podcast that peeks into the financial lives of everyday Australians. I'm Michael Thompson. I'm a writer and the co host of the podcast Fear and Greed Business News. As always, I'm with financial planner Canna Campbell, founder of Sugar Mummer TV, which is the financial literacy platform that you will find pretty much everywhere YouTube, Instagram, TikTok, threads, books and podcasts like this one.
Hello Canna, Hello, how are you?
I am very well? Indeed, thank you? I am. I have been observing a trend in recent weeks because it is we are still relatively close to the start of the year, and so you see people making money resolutions or at least the first kind of six weeks of the year, and one that I've seen a few times now, it just keeps popping up. Maybe the algorithm has kind of picked me as very susceptible to this, people committing to a no by year or a no spend year. So my questions for you today, Kenna, why would anybody do this? How would they do this? Is it even possible to go a full year without spending? Within reason? Obviously? I know that's going to be exceptions to the rule. Let's jump into it. What exactly is a no by year? How does it actually work in practice?
Okay, A no by year is a personal financial challenge where you commit to avoiding non essential spending for an entire year. So it's really about going to heart of what a need is versus a wanton stripping back to the basics of life to help you save money, preserve money even and just learly recalibrate your spending habits.
I saw recently some really alarming stats about how much Australians spend, and in particular clothing.
Black Friday sales. I think we spent seven point three billion dollars.
This is extraordinary. And on the clothing front, Australians by fifty six pieces of clothing per year on average. That is more than anyone else in the world.
Isn't that disturbing?
I am amazed. And obviously that's kind of an average, and I know that I would be well below that. So I can only imagine.
Two flannies, two striped shirts and a black T shirt. Oh and a khaki one that you're wearing today. That's new. I haven't seen that one within it.
No, it is very old. Thank you, I have. So I've pretty much committed to my own no by life. Basically, I'm just going to re I'm going to rewear these until they actually disintegrate on me. So I'm already there. But that isn't that alarming? Fifty six pieces of clothing purchased per year on average in Australia, So you can see why you don't come across kind of anti consumerist. But really that is there's got to be something wrong.
There's a great documentary actually that's worth watching called by Now, which I made my son Rocco sit and watch with me, which touches on obviously clothing and electronic goods, but it is fascinating, which if you want to learn more about how we spend.
So I was just like you just stop listening to.
Me by Now.
I was writing it down. There is a difference between not listening and taking notes, and I was writing down by Now and I was just there pondering, going, I wonder if that's by b U Y or b Y. Yeah, I'm assuming it is now Netflix. Okay, So is that why people then are drawn to these challenges? Why do you think it is Is it because that we almost just get overwhelmed by the amount we are spending, by the amount of stuff that we are accumulating. Is this a spending thing or is it a lifestyle thing trying to get more towards a minimalist kind of lifestyle and attaching the spending mindset to that.
I think there are two key reasons, and obviously everyone's different, but these challenges appeal to people because they address a universal truth. You know, deep down, most of us know that we are overspending, even if it's not intentional. So if you take something like a no by challenge, it gives us this really concrete structure to try and work within, and gives us some accountability and also allows us to kind of reset our financial habits as well as, you know, just have something to sort of sink our teeth in and focus on if we haven't necessarily come up with any New Year's resolutions as yet. But also I think there's definitely a really strong psychological element, because people are intrigued by the idea of breaking free from consumerism and seeing actually how much little they can really live on, and they're really curious to see what they might learn and discover about themselves by doing a challenge like this or something very simla. So at the end of the day where you whatever reason you're doing for, it's definitely empowering to take control of your finances and see how you can go with this in a definitive way. And it also creates a sense of achievement if you are able to pull off this challenge. I mean this one we're talking about a year challenge is fairly substantial amount of time.
And I suppose you can always kind of start with a no by a month or something like that, right weekend for February, frugal February, that kind of thing. But the rules around this, I like structure, I like some rules. Can you please set some rules here for me? Can I Is it just you don't buy anything that is non essential. You can still buy food, food, you can still buy medicine, I would hope.
So, ok, right, looking really, but obviously you look at that Maslow hierarchy all needs you go with the essential. So you know, shelter, accommodation, food, clothing, healthcare, you know, you start with that.
But clothing though that.
What things you're naked, I mean not clothing like you know, a luxury designer wardrobe. I'm talking clothing, like, let's not just cover ourselves up.
Yeah, clothing is probably one that kind of straddles this because you need you do need it to be to get by.
Okay, let me rearticulate that at least underpants like underwear.
If you just had a minimum dress code for the studio, so one must wear underwear and the rest of it. If you're in a no bio, just go for it. Goodness me, that is a confronting thought. So anything else though, gets just struck off. So we're talking that you wouldn't buy takeaway. You wouldn't buy a takeaway coffee for instance.
All right, okay, so to do this realistically, you've really got to challenge this will tailor this to your unique circumstances. So look at what your spending is like, and what you classes and essential versus are non essential, and then you can work out your own rules. You know, this is not a hard and fast way of doing You know, everyone is different and people in different stages of their lives. So for example, you know a young family like you and I, this is going to be a lot harder because we have you know, kids' activities that we need to do and be a part of. And you know, a child's not going to understand, sorry, we can't buy Jimmy a birthday present even though you're going to his party, because we're doing this no spend yere like.
We'll just send them some best wishes kids love that.
Make them a card. So that's going to be a lot harder for younger families. So you would make maybe the rules a little bit more relaxed, whereas say singles living at home. If you're lucky enough, you know you might be able to be able to do this realistically and go fairly aggressively. And I believe you know, the person who wrote that story for the Sydney Morning Heralds that you know is someone who's I think you know single independent person that was has that ability to make those changes quite easily and doesn't have those financial obligations necessarily on their shoulders. And then if you look at someone like who's are self funder retiree, you know they could cut back on things, you know, the luxuries of retirements, such as you traveling as much or going out like certain hobbies that are quite expensive. So everyone is in a different situation. You've got to kind of create your own rules and find that healthy strike of balance between something that's challenging enough but also realistic so that you can actually stick to it and go the distance with it.
Okay, so we would be realistically looking at things like excess clothes, clothes just for the sake of buying them, as opposed to kind of the essentials, buying your underwear, buying your shoes, that kind of thing that you actually need to get around. You probably need more than just undies and shoes, shoes to go to work, but anyway, take away food, those kinds of things. Those are pretty kind of clearly defined as discretionary spending items and entertainment, not going to the movies or not going to a concert or things like that, which would be tough to do for a lot of people, but they are things that you could. You would get quite a good feeling from not doing those because I'm depriving myself, but I'm doing it for a good cause.
But also you need to understand and respect where you come from. So someone who has you know, spent, has a spending problem, a shopping problem, for example, and just buys all the time, then cutting it down to one item per month is a huge transformation, whereas for someone else that one item per month is still excessive and unnecessary. So, you know, be kind to yourself. This is about you know, progress, not perfection.
Okay, all right. The big benefit of doing it is it it is a spending reset, really, isn't it. If you were to do it, even if you're not successful, not one hundred percent successful, it would make you stop and take stock of what you are spending. Right.
Oh, the awareness it creates could be very powerful and something that you could use to reset your financial habits that take you through the rest of your life. You know, there's a lot to be learned from doing these types of challenges, and not even necessarily a you know, no spend, no buy challenge. Even you know, I did a recently a seven day mortgage challenge. I did my own Sugar Mama ten day financial Reset challenge. I learned so much about myself. So there's lots of non non tangible things that come from doing these particular challenges. But you know, at the end of the day, the key benefits, I would say are obviously number one. Obviously, you know you're financial you might be protecting your savings, growing your savings, or even accelerating your financial journey, because that money that you've managed to save can then go towards some of your financial goals, such as paying off debt, or building up your emergency money or investing. So you know, if you can make sure that those savings at the end of the year are there, you can quarantine them and actually look at that bank account and go, wow, this is how much I was able to save from doing this challenge. Great, don't go then blow it on something some stuff. Use that for your financial wellbeing. And then, obviously the psychological benefit, which I think is the most beautiful and powerful one, is gaining that deep understanding and awareness of how you spend money, and you know why you spend money, what are your triggers, what are the emotional impulses that go on for you to go and have a reckless shopping expedition or blow a whole pile of money on something that you don't actually value. So you know, this can actually allow you to become incredibly intentional with your money. You're looking at me like you just did a whole blow of crap or that's actually.
Really interesting now I was actually thinking about what you said about eight minutes ago about the limited number of clothes that I bring in. It is because you lectured me eighteen months ago now on the importance of using a capsule wardrobe, and I took your words to heart. That's rubbish.
You had a capsual wardrobe before we met, and god, it couple the bull over my eyes.
But now I have a name to attach to it. It's a capsule wardrobe and KNA told me to do it, So therefore I'm allowed to just wear the same kind of two or three shirts and the same kind of three pants and two pairs of shoes.
You are all right, I'll give you that.
Thank you. It is a sound financial decision.
All right.
We're going to take a quick break, and when we come back, I want to find out kind who a challenge like this is most suited to, who would benefit most from it, and also how to overcome some of the challenges that you would have in not just committing to it, but sticking to it for any period of time. So we've still got a bit to couple. We'll be back in a moment. Can we are talking today about a no buy year or a no spend year where you commit to not spending money on non essential things really across the course of a year, and the fact that it is really a spending reset for a lot of people. But who is this most suited to. Are we talking about people that might have a bit of a spending problem and have identified themselves as being perhaps a little bit too willing to indulge in kind of impulse buys, or is it perhaps households might be living kind of paycheck to paycheck and want to go, Okay, we need to reset here. We need to find where there is a bit of room in the budget. Let's commit to this challenge.
I think to answer your question both O you know, anyone that knows they need to do something about the way that they engage with money and use money and to a certain degree abuse money. You know, I don't say that with any judgment. You know, something like this in a gentle way could be really beneficial because essentially.
It's a detox.
Then I would say anyone who's curious, you know, anyone who thinks, you know what, this could be really helpful for us in you know, getting ready ready of any waste, any creating any awareness as to have triggers for spending money and blowing money, and you know, allowing us to maybe save up a lot of money that we can then use to catch up maybe for previous lost time with their financial journey. So yeah, I would say if you've got a problem and you want to address it, and you're willing to do the work and face the music, and for anyone that's curious as to not just the financial benefit but also the mindfulness and the psychological benefits from doing this. Because I've done this not a full year, but obviously I've done Frugal February I think nine years in a row, maybe ten.
That's a lot.
And every time I do it, I learned something new about myself and it definitely keeps me in check when it covered for the rest of the year.
One of the big challenges though, would have to be motivation, right, because like anything that's a bit of a trend for instance, or anything that you can start strong with something like this, you go, yep, committing to a no by year. You often see it with people when they get like a like a fitbit or something like that, right, and they go and I'm monitoring my steps and I'm going to hit my ten thousand steps every day, and they do it every single day for the first week, and then it just drops off and they're at eight thousand, and then all of a sudden, three weeks later, it's just kind of sitting on the couch again. It feels like the same kind of thing that you would hit this really hard. I'm doing a no by year. You'd plaster it all over social media and within a month you're kind of heading out to dinner at restaurants and things like that. Forgot about it, yeah indeed, and suddenly it's just kind of well, I'm just going to go back and delete that post I made about it on Instagram. How do you stay motivated for the full year?
Look, I have my questions about how sustainable this is. But to anyone who's thinking of doing this or has already started doing this, make sure you've put a goal a goal, oh yeah, you know, so that you know exactly why you're doing this. You know, for some people who might be like saving up a deposit to buy their first home. For some people, it might be about clearing toxic debt. For some people, it might be about paying for an amazing holiday overseas. Traveling for five months. Know your why because you have that why is linked to that goal, and the goal is something that you can see and you can track your progress along the way and know that you know what the hard work is paying off. It's getting without making progress.
You're tying it to something positive, then aren't you rather than just doing something which is even the name of it is negative. No by year like, there's negativity attached to this right from the start. But if you're tying it to something positive, like a like a savings goal or a trip or something like that, then it flips it.
This isn't about punishing yourself. You can't go into this challenge with that mindset. This is about like sacrificing and punishment, and you know it's a way of undoing your sense of self worth to rebuild yourself. You can't look at like that. This is it is a challenge to help improve your financial situation. It's a challenge to help improve your the psychology around money and your money mindset. It's a positive thing. It's exciting. It's called a challenge for a reason.
Are you alarmed at how easily now I talk about money mindsets and positivity and the negativity attached to the language. I think there's a very real chance that I'm in fact turning into you.
I sometimes think I am turning into you. So this is really concerning.
So it's a really scary thought. The hybrid of where we would meet in the middle just oh, very unpleasant. It's extreme, isn't it? Not the hybrid of you and I? But the idea of going without spending for a full year, is there kind of smaller steps that we can take. And I mentioned before the idea of maybe trying it out for a month or something. Is that the way to go to kind of ease into it, Because you wouldn't recommend someone if they've got a bad habit. It's not necessarily the most effective way. Just to say cut it out entirely. Going cold turkey is not necessarily going to be the most effective way to get rid of it. You've got to be realistic about the way you're doing this.
Absolutely, and I'll say this, most households right now are living like this. Yeah, they are tightening the belt. They're saying no, they're going without. They're looking to save They've cut all those non essentials eight years ago from you know when interest rates started going up in the rising cost of living. So a lot of people at you doing this already, So this is not the right challenge to them because they're they're living and breathing it every single day. So if someone wants to do this, what I recommend is bursts and spurts. Lean into it. So you would say, okay, well, let's do for each month, let's do one week or one weekend where we do a no spend. I will say on the other side of that, though, don't then go and save a whole pile of money one weekend or one week to then you know, celebrate with a sort of rebel back, which is actually was a problem for me with Frugal February. I would be so bitter and angry by the end of Frugal February and sur fill with resentment. I'd then kind of just this bad girl would come out of me in massive It's free, So you know that's not the purpose behind is that, don't even bother wasting your time and energy doing something like this if you go into rebel like I used to, but you know, so lean into it to do a short shop burst, do a ten day challenge, do it, you know, weekend, Try a month, maybe try three months if you want. And as you get better and better and understand how to do this that suits you and your circumstances, the people around you, and you can keep going with it.
One last question, actually probably two more. I don't like to limit myself, but this has the potential to affect relationships, doesn't it. It has the potential to kind of impact the relationship you might have with your friends, your social activities. If suddenly all your friends are going out for a drink after work or something and saying no, I can't, I'm doing a no. By year, you have the potential to suddenly end up a not only yeah, it'll be a Nigel by the end of the year.
I no offense to anyone called Nigel.
Of course, I don't think that's really used anymore. The Nigel no friends, No, I hope not for Nigel's sake. If we have any Nigels listening, please get in touch and let us know whether you have friends, and let.
Us know that we please know that we're not offending you, mocking you for your name. More importantly, sorry, I bit of sensitivity here, Sorry, Nige. Go on, look, I will say this. When I first did Frugal February, I found it really and I had to learn quickly how to do frugal February, probably because I had that problem. You know, Tom would be going, let's go out for dinner. You know, everyone's going out for dinner together at this restaurant next week, and I'd have to say, I can't. I'm doing Frugal February, and so I wouldn't go. So I had to start being really careful with doing Frugal February and not let it be detrimental to my mental health. So I would actually let people know what I was doing. And by telling people upfront, hey, I'm about to start doing Frugal February, I would love to see you, but I'm sort of restricted at the moment because I really am honoring this tradition and this particular challenge. Then I would give people the opportunity of time to actually then come up with something else that would actually work where I could actually join in. Also, I encouraged as many people as possible to try and do Frugal February with me. And it's funny some of my friends would actually say to me, Hey, we're thinking all going out to lunch, but we know you're doing Frugal February, so how about we do this instead to try and support you. So it was actually really nice. You know, you do need to be aware that some people are going to find it really annoying and irritating that you're doing a challenge like this, and so be it. That's their problem, not yours. But you need to understand that you have to It works both ways. So you'd suggest maybe doing going for a walk together or having coffee, or you know, having a friend over for breakfast instead of going out for breakfast or doing a gym workout together. You know, you've got to kind of let people know what you're doing and why. You know, if you and share something important to you, if you feel safe with that person, but then find other ways to make sure that you keep connections with people so that you have that you know, mental health is strong to be able to go the distance and do this in a sustainable way. All right.
At the very beginning of the show, I asked you one question that you will now need to answer. Is it possible to go a full year without spending?
Yes, but success depends on preparation. And your mindset going into this. So you've got to create a realistic framework. You've got to have very clear, pre agreed rules and exceptions. You've got to have rewards, and I'd even recommend having rewards along the way, like little rewards to help you keep going. And of course, you know, had that big goal at the end, and don't just focus on the money, but focus on the lessons and the personal growth that goes on behind the scenes. And that's why, you know, I think the person who wrote that story in the paper, I think she was journaling along whilst doing this, which I think is a really smart idea. And if you really want to do this, know that even if you do this only fifty percent of the time, that's incredible. You know you can fail fifty percent and still have amazing like get insights and wisdom gained from doing this.
I think you've just summarized it better than I could. That's that's a really good kind of wrap of how that's the.
Nicest thing you've ever said to me, because I always think you summarize our pod episodes brilliantly.
So rather chuffed, how about this. We're ending on such a positive note. After you kind of sledged me about my clothes. I gave it to a good old night Jill for having no friends, various things. If people want more information from you, where do they find you?
Always at Sugar Mama TV and of course Canna Campbell Official and.
You can hear me every day with Sean Aylmer on Fear and Greed, daily business news for people who make their own decisions. Thank you very much for listening to how do they afford that? Remember? Please hit follow on the podcast And the best thing you can actually do is to tell somebody else or if they might be interested in this episode in particular, send them a link to this episode so that they can listen to it, spread the word about the podcast. Thank you for your company. Join us again next week
