What is a Spending Ban? Rules, Financial Benefits, Pros & Cons for Expatriates
Expatriates always find ways to save money and also send money online to their home countries to support families back home. A spending ban (i.e., cutting out non-essential purchases) can help you minimize costs so you can pay off debt, save money, or break poor spending habits. A spending ban aims to eliminate all non-essential purchases, but most of us won’t do so. Before starting your spending ban, make a list of what you cannot buy and what you are permitted to buy.
Expenditure limitations have countless benefits and drawbacks. Understanding why you’re doing this and deciding to limit your spending or expenses will help you establish a clear set of rules for successful planning.
Rules to start a Spending Ban:
Before starting your ban, please write down the guidelines and post them somewhere to remember what you do and why.
Choose the Ban’s Period
Starting small, such as with the 21-day spending fast, is a good idea when implementing a spending ban. You can always extend your prohibition if it is working for you; but it might be upsetting if you are excessively ambitious and design a prohibition that is too long to begin with.
Starting with a short restriction also allows you to plan around months that require more significant expenditure, such as holidays and birthdays.
Select What You Are Allowed to Purchase
Make a list of stuff you’ll need, such as groceries, fuel for your car, and children’s clothes. And, if you want to do so, see if there are any other areas where you may save money. Examine previous receipts to determine if you can substitute or reduce the cost of the most expensive goods, such as meat.
Decide what to do with the money.
Assign a purpose to the money you save instead of letting it remain in your bank account. You may, for example, add to your emergency fund, use it to pay off debt, or raise your retirement contributions. Setting a particular goal can help you keep to your spending limit, even if you feel tempted to break it.
Determine How to Handle Unexpected Circumstances:
Prepare a strategy for dealing with any unexpected events or situations that may arise during your spending ban. You have the option of using some of your emergency funds to replace or repair a broken item or to pay for an unexpected medical bill.
Financial Benefits for expatriates:
Minimise Unplanned Buying:
Many people have at least a few items they acquired on a whim and never used. Eliminating impulse purchases can help you save money while also freeing up room in your home for stuff you truly need.
Waste is reduced:
When you’re on a spending freeze, you have to list what you currently have. If your restriction includes no takeaway or restaurant meals, you’ll be forced to address what’s in your cupboard or refrigerator.
You end up using the vegetables before they go bad, rather than ordering pizza for dinner and wasting fresh food.
Leads to make the best of what you’ve got:
Instead of purchasing a new outfit for a wedding or special occasion; a shopping ban forces you to use what you already have – and when you have to use what you already have. You may create your fashion challenge to pull together a stunning look without purchasing anything new.
You strive to create new outfits out of existing apparel during a fashion challenge or develop fresh ways to wear the items you already own.
Aids in the Permanent Elimination of Bad Spending Habits:
After some time without impulse purchases, you learn to think twice before making impulsive purchases. Cutting down wasteful spending for even a month or two can help you change your long-term spending patterns by giving each possible purchase careful attention.
Cons of Spending Ban:
While a spending ban can aid in achieving financial goals and the avoidance of impulse purchases; it is not without its pitfalls.
Overspending May Be Encouraged Before It Starts:
You may feel compelled to go on one more buying binge before your spending ban begins to avoid spending money for a month. However, a “spending binge” violates the ban’s objective.
Can cause you to overlook specific requirements:
You may become so engrossed in the spending ban that you neglect to purchase essential items during or after it. One of the goals of a spending ban is to teach people how to maintain a distinction between wants and needs.
Whether for a month or a year, a spending ban can help you get your finances in order and teach you how to manage your money better. It’s not the ideal solution for everyone. Still, if you’ve found yourself vulnerable to shopping activities and have struggled to control your spending; you do an online money transfer to your family; going to extreme levels may be just what you need to change your habits.