Readers of personal finance blogs might be hearing about a new way of budgeting and saving money. It’s called the Challenge Everything budget. One of the pioneers of the Challenge Everything budget, Jay Money of Budgets Are Sexy, explains it like this:
“It’s my new mentality of challenging the ‘norm’ and getting my expenses as low as possible without sacrificing quality of life.”
In This Article
How to Challenge Everything
The point of the Challenge Everything budget is to take your existing budget, and challenge each expense, line by line. For instance, start by taking your car insurance payment, whether it be a monthly payment or an annual payment, and look for ways to get lower rates.
Those lower rates might come by raising deductibles, decreasing coverage, or by switching to a different insurance company altogether. The goal is to get the expense as low as possible while still making sure your car insurance plan continues to protect you and those around you as you drive.
Next, you’ll move on to your grocery budget. Start researching and reading articles on how to save money on groceries. Then implement a meal plan and a spending budget that will allow you to cut your grocery bill and yet live on more than Ramen noodles every day. The goal, as J$ said, is to get the expense as low as possible without sacrificing (too much, anyway) quality of life.
The Benefits of the Challenge Everything Budget
The road to financial freedom requires a number of steps in most cases. Because lottery winnings or windfall inheritances are not likely for most wanting to attain wealth, you’ll have to follow certain steps in order to achieve financial independence.
The first step is to eliminate debt. Interest paid on loans, credit cards and mortgages is interest that’s taken out of your pocket each and every month. Make a plan to pay off that debt and keep more money in your pocket.
What Can You NOT Spend?
Step two is to reduce expenses, and the Challenge Everything budget helps you do that, because it forces you to take a good, long look at each monthly expense, and determine whether or not that expense is of value to you and is in line with your goal to build wealth.
The less in expenditures you have each and every month, the less money you’ll need each month in order to become financially independent. This is the beauty and strength behind the Challenge Everything budget.
By confronting each and every expense you have, and looking for ways to eliminate or reduce that expense if it’s not bringing true value to your life, you free up more cash to put toward wealth building and financial independence goals, and you decrease the amount of money you’ll need each month to live on.
By reducing monthly expenses, you have more money available to put toward step three of becoming financially independent: building wealth.
If you haven’t already, I encourage you to try working the Challenge Everything budget into your life. You’ll likely be surprised at the amount of monthly savings you can amass, and surprised at how well you can live on so much less money than you thought you could. And by taking that monthly savings you’ve discovered, and putting it toward your wealth-building goals, you’ll reach those goals much faster than you’d imagined.
Have you heard of or tried the Challenge Everything budget? What line items in your budget have you considered eliminating but haven’t taken the steps to do so yet?