Hot damn, is it some sort of personal finance blog rule that you have to do at least one no spend day per week?
Admittedly, I probably don’t read that many of them. That’s because I generally avoid the types of blogs that talk about stuff like that. Frankly, you’ve got to be an entertaining writer to pull off spending reports. Some can do it, but most can’t. You know, I just don’t want to know about the boring stuff that goes on in your life. YOU SPENT $2.18 ON HOT CHOCOLATE AT TIM HORTON’S? HOW INTERESTING.
On the surface, no spend days don’t really look at bad. The whole point is to avoid spending money. There’s nothing wrong with attempting to not spend money. Most of us (yes, me included) spend too much of it, usually on crap. Anything that cuts down the amount we spend isn’t bad.
But, no spend days aren’t really as good as they seem. What’s that? You want me to use accounting as an example? If you insist.
The Accounting Of No Spend Days
When a company figures out how much inventory they have on hand, they use a pretty simple way to count it, at least most of the time.
Let’s say a company buys a million dollars of inventory, so they can sell widgets. Oh widgets, always being made, never being used. Anyway, as any business does, they buy that inventory so they can sell these widgets at some sort of profit. Inventory drops to $200,000 worth of inventory, so they buy a million bucks more. Inventory now stands at $1.2 million.
Now, which inventory would they sell first? Well, in just about every business, they sell the old stuff first. This makes sense, you want to get the old stuff out so you’re not sitting on it. Maybe it’s perishable, or maybe it’s technology that goes obsolete quickly. Even natural resource companies sell the old stuff first, since nobody wants to store barrels of oil.
What does this have to do with your finances? Say you buy a tank of gas and it lasts you two weeks. In accounting talk, that’s a prepaid expense. If 14 days worth of gas costs you $42, that’s the exact same as buying $3 worth of gas everyday. Nobody does this, because it’s a pain in the ass. It’s the same thing with groceries, your utilities, and so on.
It’s cool that you’re trying to spend less money. Just remember, if you spend money in advance, it kind of isn’t a no spend day at all.