4-Week Financial Detox

It’s that time of year when things are festive and celebratory and it’s easy to go a little overboard on food and drink and, of course, how much you spend. And I am not immune to any of it. I like eggnog and making big meals for the family and watching movies and giving gifts. In fact, I LOVE giving gifts. But — in case you hadn’t noticed — every goddamned thing under the sun has gotten 50-100% more expensive over the last five or six years.

And, frankly, it’s just hard to stay disciplined between Thanksgiving and New Year’s Eve. So it should surprise no one that it’s also around this time that people start thinking about New Year’s resolutions or intentions or mind maps or whatever. It makes total sense that after a lot of relaxing and eating and drinking and spending, you would want to approach the new year with focus and determination to improve your life.

For some people, that means recommitting to the gym or healthy eating. For small business owners like me, it’s a great time to reflect on what’s working or not and update your strategies accordingly. And may I also suggest that you include improving your financial health among your good intentions for the new year.

I came up with a fairly simple program I call a 4-Week Financial Detox for exactly this purpose, and it’s a great chance to reflect & reset your spending habits following the holiday season. (FYI, you can do this detox any time of the year, but right after the holidays makes a lot of sense to me.)

Today I’m going to walk you through each step of this 4-Week Financial Detox. BUT if you’d like to access templates for any of the exercises mentioned, including some stretch goals not included in this episode, as well as weekly email prompts to help keep you on track, then sign up at iselerfinancial.com/detox and you will be guided step-by-step through the whole thing.

Ok, here’s a quick overview of what the 4-Week Financial Detox covers:

1. Put a pause on excess spending. Remember that this is a detox and, just like any detox, that means you have to take a break from the way you’ve been doing things. 

2. Establish new baselines for normal spending habits. Once you’ve paused extra spending, you can reset your expectations for what is normal. That’s hard to do around the holidays, so it’s great to tackle this in the new year.

3. Find (and fix!) leaks in your checking account. Listen, we all get into the subscription black hole, right? Ten bucks here, twelve bucks there, and pretty soon you’re spending hundreds each month on streaming and substack newsletters and memberships and whatnot. And the truth is that most of that stuff makes only marginal improvements to your quality of life. So finding those leaks in your checking account makes a huge difference.

4. Use your money with intention. After you’ve taken a break from extra spending, established new baselines, and cancelled or paused those unsatisfying recurring expenses, it’s time to think about how you can use your money to move your life forward.

Ok, those are the four steps.

Week one in your 4-Week Financial Detox revolves around a 28-day spending fast. Normally when we talk about fasting, we mean intentionally restricting caloric intake. This allows your body to process what you've already consumed, get rid of accumulated toxins, and recalibrate the way your body & mind perceive how much and how often you need to consume to feel normal.

And I’m using the word consume deliberately. We live in a culture driven by consumer spending, and so the 28-Day Spending Fast does the same thing for your money. Your challenge is to take a break from all discretionary spending for the next four weeks. This does not impact essential expenses like housing, bills, debt repayment, or groceries, ok? And we're not even talking about turning off your subscription services (yet – we'll look at that in week 3).

But for every expense that involves a choice, your choice should be "nope, I'm going to skip that". And yes, you'll miss a few deals and a few nice meals in restaurants. That's ok: this is just a temporary break to get back to basics.

Week two is all about establishing new baselines for your spending. The first step is to make a list of all recurring expenses, whether monthly or annually. This might sound like a big deal to some people, but I promise you can do the whole thing in less than an hour. It’s not a budget, it’s not about what you should or should not do with your money; we’re just taking note of your current recurring expenses so we have a new frame of reference.

Here’s how to get started: log into each of your bank and credit card accounts and look for the recurring expenses that happen month after month, then write them down on a piece of paper. That list should include things like housing payments, bills, and subscription services, but not things like groceries or dining out that will change from week to week. You should also include expenses that only happen once each year, like Amazon Prime or annual credit card membership fees. For the expenses that go up and down each month – your electric bill, for example – just add up the payments from the last 6 months and divide by 6. That’s close enough.

Once you add up all of those recurring expenses, you have the average minimum amount of money that leaves your bank account each month. This is just the minimum, so you will always spend more than this amount, but seldom less. 

Once you know your minimum average monthly expenses, you also have a number for the minimum safe balance for your checking account: if it dips below that number, you're at risk of overdrawing the account and need to pull back your spending.  Remember this is about establishing baselines. So this average monthly minimum spending number — which is now also your minimum safe checking account balance — acts as a quick reference for when you are spending the normal amount, a little bit more than usual, or way too much. 

Week 3 is focused on finding & fixing leaks in your checking account. There is so much money that disappears due to subscriptions and memberships, etc., that we don’t even notice; and many of those expenses are just siphons that pull money out of your accounts with little improvement to quality of life.

So, with your list of recurring expenses in hand, I want you to do an exercise that I call “Pause, Punt, or Pass” to help you identify ways to save money. 

• When you designate a recurring expense as Pause, that means you will skip it for one month. It’s just a short break to save a little cash and, who knows: if you don’t miss it all that much, maybe the pause continues.

• Punt means taking a 3 month break, giving you some extra time to decide whether an expense improves your life (or not). So, if you’re on the fence about any of your subscriptions or maybe you stopped using that cool app that has a monthly fee, go ahead and punt them for three months.

• And Pass means choosing at least one recurring expense that you will permanently remove from your life. Adios, sayonara, adieu: you've just simplified your life – and your spending.

Here’s how it works: for each category, you must choose at least one recurring expense. You can add as many as you want after that, but you must identify at least one expense to pause, one to punt, and one to pass. 

Now, of course, it’s your money and it’s up to you to decide how to use it. If you decide that you absolutely need those expenses back in your life, then by all means add them back in. The point is not to stop spending on everything forever; the point is to make sure you’re spending on the things that actually matter. This exercise gives you a chance to test that out. And again, you can Pause, Punt, or Pass as many as you want, but you must do at least one of each.

And the final week of the four week challenge is focused on spending for fulfillment. 

Stop me if this sounds familiar: you see something super cool on social media or Wirecutter or your favorite shopping website, and you click the link, and man, oh man, wouldn't that be a great thing to have in your life? So You hit "add to cart", check out, and it feels so satisfying … for like 15 seconds.

Then the thing arrives and ... it's fine. You spend a few minutes with it, then put it on a shelf or in a drawer and it becomes just another thing. That kind of spending keeps you on a treadmill of chasing the next dopamine hit, which quickly fades and never feels like enough.That is the opposite of spending for fulfillment. 

Instead, spending for fulfillment enriches your life (pun intended) and – rather than accumulating more stuff – it usually centers around activities like hobbies or experiences with friends & loved ones. What's better: a dinner at your favorite restaurant with your sweetheart, or a really cool pair of sunglasses? They probably cost about the same, but I’ll tell you from experience: the coolest sunglasses start to feel really ordinary faster than you’d think. Spending for fulfillment, on the other hand, often includes experiences that will never happen again, but have the potential to improve relationships, help you learn & grow, and lead to a more full and interesting life.

Your final challenge is a thought exercise, an aspirational exercise: what is One Thing, capital O capital T, you could do, have, or be in the new year that would unquestionably make your life better? That could be an experience, a vacation, taking a class, learning a skill, etc.. If you need a prompt, start by thinking back on the last 6-12 months and pick out one use of money that was an unequivocal win. How can you have more of that?

When you choose your One Thing, write it down and post it somewhere that you will see it every day. Make that One Thing your priority: when you save money, you're saving for that; When you spend less, it’s because of your One Thing.

You work hard for your money, so your big purchases should mean something big. Prioritize spending for fulfillment by focusing on your One Thing, especially when it involves skipping lots of other stuff along the way. Having a clear focus for why you’re saving more and spending less will help you stick with it.

And that, my friends, wraps up the 4-Week Financial Detox. As I mentioned, there are templates and stretch goals available at iselerfinancial.com/detox, but this post gives you everything you need to reset your spending habits and start the new year off with solid financial decisions. I encourage you to give it a go: it’s not that hard, it doesn’t last that long, but the upsides are real and can help you reframe how you think about spending your money.

If you want to have a conversation about whether your investments line up with your best vision for the future, hit me up. This email address is always checked by yours truly.

Thanks,

Timothy Iseler, CFP®

Founder & Lead Advisor

Iseler Financial, LLC | Durham NC | (919) 666-7604

Iseler Financial helps creative professionals remove stress while taking control of their financial lives. We'll help identify current your strengths and weaknesses, clarify and refine your long-term goals, and prioritize decisions to improve your financial well-being now and later. Reach out today to take the first step.