The new money mantra: less is more

Posted at 5:54 AM, Sep 15, 2015
and last updated 2015-09-15 08:54:36-04

Being a minimalist is all about paring down your lifestyle to what you truly need and removing the aspects of life that distract you from pursuing what is most important. While it has been a popular and growing movement for the past few years, you can apply the ideals of minimalism to help make smart personal finance decisions. This may not mean the same thing to everyone. This doesn’t necessarily mean you have to overhaul your life, but you can manage your finances more mindfully and simply.

Make Your Lists

It may seem like a challenge to change how you think, but when you really consider the goals and motivations of minimalism, you may be surprised how quickly you get convinced. You could start by making two lists: the essentials and non-essentials. This includes not just material items, but also financial goals like making 401(k) retirement contributions or buying a home. Then, take a hard look at your budget and assess whether your regular purchases and budget align with your goals and life mission. You can get a sense of how much money you really need and not just for things that you want.

By questioning all spending, you may find you are able to trade money for time and freedom, allowing you to focus on pursuing your passions and contributing to society. This can be in the form of early retirement or just fewer hours needed to work on a weekly basis because your expenses are lower.

Taking Action

Try incorporating not just a leaner budget, but also some minimalist money tips so you can spend less, save more and still live happily. It can be a good idea to learn to use what you have already and take a look at the ways you are currently throwing money away. The biggest culprits are usually food and energy waste, so take a look around and see if you can reuse things when possible. You can really rack up savings when you focus on what you have vs. what you don’t. It’s a good idea to take a look at what your debt is costing you too — this lifetime cost of debt calculator can help you crunch the numbers. Once you see how much money you’re losing to debt, you can look for ways to consolidate your credit card debt, like a personal loan or a balance transfer credit card, which can lower your interest costs and help you manage your debt or eliminate it entirely.

Another minimalist method that can help your finances is consolidating your money into one or two accounts. Streamlining your finances takes the hassle out of balancing multiple checkbooks, cuts down on service charges, and reduces the potential for things to fall through the cracks. You can also automate your savings, which eliminates the need to actively transfer money between accounts and avoids the temptation of spending money that you are hoping to put toward another use.

Moving Forward

Making some minimalist changes in your personal and financial life can be liberating and terrifying at the same time. You may feel excited and free, but you may also struggle to let go of some of your old material comforts.

Even if you don’t want to make the jump to extreme minimalism, you can take a lesson from the movement. Allowing that less-is-more approach to guide a few simple changes can profoundly impact on your finances and overall outlook.

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