A minimalist budget seems pretty basic on the surface. Spend less and don’t buy much. But there’s more to it than just that.
Financial clutter can come in the form of credit card debt, student loans, mortgage payments, and many other things.
The goal of simplifying our budgets is to not only save more, but also to declutter our debts. It can help us feel more peace and security when it comes to our financial well-being.
Through better spending habits, we’re able to have more opportunity to spend on items and experiences that are most meaningful to us.
Here’s how to do a simple living budget and create financial prosperity.
1. Determine your priorities
Define your priorities so you can know what you want most of your finances to be used for. This will help make it more clear to you what expenses should be eliminated.
As an example, I like to prioritize saving for travel trips or investing in things that will help me in my future work. Of course, your basic necessities will be something you make a priority, but think of your passions you have.
Decide that you’re going to spend more on items and activities that reflect what you enjoy in life.
2. List all expenses
It may be a time-consuming process, but it’s a necessary one. You need to know exactly where all your finances are going.
Look into all your expenses in the last month and write them down. Here’s a small example of how you can set up your list.
|Rent or Mortgage:|
Any categories that are missing for you in this example, include them in your expense list.
3. Cut unnecessary expenses
Once you have all your expenses written down, dive deeper into how the numbers break down. Write out all the specific payments with your groceries, clothing, and other categories.
Writing out every detail of exactly what dollar amount was spent will give you a better idea of what you can cut out.
Using groceries as an example, you might discover that you spent a lot of money on some items you didn’t use much.
These can be things you cut out. With your gas, if you realize you spent a lot on filling up your car, you can game plan how you’ll spend less time driving your car.
You might surprise yourself with how much you can save if you just avoid spending so much on certain things.
4. Automate payments
Automating payments can be really useful for simplifying the process of paying your debts. Forgetting to pay a loan or credit card can be costly.
You want to avoid dealing with penalties that will set your budget back. With every debt you have, see if there’s a way to set up the payments to automatically go out on the due date or earlier.
5. Question what you buy
Stopping to think about why you’re purchasing something can help you hold off the urge to impulse buy. Here are a few questions you can consider before you purchase something.
- Why do I want purchase this item or service?
- Will it enhance my life in a way that makes me happier?
- Do I really need to buy this right now?
Just stopping to think about these questions may be enough to hold you off from making a poor purchase decision.
6. Cut down on debt sooner rather than later
As someone who has to pay back student loans, I can tell you the longer you pay it off, the more the interest is going to rise.
That means you’ll end up paying more money than you originally owed. While it may seem like you’re just kicking the can down the road, it’s more like you’re throwing your finances down the drain.
Try to pay as much as you reasonably can afford to pay on your debts each month. Once that debt is all gone, everything you earn is all yours from that point on.
7. Don’t spend more than you earn
Living above your means may make you feel rich, but you’re only adding more stress on yourself. With all that you have to pay back, you could end up in a difficult financial situation for a long time.
Instead, choose to spend less than you make so you can save more in your bank each month. Over time, you’ll have enough to fully pay for items or experiences you really want rather than having to use a credit card.
8. Set a monthly saving goal
If you felt like you spent too much in the last month, set a goal for how much you’ll save next month. Setting a specific monthly saving goal will help you to be more diligent in your purchases.
9. Strive to spend as little as you can daily
You can turn your saving into a game by trying to spend as little as possible each day. Look for all sorts of creative ways you can minimize your expenses.
Search for coupons that can be used at your local grocery store. Find discounted items where you can. Make alternative choices such as walking to somewhere nearby rather than driving.
There are many different ways you can get creative in cutting down on your spending and saving more. Here’s an article that can give you some ideas: 40 Pretty Easy Ways to Spend Less Money
10. Monitor weekly expenses
It’s important to know what you’re purchasing week to week to know you're staying on track with your monthly saving goal.
Let’s say one week you realize you spent above your weekly expense limit. Try to find ways to cut back on your buying in the next week to get back on track.
If you’re spending well below your weekly expense limit, you can treat yourself to something special the next week.
11. Use up what you have
Sometimes we think we need to get something new, when in actuality, we just need to polish up something old. There are items I’ve been able to use in my life for almost 10 years.
All I needed to do was fix up a few things and it looked or worked as good as new. Get in the habit of just taking care of what you already have and making use of it for as long as possible.
It can help you save a lot more in the long run.
12. Create a vision board
It’s good to have something to inspire and motivate you to want to save more. You can use your wall, a piece of cardboard, or your screen.
Put together some images of items or experiences you hope to experience someday. Look at the board every single day to inspire yourself to spend less.
When you make use all of these tools, you’re going to be more likely to use your finances as a tool for creating a happy life for yourself.
How do you simplify your spending? Let me know in the comments.