It is really easy to over-complicate personal finance. Scary-sounding terminology and emotional weight from our past experiences with finances prevent us from regularly managing our finances.
Approaching money with a minimalist mindset can help you clean out the mental clutter and emotional anxiety around money. Combining minimalism and money can help you make more purposeful spending decisions, which can lead to a significant increase in the amount of money that stays in your bank account every month.
I’m going to share five minimalist money habits that can help you take the stress and complication out of finances. By implementing these minimalist money-saving tips, you’ll be able to make more future-driven decisions.
What is Minimalism?
A lot of people think of minimalism as an aesthetic with white walls and scandi-inspired furniture. Or as an extreme way of living, like owning less than 100 items or living in a tiny home.
Actually, minimalism is a lifestyle centered on intentionality and simplicity. It isn’t that minimalists don’t believe in owning things, it’s that they believe in only owning things that add value to their lives.
Minimalism and Money: 5 Minimalist Money Habits to Spend Less
Combining minimalism and money helps you make more purposeful, future-driven financial decisions. Plus, eliminating excess and clutter in your life cleans out stressors that come from investing energy and money into things that don’t really matter or improve your life.
Here are five minimalist habits to help you better manage your money:
1. Spend with Intentionality
If you’ve worked from home, have you ever found yourself mindlessly walking over to the pantry, picking out a bag of chips, and snacking on them while you work? And maybe an hour later you go back for seconds and then thirds…? (It’s not just me, right?)
When I tend to graze instead of sitting down for proper meals, I never feel full and satisfied. And when I do it too often, it carries consequences, like bloat or weight gain.
Spending money unintentionally causes the same problem. Expenses just keep adding up and you end up wasting money on things that only bring short-term satisfaction. They end up becoming more things to manage and worry about.
Here’s are a few ways to make sure you’re spending your money intentionally:
- Prepare before you shop. Before you go to the store, make a list of things you need to buy.
- Don’t make impulse purchases. If you spot something while shopping, ask yourself, “Is this a need or a want?” If it’s a want, then leave it and take some time to think it over. Ask yourself:
Why am I buying this?
How often will I use it?
How will it improve my life?
There’s nothing wrong with buying things you like and will use – just make sure it isn’t going to collect dust in the back of some closet.
- Focus on quality over quantity. Instead of spending money on cheap products, wait until you can buy a higher quality item that will last longer. Or focus on saving for experiences over objects. Maybe instead of stocking up on home décor, try saving up for an amazing vacation – cycling Europe or getting pampered in Hawaii…whatever your dream is.
2. Live Within Your Means
Imagine you just walked in the door after a long walk on a hot day. You go into the kitchen to pour yourself a cup of water, but as you’re pouring, you realize water is leaking out the bottom.
Would you keep trying to drink out of that cup? Or would you grab a new one or try to fix it?
A cup that can’t retain water doesn’t serve you because it can never quench your thirst. The same thing happens when you’re spending more than you make. If you can’t hold on to any of the money that you’re making, it will hurt you in the long run.
Alternatively, when you live within your means — when you spend less than you make — you can relax, knowing that you’re making enough to afford your lifestyle without getting into debt and while putting some money away to take care of future you.
How to live within your means:
- Download an app to track your spending. Before you can make adjustments, you need to know where your money is going. There are several apps you can download that will help you track your spending habits and stay within a designated budget.
One of our favorite financial apps is Empower. This app will give you a monthly analysis of your spending habits and even send you alerts when you’re about to go over your self-designated budget. It’s like having a techy angel on your shoulder telling you the right thing to do with your finances.
Once you’ve gathered data on your spending habits, look back at what you’ve bought in the past month and figure out what you can eliminate or reduce.
- Use the 50/30/20 rule to keep your budget in check. In this approach, 50% of your monthly income goes to needs (things that are essential to keeping you alive, like food, water, and transportation), 30% goes to wants (things that make life fun, like movie tickets or spa days), and 20% goes into saving and investing.
- Go “bare bones” for a week or month. “Bare bones” is spending as little money as you can to get back to living within your means. It means no take-out, cooking the food in your pantry, and canceling your subscriptions. Basically, spend as little money as possible so that you can start saving money each month. Don’t worry – it’s not forever; it’s just to learn what you need to do to be able to save money!
3. Focus on your Long Term Goals
Have you ever watched Tidying Up with Marie Kondo? (Huge fan over here!) Marie’s philosophy is, essentially, to get rid of anything that doesn’t “spark joy.”
A minimalistic approach to finances is like KonMari-ing your life; you should be able to express how every way you’re spending money is serving you. And when you become more intentional about the things you want in your life, you’re forced to think more about what kind of life you want — what truly sparks joy for you.
Many of our current actions are dictated by our long-term goals. If you aren’t thinking long-term about what you want your life or financial future to look like, you’re not going to make a plan to get there. This means that you may not be able to buy a house as soon as you’d like or spend as much time with family or donate to causes you care about.
How to focus on your long-term goals:
- Think about your personal goals and how money can help you achieve them. Do you want to travel more? Quit your job? Donate to a cause you care about? Write down five reasons why you want to build your wealth to help stay focused and motivated.
- Before you spend money, ask yourself three questions:
How will this help me achieve my goals?
How does this fit into the future and life I want for myself?
Will it serve me right now?
For example, an online business course may be helpful in achieving your dream of starting your own business, but if buying that course will put you into debt, then it may be more of a setback than a step in the right direction. Don’t focus so much on your long-term goals that you ignore your current needs.
4. Tackle One Money Goal at a Time
When you’re running long distance, you don’t want to break into a sprint right from the starting line. You’ll wear out quickly, so your time will be worse than if you had just started at a slower, sustainable pace.
Similarly, trying to accomplish multiple money goals at a time can be complicated and anxiety-inducing. When you focus on accomplishing one realistic goal at a time, you’re more likely to stay motivated and confident instead of burned out and overwhelmed.
Building wealth is a lifelong endeavor; you don’t need to drive yourself crazy doing all the things all at once.
If you don’t know what goal to focus on first, follow our wealth-building roadmap:
- Make sure you’re making more than you’re spending each month
- Pay off any high-interest rate debt
- Build up an emergency fund
- Save for retirement
- Invest and grow your money
Speaking of investing, that brings us to the final tip for combining minimalism and money:
5. Keep Investing Simple
As humans, we’re locked in what leader and business strategist Greg McKeon calls “the undisciplined pursuit of more.” We think that we have to do and be it all.
Again, minimalism is all about simplifying your life and eliminating unnecessary stressors. There are ways to invest that don’t require hands-on management.
Tips to keep investing simple:
- Avoid day trading and single stock purchases because you’ll have to keep a close eye on how those fluctuate.
- Stick to target date funds. These are portfolios of stocks and bonds. Think of it this way — if a single stock or bond is a flower, then a target date fund is a whole bouquet. It provides more substance and variety. These investments help even out the tumultuous ups and downs of the market, and you aren’t personally responsible for managing them.
- Don’t invest in anything you don’t understand. Take the time to educate yourself on your investments. If something is too difficult to understand, just stay away.
To Put It Simply…
Managing your money with minimalist money habits cleans out all of the emotional clutter. By spending intentionally, living within your means, focusing on the long term, tackling one money goal at a time, and keeping investing simple, you can experience calm and joy while purposefully building your future.