how to be a financial minimalist

Being a financial minimalist makes managing your cash so much simpler. In this wild world where we have a heap of financial opportunities and options, it’s important to think strategically about how you want to invest your time and money. It’s not about how much stuff or money you have, but how you choose to manage, use and invest it. Glen and John had the chance to chat with Bec from The Everyday Organiser about how you can bring minimalism into your financial life so you stay focused and avoid becoming weighed down by unnecessary financial burdens.

Have a listen to the episode where Glen and John chat with Bec, and check out our tips below about how to be a financial minimalist:

let’s cut your expenses back – be ruthless!

First, let’s build a mindset of LESS. Look at what you spend and question where your money is going – do you need that expense at all? We’re not even talking about reducing the cost of things yet – first get ruthless with the idea of culling any expenses you can cut completely from your budget! Top of your list should 100% be getting rid of consumer debt – that’s personal loans, car loans, buy-now-pay-later schemes and credit cards. These debts choke your cash flow, typically take forever to pay off and add line after line to your weekly expenses. It’s too much! Aim for no debt, no lock in phone contracts, you might not even have a car in some capital cities. Cancel the gym and work out at home for free! Give yourself permission to let go of things that financially hold you back or pin you down. Sometimes a good place to start is the big 4 essential costs – accommodation, transport, basic bills and groceries. Keep accommodation costs (rent or mortgage) below 30% of your net take home income wherever possible, and try to get the best deal on the other 3 expenses first – cancel everything else and start from scratch. Get comfortable asking your providers for reviews of your current contracts or deals, and if they can’t offer you anything better, check out the competition. Don’t just stay with one provider because you’re feeling lazy with paperwork! Read through Glen and John’s budgeting hacks to see if any of their points apply to your situation.

consider the ongoing stress involved

Becoming a financial minimalist isn’t just about becoming completely frugal. It’s about making your life simple in practical terms as well – aim to keep it simple, not stressful. Some decisions need to be considered simply from how much drama they’ll add to your life and money management. Paperwork is a big one when it comes to finances – an example could be say when tax time comes around you might think doing your tax return yourself saves money. Lots of people choose to do it this way. But an accountant will do it faster, potentially cover off on some tax deductions you don’t know about, and sure they charge a fee – but you aren’t wading in receipts till midnight trying to figure out what the heck you’re doing! In that case the fee is worth it for reducing your life stress. Likewise you might decide that investing in shares is the better option for you because investing in property comes with all kinds of costs and paperwork you just don’t want to deal with (or maybe you do! You do you.). Choose what suits your level of management chill or stress – think through what the ongoing time, money and drama costs involved will be.

be intentional with your spending

Now that we’ve cut back your spending let’s streamline all future spending to your goals. Target everything towards your personal values and goals only – invest the rest. Don’t have a list of 52 simultaneous goals – stick to a handful to focus on at one time. Have a budget that you always stick to. Ensure there is no wasteful spending – don’t just buy ‘stuff’ – invest in things that align with your needs and values. Challenge each purchase you’re considering – do you really need this item? What essential purpose does it serve? Does it align with your needs and values? Get comfortable saying no to the things that do not align with your goals and suggest alternatives that cut back on cost. A good example might be a mate wanting to have an expensive dinner out – simplify costs and cook at home! You still get to enjoy that time with a friend, but your bigger goals are taking priority over a more impulsive spend.

create sinking funds and automate your bills wherever possible

Automating your bills saves so much time and headspace! Don’t waste time managing each individual bill as they come in - set up a sinking fund for your expenses! Estimate how much your expenses are costing each pay cycle and put that money in a dedicated account so you have the money ready whenever the next bill comes in. Set up regular direct debits wherever possible so your bills are getting covered each pay without too much extra thought. These actions reduce the amount of labour and headspace required by you to manage your bills, so they’re well worth the time!

get clear on your needs vs wants

Every financial decision should be assessed through the lens of whether what you’re about to spend money on is a need or a want. This isn’t to say that financial minimalism is about ignoring the things you want and just sticking to the essentials – not at all. Your essentials should come first, however, and the wants that trickle into your budget after that should really be challenged against your values. Sometimes we want many great things at once, and that isn’t always possible. Which of these wants in front of you resonates the most with where you place value in your life? That’s where you want your time, energy and money to be going.

do a stock take of your subscriptions

Businesses and services are trying to build subscriptions models into everything, from toilet paper to make up! As a consumer it’s too easy to collect subscriptions – how many entertainment subscriptions do you have? It makes sense for these businesses to use this model – they’re guaranteed that $80 fee every month, that’s some sweet cash flow! But these ongoing subscriptions really add up and sometimes we don’t stop to assess whether we really are reading that online magazine, getting through that facial cleanser or wasting any of that monthly subscription based food delivery. In some cases you’re better off buying it when and as you need it. Cut the transactions down and buy based on need.