Note: This blog post is a sponsored conversation written by Lynn Smythe, the Founder and Chief Blogger for The Creative Cottage lifestyle blog. The opinions, thoughts, ideas and text are all mine.
How to Live a Simpler Life Following a Minimalist Budget
A recent article published to The Creative Cottage mentioned how you can declutter and organize your living space to live a simpler life. That particular article focuses on using Marie Kondo’s KonMari method to take inventory of your current belongings, evaluate what you really need and sell or donate the rest.
On your journey to living a simpler life you can also learn ways to save money while sticking to a budget. But first, you will need to learn the importance of downsizing your monthly expenses and how to start changing your spending habits ASAP.
Make a List of Your Expenses
This is probably towards the top of my least favorite things to do as an adult. I’m sick and tired of adulting, can I get off this crazy ride now!?! Well, I guess not – LOL!
However you do it, with a pad of paper and pen, or a fancy spreadsheet, you need to sit down and make a list of all your expenses. And I mean EVERYTHING. Rent, food, clothing, all utilities, insurance, phone, car, internet, gas, food, loans, Starbucks, etc.
I use my debit card for most/all purchases so I can take a look at my last bank statements to see where my money went. You will need to list out your monthly expenses and then any other expenses that may occur throughout the year.
You also need to take a look at expenses that don’t occur on a regular basis. Things like oil changes, new tires, going out to dinner with family, concerts, uninsured medical expenses. You can see how quickly your budget adds up – are you making enough to even cover your minimum payments on all your credit cards?
Identify Financial Priorities
Following a minimalist budget starts out by eliminating non-essential items and getting rid of extra expenses (monetary clutter) to leave more money for necessities and what you value most.
While I would love to book a 2-week trip to Hawaii, that’s probably not on my immediate expense radar. What is on my immediate priority list is saving up first and last months rent and a security deposit (equalling three months rent) to get my own place.
That’s a chunk of change to say the least, especially when I’m following a pretty tight budget to begin with. So, when it comes time to make a purchase, instead of cracking out a high interest credit card, save up your money to pay cash.
I’ll use my mom as an example. She’s retired now but she used to sell the heck out of real estate in upstate NY. Back when she was making bank, she was pretty thrifty and paid cash for most major purchases. Even when it came time to buy a new car – she kept driving her old car until she saved up enough to pay cash for her new vehicle.
I thought that was pretty impressive because I currently have 2 more years of monthly payments before paying off my car. Can you imagine not having a monthly car payment!?! Oh, the things I could do with an extra $320 a month!
Eliminate Unnecessary Expenses
This one may be more difficult for some of you. Hey, I get it, “Hi, my name is Lynn, I used to be a Starbucks junky.” I got stuck in a rut of grabbing a cup of coffee and/or something to eat on my way to work. If you are doing that everyday, that can quickly add up to $30, $40, $50 or more each and every week.
While I still occasionally treat myself to a Venti Caramel Macchiato Soy No Whip, it’s usually only if I have a gift card that someone gave me for a birthday or Christmas present.
I’ve learned that I can make a mean cup of coffee at home – fresh brewed, French press, and I’ve even recently discovered how to make overnight cold brew coffee. Yes, it takes a bit of planning and a tiny bit of time to prep and make everything, but you will save mucho, mucho, mucho $$$$ in the long run.
Simplify Your Accounts
Do you really need a Visa, Discover and Mastercard? What about house accounts like Kohls, Target, Walmart and Home Depot? Take a good look at your spending habits, start paying off your smaller accounts first and then roll over that monthly payment to your next higher debt, etc.
You don’t want to cancel all your accounts, as that could potentially lower your credit rating, but you should make a goal of not opening any new accounts and paying down the ones you currently have.
Interest rates on some credit cards are as high as 18 to 25 percent. That is almost like having to pay back a loan shark – avoid this situation if you can. Start putting away 5, 10 or 20 percent of each paycheck so you can pay cash for most major purchases.
Question Every Purchase
Just because you have fewer items, doesn’t necessarily mean you are going to spend less money. You have to find a happy medium between minimalism and frugality if you want to gain financial freedom and get out of debt.
Luckily, minimalism should encourage frugality. Instead of buying more, more, MORE, you should rethink each and every purchase. If you already have a pair of black slacks do you really need another pair?
Resist the urge to buy new clothes, new possessions, new THINGS until you actually need them.
Spend Less Than You Make
This should be a no brainer but it’s actually really easy to spend more than you make. With everyone and their brother ready to hand out a new credit account you can quickly find yourself owning thousands, if not tens of thousands of dollars.
And all the borrowing comes with a cost – sky high interest rates can have you paying back 2 to 3 times the original amount you borrowed. So, instead of reaching for your Visa, Discover, Mastercard the next time you are shopping, take a look at your bank account and pay with a debit card instead.
Final Thoughts on Financial Minimalism
When it comes to financial minimalism, you may want to look into alternative options to a traditional bank. Banking with a credit union can simplify the process and help you get back on track all while sticking to a budget.
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