For most people, minimalism means buying less stuff, trimming down their possessions, and living a simpler life. A minimalist may maintain a smaller wardrobe, live in a smaller house, and opt to trim their collection of appliances down to what they really need. Why have a console, TV, desktop and laptop when one quality device can do multiple duties? Why buy a fitness watch if your phone can track your jogging sessions?
Minimalism Simplifies Your Life
Minimalism is a great strategy for simplifying your life, and it works well for many things, from clothing to collectibles. But can it work for your finances? For many people, the answer is yes.
Minimalism and Budgeting
Taking a minimalistic approach to budgeting is a good starting point to simplify your finances. Note that being minimalist with your budget does not necessarily mean being frugal. You CAN be a frugal minimalist but a lot of people who turn to minimalism do so for simplicity’s sake rather than for a desire to outright spend less.1
At the core of minimalistic budgeting is the idea of simplifying your day to day accounts. Aim to have:
– One checking account
– One savings account
– One retirement account
– At most one credit card (many people don’t bother with credit cards at all)
There are many benefits to this strategy. Firstly, you know exactly who your accounts are with and it’s easy to keep track of their status. You’re less likely to fall for phishing or social engineering attacks, or malicious text messages trying to steal your details because you will be used to dealing with that small handful of financial institutions.
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Secondly, you pay fewer fees because you have fewer accounts.
You do lose out on some perks, however. You will get fewer freebies, and you will not be able to take advantage of balance transfer deals, reward hacks, coupons or other special offers that rely on you opening and managing multiple accounts. This could mean that financially you end up slightly worse off than someone who is willing to “credit card tart”, however, you will save time and stress and for many people that benefit is worthwhile.
Making the Shift To Minimalism
If, right now, you’re finding that you need a breath of MONQ Zen to find your inner center before you tackle your bank statements, then you might find that minimalism will help you a lot. The stress that you are feeling when your bank statement arrives likely comes from having an overly stretched budget. You need to take control of that.
Instead of thinking “That phone is a great deal at $50 a month”, look at what it would cost to buy that phone outright, and downgrade your phone package to a SIM only one. If you’re paying $250 a month for a car, could you buy a used car outright and save that money too? Make the shift from renting to owning and you’ll feel so much better in the long run.
Set Your Values
Everyone has different priorities.
If you are in debt right now then clearing that debt is a good starting point for cleaning up your finances and is something that you should seriously consider.2 Once that is done then you should think about what matters the most to you.
Would you like to own your own home? Is your number one priority having a nice car? Do you care about holidays every year or even more than once a year? What about a pension? Do you have a target age for retirement?
Mark out those important things so that you can think clearly and plan. It’s easier to turn down that takeout if you think of it as being “X percent of the cost of the flights to your dream destination”. It’s easier to turn your nose up at a new phone if your old phone works fine and you know that a new phone would cost so much that it would mean you were a month further away from owning that awesome motorcycle.
Prioritize and plan, and find more affordable ways to treat yourself. MONQ’s Healthy Blend with cinnamon will help you tackle your cravings for a cinnamon bun and spiced latte, and will last a long time too, so you can enjoy it time and time again for one purchase. When you break pricing down like that it’s easier to know what is and is not worth getting.
Don’t Fall for Fees
Minimalism means maintaining fewer accounts but you should still shop around for those accounts. Don’t stick with the bank you had in high school if they are charging you a lot of money for your account. Find a different bank and get them to move all of your payments over when you switch. You can get good deals if you are willing to look around.3
Do seek advice about switching first, though, especially if you are planning on applying for a mortgage soon. It can harm your credit rating if you shut an old account that was in good standing and you don’t have other accounts that also show a good history of being well-managed.
If you don’t have credit cards or loans then lenders don’t have a lot to go on to reassure them that you will be a good customer for them so you should make an effort to protect your credit rating as much as possible. That’s beyond the scope of a simple blog post, however, so seek specialist advice!
The minimalist way of running your accounts is just one of many options, and it is not the only thing that you can do. If you prefer to take advantage of coupons and offers, then there are benefits to that financial approach as well. Just be systematic in how you take care of your finances so that you don’t fall victim to extra fees or charges by forgetting payments. That’s what the banks expect to happen, and how they fund their offers for the few who manage their accounts well. Minimalist or not, you don’t want to throw money away.
Photo credits: GyorgyBarna/shutterstock.com