Financial Minimalism 101

Similar to practicing minimalism with your material possessions, practicing financial minimalism can give you a sense of both control and freedom. Control over your financial situation and freedom to take risks and pivot your lifestyle whenever it suits you.

Sound good? I know, I feel to pounds lighter just thinking of it. So let’s get started implementing. Here are 5 simple tips to implement financial minimalism in your life.

Practice minimalism with your physical possessions

99.999% of us have too much sh**. It’s true. Between that air fryer your mom bought you, your box of “memories” that hasn’t been opened in 10 years, and your random stack of papers that doesn’t seem to shrink, there’s a good chance you could benefit from practicing physical minimalism.

Keeping our physical possessions to a bare minimum can help immensely with our spending. When we have less stuff, we feel more free. When we feel more free, we want to KEEP it that way. This means, we don’t crave spending money on acquiring new possessions.

I went through a minimalism journey in 2018 when I left Boston, MA to take on a nomadic lifestyle. During that time, I had to get ride of most of my possessions, keeping only what could fit in a couple of boxes. The process sucked at times, but I’ve remained constantly mindful of the stuff I choose to bring into my life. Hence, why I don’t really like to shop. PS: My dislike for shopping is a huge asset to keeping our expenses low.

In summary, to save more money, own less stuff. Less stuff = less maintenance and lower cost of replacement.

An awesome resource on entering your journey with minimalism is The Minimalists (https://www.theminimalists.com/). They have an awesome blog, a podcast, and an inspiring documentary.

Get To Your Bare Bones Monthly Spend Point

When thinking through budgets with clients, I often ask them to think of their monthly “NEED” number. How much money do you NEED to spend per month to keep your quality of life relatively the same? This can sometimes feel bare bones, but having your monthly fixed expenses LOW allows you to (1) have more disposable income that you get the CHOOSE what to do with and (2) save more money.

If you could cut your monthly fixed expenses to the bare minimum — no subscriptions, no memberships, no car payment, etc — how could you use that extra money? Answer— To buy freedom. Time freedom, travel freedom, etc.

So my challenge to you is what monthly fixed expense can you cut? Can you pay off your car loan sooner than expected? Can you cancel your gym membership and just pay for drop in visits instead? Less is more here.

Get An Easier Financial Process

When thinking through your financial processes, a lot of us tend to overcomplicate things. Find a process that works for you and use it. 

My process? 

I have three main bank accounts — day-to-day (checking), emergency fund (savings), and goals fund (savings). I also have one main 401K that I contribute to on an ongoing basis. I have ONE spreadsheet that tracks it all and I update on a quarterly basis.

One thing to note, if you feel like you have too many accounts — you probably do. Consider rolling over old 401Ks, investment accounts, etc. You can use a service to do this for you like Capitalize: https://www.hicapitalize.com/

Simplify Your Sh** Through Automation

Along with the point above, automation will help us keep our financial lives minimalistic by taking the manual labor out of the process. 

If you’re contributing to retirement accounts, please setup an auto-contribution ASAP.

If you have credit cards, setup monthly auto-payments for the entire card balance.

Most of your bills — utilities, cable/internet, etc. — will have auto-pay capabilities. Spend the 1 hour setting up auto-pay for your financial life and I promise you will thank yourself.

Limit Lifestyle Creep

This is my most important point yet. Lifestyle Creep, as defined by Investopedia, is the phenomenon where discretionary consumption increases on non-essential items as the standard of living improves.

 As you earn more, you WILL want to spend more. It’s human nature. Moreover, “keeping up with the Jones’” is a trap that we all fall into from time to time.

In my opinion, lifestyle creep is bullshit. Most of us are already living really comfortable, awesome lives. Spending money won’t increase this exponentially.

Instead, it will take away more of our freedom because the more we spend, the less we can save. The less we save, the further we are from financial independence. The further we are from financial independence or security, more we have to keep trading our time for money.

Keeping your life physically minimalistic will help a ton to prevent lifestyle creep. The people who you surround yourself with is also SO important. If your community or friend group places value on spending money to establish your worth in society, this is a problem. 

Consider surrounding yourself with friends that are also minimalists at heart and who understand that you’re not just being “cheap”, you’re protecting your most important asset which is ultimately your time freedom.

OK — soapbox over. I hope you can take some of these financial minimalism tips and implement them in your daily life. Comment below with any questions or to share your journey with minimalism!