Adopt these minimalist principles to help simplify your finances
These minimalist principles can help you reduce clutter, simplify and improve your finances.
Do you have too much stuff? Does your money seem to evaporate each month, leaving you questioning where it's gone?
If the answer to these questions is "yes," then read on to find out how living a more minimalist lifestyle can help you reduce clutter and improve your finances.
What is minimalism?
The concept of minimalism is pretty self-explanatory: it's all about living with less.
The goal of minimalism is to remove excess "stuff" from your life and make space for the things that matter most to you. Moreover, minimalism is about living intentionally. It requires you to assess what you value — and in doing so, you get to decide how to spend your time and money.
If you want to take a more organized, purposeful and simple approach to your finances, you can start by implementing 2 basic minimalist practices: reducing clutter and spending with intention.
Reduce financial clutter
Financial clutter is simply the collection of unnecessary financial "stuff." There are many forms of financial clutter, including:
This includes all your tangible financial documents. You know, those papers scattered across your desk or stuffed into boxes — old paper bills, receipts and statements that you no longer need to hold on to.
To decrease physical clutter, only keep the documents that serve a specific purpose, such as your tax records. If you haven't already gone paperless, now's the perfect time. Moving from a paper bill to an electronic one is helpful in reducing physical clutter. In addition, it's better for the environment—and it's also good for your wallet, as some institutions are starting to charge for those paper bills.
You can also clean out your purse or wallet and count your credit cards, debit cards and loyalty cards. Are you using all of them? Are they all necessary? If not, get rid of them. To ensure these cards are disposed of safely, first call to cancel your account, and then cut the cards up, making sure you cut through the numbers, your name and the magnetic strip or chip.
While digitising paper documents is a great way to reduce physical clutter, if it's not done properly, you might just be moving the clutter from one form to another.
Take inventory of your digital documents and toss them in the virtual trash. The same goes for online bank accounts — review what you have and consider consolidating in order to simplify your finances.
You can also look at what software or apps you've accumulated. If you're not using them or if they're not serving a specific purpose, they count as clutter.
Finally, while automating some payments is a great way to simplify your finances, make sure you're aware of what you've automated. When you don't have to think about paying a bill, it's easy to forget that you're paying for something you might not necessarily be using, think about subscriptions or memberships.
There is true value in cleaning up your financial clutter. First, you'll feel lighter and more organized. Second, it can save you time, which means no more searching through piles of physical or digital junk mail. Third, cleaning up your finances will give you a better understanding of where you stand—how much do you have in savings, investments and debt? This awareness will give you more control over your finances, and you'll likely feel more ready to take on the next step.
Spend with intention
Intentionality is another aspect of minimalism. When it comes to your money, it's important to have a clear idea of how you want to spend it.
The goal of intentional spending is not about restriction or deprivation. Rather, it's about prioritization. Think about what is important to you: what is worth spending your hard-earned dollars on?
If you enjoy the movement and stress relief you feel after a good yoga session, then buying a membership to your favourite yoga studio or investing in a quality yoga mat is an example of intentional spending. Similarly, if you are passionate about travelling and seeing new places, then a weekend getaway will be worth it. The goal is not to halt all spending. Instead, it's about spending on the things and experiences that align with your values.
If you want to begin spending with intention, here are 3 easy steps you can take:
Think about past purchases and how they made you feel over time. What purchases have left you feeling happy and satisfied weeks, months or even years after the fact? On the flip side, what purchases did you come to regret?
Create a financial plan. The simpler, the better. In order to achieve your financial goals, create an inventory of how much money is coming in and going out.
Determine your financial priorities. Now that you know where you are financially, where do you want to go? Is paying off debt a priority? Do you want to put money in your children's college fund or bulk up your retirement savings?
Intentional spending might also support you in reducing financial clutter. By being more aware of how you spend, you may be less likely to make impulse purchases that take up unnecessary space in your life.
So, how do you take the first step? Take a deep breath and decide which small actions you can apply to begin decluttering today. Then, give yourself some time to think about what you truly value and how you can begin to spend with intention.
By being more aware of your financial situation, you can simplify and streamline everything from your physical space to your bank accounts and even the number of credit cards in your wallet. It's incredibly simple, but also incredibly effective.