One of the things that my partner wanted for Christmas was a subscription to a magazine called Simplify. It centres on a trend to minimalism. Life for many has become too complicated with a focus on wants, not necessarily needs. I find that people are getting older, they naturally want to move in that direction. Right sizing, passing on possessions to family, and getting rid of things they don’t need come to mind. For younger generations, the cost of living has pushed us to the need to live minimally because of the cost and space of available accommodations. These trends have led to the minimalist movement.
Minimalism focuses on reducing the clutter in your life both in physical objects and in other distractions. People who embrace it find ways to eliminate the distractions from their lives and it opens up more opportunities for them in other ways and areas. Embracing minimalism does not mean that you stop spending money, but it can mean that you spend it on other things and your focus may change from making money to enjoying life. As a financial life planning firm, we decided to concentrate this post on 10 ways minimalism can help your finances.
Prioritize your spending
Minimalism encourages you to embrace the things that are most important to you. This will naturally carry over into how you spend your money. If you are not focused on acquiring certain items but more focused on specific experiences, the way you spend your money changes. Realizing what is most important to you will help with your spending priorities and this can carry forward into the way that you handle your money overall.
Limits the need for things
When you are focusing on minimalism you are often limiting what you own. Since you own less or spend less on buying items, it can help you if you need to cut back on your spending to increase your savings or to get out of debt. Often since you are not buying as much you can put more money towards other financial goals that can help you focus on experiences rather than things. This may mean early retirement or better vacations.
You need less room
When you are practicing minimalism, you need less room to store everything that you have collected over the years. When you buy or rent a smaller space, you can save on rent, but you can still have a nice home with clean lines and a space that you love. As you begin to clear out some of your things, you may find that you can save money by moving to a smaller place. Not only will this save you on your rent or mortgage, but it can save you on utilities and free up even more money to spend on the things that are most important to you.
Gives focus on financial goals
Minimalism is about practicing mindfulness in your life. This can benefit you as you begin budgeting and setting your financial goals. Budgeting is a spending plan based on your current priorities. As you discover what is most important to you, it becomes easier to decide when and how to spend your money. It can also help you see areas where you need to change the way you handle your money like the amount that you pay in interest each month on various loans.
Focus on living debt free
One way to simplify your finances is to focus on getting out of debt. Many people begin by paying down their consumer debt and then choosing to only have a credit card to handle emergencies. Getting rid of debt opens many doors and gives you the freedom to leave a job that you do not like or take off a year to travel. If you do not have additional monthly payments, it is much easier to explore and do the things that are the most important to you.
Free yourself of items
If you are just beginning to embrace minimalism, you can sell the items you no longer want or need. You can use this money to help you begin to clear up the financial clutter in your life, like your debt. The money can also go to jump-start an emergency fund or to fund a trip that you have always wanted to take. As you rid yourself of the clutter in your life, you can use the money to clear up your financial mistakes too. Holding a yard sale is an easy way to sell a lot of items quickly.
Ways to simplify your finances
There are several things you can do to make handling your finances easier. You can pay your bills all on one day. You can switch to cash for everyday purchases which make tracking your spending easier. You may also want to find an app that simplifies the budgeting process. If you find a mobile app that works for you, you can enter purchases on the go and now where you are with your goals and limits.
Makes giving easier
When you know what is most important and have your finances under control, it can make giving back easier. This may mean giving back in time or giving back through donations. When you are practicing minimalism, it is easy to recognize what you can give and how much you can give. It makes shifting your priorities easier when needed.
It is interesting on changing trend from a “me” movement to a “minimalist” movement. Personally we have embraced this concept. Giving more of our time and not trying to placate our relationships with gifts. Forgoing the expensive items in our life and making more economical and frugal decisions. Trying to concentrate on the needs in our life and limiting our wants. As a firm, we continually coach clients in incorporating this in their own lives if that is an expressed desire. Sometimes it is a necessity. In all respects, our primary focus, in our client planning is Keeping Life Current.