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The minimalist mindset focuses on simplifying your life to include only what you truly need; the things in your life that provide value.
By cutting out the clutter, it allows you to focus on what’s truly important to you. It also has the added benefit of removing sources of stress and anxiety in your life, so that you can lead a richer life.
As it turns out, applying these same principles to your finances will also lead to a richer life. By eliminating the unnecessary and simplifying your finances you’ll have more money to pay down debt and invest for the future.
Here are 13 minimalist money saving tips you can employ to help reach your financial goals.
Table of Contents
Consolidate Your Accounts
If you have multiple bank or investment accounts you should consider consolidating.
Consolidating leads to less statements, less hassle when moving around money, and easier tracking of your finances.
Go Paperless
If you receive bills and financial statements in the mail, you should consider going paperless.
Paper bills take up unnecessary room in your house and end up getting shredded and disposed of in crowded landfills.
Also, some organizations are now either charging a fee to run a paper bill each month or offering a discount to switch to paperless billing.
Eliminate Debt
Debt is an unnecessary burden that only complicates your life.
Not only does it cut down on the amount of income you have available to achieve your financial goals, but it also promotes negative psychological effects.
You should make it a financial goal to get out of debt as quickly as possible.
The debt repayment method I recommend is the debt avalanche. This method focuses on paying down the debt with the highest interest rate first. This creates the shortest path to payoff and the lowest interest paid over the debt repayment period.
Cut Credit Use
Using credit is like:
- Having a pet tiger – the moment you stop feeding it, it turns on you
- Juggling explosives – losing your focus just once can be catastrophic
- Operating a crane – in the hands of someone skilled, the leverage it provides can be used to create; in the wrong hands, it can easily demolish.
To simplify your finances, cut credit use altogether. As mentioned above, debt has negative consequences on your physical and financial health. While credit can be beneficial, it’s not worth the risk or worry.
Consider Switching to Cash for Your Everyday Purchases
Using cash makes spending much simpler. When you use your cash for purchases, you have less of it. When you’re out of it, there’s no magic credit fairy to make more. This keeps you honest with your spending efforts and keeps you focused on spending no more than you earn.
Pay Yourself First
To simplify your savings, consider paying yourself first. What this means is that before you pay any bills out of your paycheck, you first deposit your budgeted allocation for savings.
This transitions your savings efforts from whatever is left at the end of the month, to an intentional effort to save a specified amount each month.
If you are serious about saving, the simplest and most deliberate way is to pay yourself first and live off of the rest of your income.
Automate Your Finances
To simplify your finances, automate as much of it as possible.
This includes:
- Switching your paycheck to direct deposit – this cuts out an extra trip to your financial institution
- If you’re paying yourself first, you may consider direct depositing the portion of your paycheck for savings straight to that account (i.e. having multiple direct deposits for the same paycheck)
- Setting up automatic bill payment – for the bills that don’t really fluctuate from month to month, it may be beneficial to setup an automatic bill payment. You can do this through your bill provider directly or, if your bank offers it, through your bank.
- Setting up automatic deposits to your retirement/investing accounts – if the retirement or investing account is offered through work, there’s a good chance this will be taken out automatically before you receive your paycheck. If it’s outside of work, you can set up an automatic draft from your checking or savings account to your investment accounts either through your bank or investing institution.
- For financial tracking, consider using software like Mint or YNAB (You Need a Budget) – using software that can pull the data from your accounts (as opposed to manually entering it) allows you to track your finances from month to month with minimal effort.
- For retirement and investing progress, consider using software like Personal Capital – Personal Capital is like the Mint of investing. It will pull from your financial accounts to determine your net worth and how you’re are tracking towards your financial goals.
Streamline Your Budget
To start with, hopefully you’re preparing a budget each month and following it. If not, you should start if you’re serious about getting the most out of your finances.
To simplify your budget, look long and hard at what you spend your money on. Eliminate anything that doesn’t bring value to your life.
For instance, if you’re really health-conscious and very rarely watch tv programming, you may consider switching to a less expensive streaming option or eliminating tv programming altogether. After all, it could be an opportunity to spend more time running, hiking, jogging, etc.; just doing the things you love.
Practice Mindful Spending
Before you make a purchase, practice mindful spending.
Take some time to consider the consequences of making the purchase:
- What else can you use the money for?
- Does it fit my values?
- Does it help me reach my goals?
- Will it make me happy?
- Can I live without it?
For a larger purchase, you should also consider taking an extended pause before making a decision.
After a week or so, you should have a better idea how you truly feel about the purchase and be able to make a more informed decision.
Sell Any Belongings that Don’t Provide Value
Building on the mindful spending section, sell or give away any items that don’t meet the same criteria you would use to evaluate a new purchase.
If it’s not providing value to you in some way, shape, or form, it’s just taking up space.
Invest in Index Funds or ETFs
To simplify your investing, switch to a more passive investing philosophy. Most index funds and ETFs inherently have low risk, low fees, and are passively managed.
You’ll still have industry risk unless you invest in the market as a whole and no matter how you invest, you’ll still be subject to some form of market risk (i.e. the ebbs and flows of the economy).
For a great combination of risk and return, I would consider investing in Vanguard’s Total Stock Market Index Fund or ETF.
Minimize Goals, Maximize Focus
Having too many goals can mean that you don’t have the time you need to focus on any one goal.
To easily simplify your goals:
- Write down your goals
- Consider:
- what is most important
- each goals relationship to another
- timing of each goal
- Now, rank them considering the items above
- Focus on the top goal (or goals if one or more are interrelated)
By focusing on limited goals at a time, you actually have time to spend on reaching them in a reasonable amount of time.
Take time to celebrate a goal when you achieve it. Use the feeling of accomplishment to fuel your efforts towards your next goal.
You’ll be surprised how much you can achieve with a little focused effort.
Prioritize Higher Income Producing Work
If you’re stretched thin with multiple side gigs, jobs, etc., you should consider focusing on the work that produces the highest income and has the greatest future opportunity.
For instance, let’s say you have a career as a lawyer, deliver pizzas on the weekend, and take the occasional survey for money. To simplify your life and maximize your opportunities, it would probably make sense to eliminate the survey taking (little growth prospects and income), only keep the pizza job if you it helps you achieve your financial goals and doesn’t interfere with your career, and focus more on your career.
Whether you believe it or not, these little distractions are holding you back. Having additional time to rest and prepare for the week ahead may not pay dividends immediately, however if you keep at it, people will notice the effort you put into your career and should reward you for it.
If they don’t, there are plenty of other great companies to work for that would gladly pay top dollar for someone who will provide value.
Conclusion
There are plenty of money saving tips we can adopt just by taking a minimalist look at our daily lives.
By cutting out the unnecessary and truly focusing on what’s important, not only will our financial lives improve, but our emotional and physical lives will as well.
What minimalist money saving tips do you employ?