Money minimalism - the new approach to financial freedom

financial coaching mindset money Aug 09, 2021

We’ve all heard of the minimalist movement, and quite a few of us would’ve watched Marie Kondo on Netflix. But have you ever thought about taking the same approach with your finances? Financial minimalism is the new approach to reducing the stress, guilt and anxiety that comes with our over-indulgent and spontaneous consumer culture.

A minimalist approach to money is about spending money on fewer things, and making sure that your budget fits your lifestyle. You don’t necessarily spend less money on fewer things, but your purchases have more meaning and align more with your goals. You may find that you spend less as a result, however that is not the overall goal when it comes to money minimalism.

There are 4 easy steps to nailing financial minimalism:

1. Be accountable

The first step to financial minimalism is understanding where you spend your money, and make small changes when needed. Taking conscious steps to understand our needs versus our wants, and make sure that we prioritise what is important and what will help us achieve our goals.

To become accountable for your current spending habits, you first need to understand where it is that you spend your money. To do this requires you to actually track and categorise your expenditure. This can be done over a 3, 6, or 12 month period, however the 12 month period will provide the most accurate representation of your spending habits. By tracking your spending and understanding where you spend your money, you can then build a realistic budget that supports your financial goals that isn’t too difficult to stick to.

2. Take action

The next step in financial minimalism involves taking action and responsibility for where you spend your money. This leads to more informed choices, and ensures that you can stay on track with your spending.

Take action in eliminating the non-essentials from your spending patterns to make more room for the things that you truly value. Most people use the term minimalism when they are describing physical objects, however it can also be used when it comes to budgets and money in general. Essentially you are eliminating the clutter from your budget to leave more money for the things that align to your goals and values.

Taking action can also involve simplifying and optimising your bank accounts. Some people have too many accounts, and some people have only one. By utilising the three-account rule (one for bills, one for everyday spending, and one for savings) you can automate your spending and savings, and also ensure that you have enough put aside to cover all of your bills.

By automating everything to do with your finances, including automated savings and bills payments, you can feel less stressed about whether or not you will have enough money to cover your expenditure during the month. You know everything is covered, and this reduces the stress and anxiety that comes with managing money manually each pay cycle.

3. Feel empowered

Taking this action and being accountable for your spending habits will enable you to understand how your spending choices impact your overall goals. Once you have set up a budget that is sustainable, you will find that you liberate yourself from the stress of every-day financial management.

Once you’ve created your budget and adjusted your spending, you will feel empowered to work out a way to prioritise paying down debt, or increasing your savings. By minimalising our budget and making room for those things that are important to us, we can achieve our goals quickly.

4. Find a balance

In today’s world of social media, it becomes very easy to try and keep up with those that you see online. We forget that social media portrays a highlight reel of people’s lives, and we try to emulate the lives of those we see online. Financial minimalism means that we have a more balanced lifestyle and we do what is right for ourselves and our families. It means that we can focus on what is important to us, without having to worry about guilt and judgement.

Whether or not you practice minimalism in a physical sense, minimalist budgeting can be a great alternative to those not able to see success on a traditional budget. Budgeting can feel quite restrictive if approached in a way that sees you not spending your money on things that you value. Minimalist budgeting provides you with the freedom to ensure that your purchases reflect your values, and allows you to work towards achieving financial freedom.

The information in this blog post contains general information and does not take into account your personal objectives, financial situation or needs. Please speak to a qualified financial advisor if you require specific financial advice.

Kate Bradley - Money Coach

Kate Bradley has over 10 years of experience as a small business accountant and financial advisor. Kate brings her significant experience advising on the financial aspects of small business to the BMH team, with a particular focus on the optimisation of systems, budgeting, profitability and cash flow management.