minimalist budget

Minimalist Budget: Minimalist Approach to Personal Finance

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Last updated on February 27, 2023

No matter what situation you find yourself in, COVID-19 certainly sent almost everyone’s personal finances in a tizzy. It could be that you had to rely on your emergency fund when you were laid off or furloughed, or you’ve been wondering about your investments during the past few months.

Some days may even seem as if we’re almost through to the other side–a post COVID-19 world–while other days it might feel like these turbulent times may never end. While we long for work, school, and some sense of our pre-COVID lives to return, there is something important you can focus on during this time. Perhaps you have mounds of paperwork and bills sitting on your desk. Now is great time to get rid of the clutter.

That’s where a minimalist budget comes in. The idea is that you take a more simplified approach in how you allocate your funds, including the types of accounts you own. The idea of minimalist personal finance strategies isn’t new but, many people might find it extremely helpful to simplify a vital aspect of everyday life right now–personal finance.

What is a Minimalist Budget?

Think of this type of budget as a minimalist approach to personal finances. Basically, a minimalist budget is where you’re making sure you’re not spending any more than you need to, or the bare minimum for the lifestyle that’ll make you happy. As in, you spend less than you make and still have enough to reach your financial goals, like retirement.

This type of budgeting also extends to the types of products and services you use to manage your finances–choose less and better quality instead of cobbling together a bunch of apps that work, at best, in a mediocre fashion.

Keep in mind that being a minimalist with your finances doesn’t mean you’re automatically being frugal (though you can be). Even if your purchases or financial products are pared down, it doesn’t mean you’re always choosing the cheapest option. The idea is to get the best quality for your budget so that it lasts as long as possible or extracts as much value as possible.

Of course, you may see that a natural byproduct of using a minimalist budget is that you’re encouraged to be more frugal and maybe even meet your financial goals faster.

So now that you know what it is, let’s talk about how you can create a minimalist budget.

Focus on Your Spending Habits

Budgeting 101 mandates that you track your spending and that you list all your expenses, both fixed and discretionary ones. A minimalist budget is no exception.

First, take a look at your take-home pay (what you make after taxes and other deductions). Then take a look at your bank and credit card statements to see what you’ve spent for the past couple of months.

Once you have that, list how much you’re spending with your fixed expenses. Don’t forget to list how much you want to save for retirement and any shorter-term saving goals as part of this too.

Take that total amount and subtract it from your take-home pay. That’s your discretionary income. You can basically spend that as you please.

What works is that you can see really easily if you’re overspending or see whether you need to cut back on certain expenses. For example, if you notice that after fixed expenses and savings you don’t have much to spend, either cut back on discretionary spending or see if you can reduce your fixed expenses. It also frees you up from having to track every penny if you don’t want to.

Pare Down Your Accounts to the Essentials

Another way to be more minimalist and help you see where all your money is going is to pare down your financial products. Sure, you can use a simple Excel spreadsheet, but there are many all-in-one platforms where you can track your investment stock portfolio, banking and credit card accounts. These apps can also act as your financial assistants, showing you reports of your spending and help you determine where you can save money.

Here are a few budgeting apps to consider:

  • Empower – This app tracks your spending and net worth, plus gives you an overview of all your accounts. It’ll also help you analyze your retirement fees to find even more savings for you. Learn more with our Empower review.
  • Money Patrol – Money Patrol is an app that looks at your spending and helps you improve it by showing you where your money is going to the most. It’ll also link to all your accounts and sets reminders for upcoming payments. Learn more with our Money Patrol review.
  • CountAbout – One of the perks with CountAbout is that you can import data from Mint and Quicken in addition to other financial institutions to help you analyze your spending. Learn more with our CountAbout review.
  • PocketSmith – Aside from the usual features you get with other budgeting apps, PocketSmith also helps you forecast your money, such as whether you’ll overspend or if you are on track with your retirement. Learn more with our Pocketsmith review.

(Personal Capital is now Empower)

You can also go so far as to make sure your banking accounts do more than just house your cash. There are many apps that help you save automatically and give you the most bang for your buck:

  • Empower – This app offers a savings account and other financial tools such as helping you save money on existing bills and unwanted subscriptions, as well as the ability to work with human financial coaches.
    Learn more with our Empower review.
  • Stash – You can invest and bank with this app. Plus it can help save automatically and whenever you use your debit card, you get cash back in the form of shares of stock. Learn more with our Stash review.
  • Chime – This banking app helps you save automatically by rounding up your change and sticking it into a separate savings account.
    Learn more with our Chime review.

Keep Your Investing Strategies Simple

Investing can be complicated. That’s why it’s important to keep it as simple as possible. That way, you cut down on the amount of research you need to do. Plus, some are more accessible to the everyday investor since you don’t need a lot of money to start.

As mentioned above, Stash is a great micro investing app, but here are a few more you can look into:

  • WeBull – You get plenty of research tools in this self-directed platform so it’ll cut downtime on you having to go elsewhere to find the information you need. Learn more with our WeBull review.
  • Public – You can own fractional shares of stock, which means it’s more accessible to those who don’t have a lot to invest initially. Learn more with our Public review.
  • Streitwise – Invest in commercial properties without needing millions of dollars. Instead, you own a part of the property and you’ll earn returns from it. Learn more with our Streitwise review.

Focus on Keeping What’s Essential in Your Life

Incorporating a more minimalist approach to your finances can really benefit your life. You can save time from having to track every penny and the tools you use can even help guide you towards a better financial future. Choose carefully, try what works best and good luck!

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