The 5 Rules of Financial Minimalism That Optimized My Finances
By: Rose Goldberg
Tags: Minimalism, Lifestyle, Money, Life Lessons, Finance

You’ve probably heard the phrase “Abs are made in the kitchen,” but let’s extrapolate. The way abs are made in the kitchen, I think savings are made in the… lifestyle? Doesn’t work out — however, I hope you get the point.

Contents:

Warning

Financial minimalism

The 5 rules

Warning

First things first: saving won’t make you a millionaire. If you want to have a heftier income stream, you have to work on that. Savings won’t change the amount of money you make.

They will, however, change the amount of money that’s available to you.

You can take 2 people that make the same income per month, and one of them can afford everything they want and need, while the other is worrying about rent. I know — because I’ve seen it happen. With my sister and me.

This is the power of strategic spending.

Financial minimalism

I know the term “financial minimalism” exists and has existed for a while; however, I couldn’t find an authorized, reputable source to thoroughly explain what it is, so I’ll just tell you what it means to me.

Financial minimalism means cutting out useless expenses and investing more — but more rarely — into important items/services that you will benefit from long-term.

You can imagine a financial minimalist as a person that doesn’t buy into trends, can go out (when it’s allowed) and entertain themselves without spending hundreds of dollars and invests in quality rather than quantity.

They are also the person that would rather not eat out as much and pay more for a beautiful place to live because they know it will motivate them and allow them to bloom into their full potential.

You will see them shopping at quality stores, rather than fast fashion — rarely. And that’s because the items they buy are long-lasting and versatile. They might also meal prep and create an exhaustive shopping list in order to strategically plan and figure out beforehand what they have to buy and what is the wisest to invest in.

Financial minimalism does not equal to being “cheap”. It equals being wise and strategic with your money.

And this strategic lifestyle eventually bleeds into finances. You spend less on useless stuff — you end up having more to spend on quality services, and, of course, to save or invest.

Photo by Charles Deluvio on Unsplash

The 5 rules

In the past 6 months, I’ve become very aware and thoroughly interested in my finances — which led me to optimize my lifestyle and, consequently, my finances and spending habits.

These are the 5 rules that encompass the strategies that took me from broke to the bank — to start a savings account.

#1: You have to keep track of your income and spendings

You can’t change what you don’t acknowledge. In my opinion, trying to get a hold of your finances without carefully tracking what you make and spend is a lost cause. Of course, don’t obsess over it — but be as aware as possible.

In my best-performing article, I talked about the vast insight I gained from the simple process of adding up all my income and subtracting what I spent.

The simple process of actually paying attention to receipts and writing down what I spent money on, gave me real control over my finances. I knew what was worth it and what was not. So I knew what to change.

#2: Online shopping is a rabbit hole — but I have a trick

In an ordinary context, I would probably tell you that the mall isn't your best friend if you voluntarily let yourself be robbed by “sales,” but considering the current situation, you’re probably not going to the mall.

However, many of us became victims of online compulsive shopping ever since quarantine began. And that’s okay. Some of us eat too much; others spend too much, some do both — it’s a global crisis, cut yourself some slack.

Getting rid of this habit might take you a while, but if you need to fulfill your shopping desires, I have 2 very useful steps/strategies for you:

Sell/donate what you don’t need anymore before buying new clothes. Shop for the opposite season — everything is cheaper.

If you sell items you don’t wear, you can use that money to buy new, quality items, and if you shop for the opposite season, items are usually way less expensive because they’re not “in trend” at that current time.

Photo by Eduardo Soares on Unsplash

#3: Quality over quantity — and priorities above all

Financial minimalism comes with wisdom. You know what’s worth paying a lot for and what isn’t.

I like to determine that by how much proper use I’ll get from the product.

As an example, although a quality bottle of cooking oil is more expensive, it lasts longer because you need less of it — so you don’t spend mindlessly.

This also works for clothes, services (such as your phone plan or gym membership), and generally anything else.

You also have to prioritize what you’re willing to spend more on.

This way, you can save on non-essential purchases (such as the 5th uber to work this week because you slept too late) and spend that money on something that will optimize your living — and also save or invest part of it.

I did this by saving money on going out, buying clothes/accessories that I didn’t need, and canceling subscriptions I never used — and realized I have more than enough to rent a new, luxury apartment with my boyfriend, which will help me work more productively from home and be a better writer, which I and my finances will, in turn, benefit from in the long-term.

#4: Save before anything else

As soon as you get paid, make a deposit in your savings account. Like this, you’ll work with your real budget and also not neglect your savings or investments. If the first thing you do when you get paid is to save your desired monthly amount, you’ll stay true to yourself about your finances and be able to really notice what makes a difference.

It’s not rocket science — you won’t mourn over the money you “never had”.

Saving money (I like to stretch my limits and see how much I can afford to save every month) can seem like an overwhelming and scary task that will leave you broke. But it doesn’t have to be — if you’re authentic and attentive.

#5: Get used to the abundance mindset

Although this might not have to do directly with financial minimalism, you could call it “psychological energy minimalism,”…I guess.

Would you rather spend your energy on whimpering about how you might not have all the money that you need — or on feeling abundant and taking the steps towards your financial goals? I chose the latter.

And that’s because a scarcity mindset will limit you from achieving your financial potential — experienced that first-hand. I used to feel bad when I had bills to pay because I never had enough.

However, when I became more conscious and aware of my finances, I became more abundant because I realized I could afford to pay all the bills and taxes that come my way.

Being able to pay them is a privilege, not a burden.

And once I realized that I opened myself up to opportunities that allowed me to further strengthen my income streams.

The only way you’ll be able to create more wealth is to understand that you deserve it. You have to get used to the feeling of abundance, of “more-than-enough” in order to take the necessary steps towards improving your finances.