5 BEST Secrets of Financial Minimalism
It can feel impossible to save money when you have bills coming in every month. Lots of us don’t realize how much we’re spending on things that aren’t important until they see the numbers side by side. If you want financial freedom then you need a plan that works WITH your life.
Minimalism is one way to create the lifestyle you desire, while also saving money each year. But what is it? And how can you implement it for your financial future? Hi there! I’m Kim and in today’s Article, you are in for a treat. Because we will talk about 5 of the best secrets to utilize a minimalist approach to secure YOUR financial journey. Are you ready? Let’s go!
First, let’s define financial minimalism. The fundamental idea behind minimalism is focusing on your priorities in life. You simply get rid of anything that is not needed, and this applies to both your finances and your possessions.
Financial minimalism, then, is the practice of limiting your spending to items that are absolutely necessary to you. But it also involves prioritising and streamlining your financial affairs. The power of financial minimalism is immense. It not only makes money management simpler for you, but it also frees up more cash.
You end up saving more money because you are only spending money on necessities, which then enables you to invest more money. But what is the best way to begin saving? Here’s how you can make a dent in you debt?
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Imagine your debt as clutter
Let’s begin with the first secret, which is to imagine your debt as clutter. Being surrounded by a lot of clutter and objects makes it difficult to think clearly. I really like the comparison between debt and clutter because it illustrates how difficult it is to move around in a cluttered space.
No way to move around. And when you have too much debt in your life, that is exactly what happens. Plus your options are limited in what you can do. You are not able to invest or save more. You are not allowed to think of creative ways to increase your income. When attempting to achieve financial independence, debt poses a significant barrier.
Cut down on how much money you spend on a home
This brings us to secret number two, which is to cut down on how much money you spend on a home. Although buying a huge house may seem like the right thing to do, this doesn’t reduce your expenses in any way. The majority of people end up spending way too much! Do you need a house with all the amenities like an office, a man cave, and a foyer that is the size of an additional room?
The desire to buy these enormous homes, causes you to overspend even though you don’t actually use the majority of the space. You see, you could have bought a smaller home and saved even more money, but instead, you waste money on all that unutilized space. As was already mentioned, financial minimalism emphasizes meeting your basic needs.
Therefore, if you’re going to buy a house, make sure it will fulfill what you consider to be absolutely necessary. It doesn’t have to go beyond what is required. And if the house you currently live in is too big for you, you might consider downsizing.
Make a clear and simple investment plan
The next secret is to make a clear and simple investment plan. When you purchase individual stocks, going overboard just doesn’t make sense. You see, if you’re an investor, you should be present at each company’s annual meetings, reading its annual reports, and stay current on each and every investment you own.
But if you own 30 to 40 individual stock investments, it would be nearly impossible for someone that has that many individual stocks to stay on top of everything. Therefore, if you have a minimal approach to money, your investment strategy should also be minimal in effort but yield a maximum return.
I would encourage you to inves in index funds because they enable us to diversify our personal investments.
Automating your investments
Automating your investments is the fourth secret to financial minimalism. When it comes to investing, this is a major consideration for those who are pursuing this lifestyle. Put your accounts on autopilot once you’ve decided where and how much money will go into them so that you can devote your time and energy elsewhere while your money earns interest and grows without your constant attention.
This will eliminate a great deal of the work involved in investing. Automation is effective on many levels, but it is most crucial when pursuing financial minimalism. But what about driving a car or transportation?
Managing your transportation cost
Yes, you guessed it! It our final secret….. Because there are other expenses associated with car ownership in addition to the car’s cost, a car can be one of your biggest unanticipated drains on your bank account. So, if you decide to buy a car, our advice to you is to do so with cash.
Get a car that satisfies your fundamental needs and try to avoid financing it. The alternative suggestion is to see if you can live without a car, which might sound a little extreme. Imagine all of your other financial obligations going away completely if you can live without a car. Your financial life is made more difficult by additional expenses like fuel, insurance, taxes, and licenses.
And if you’re aiming for financial minimalism, you should consider each purchase you make as something that will add to the upliftment of your financial situation. A car is unquestionably one of those items but do you really need it? When looking at these secrets, it is important to think about which one you can easily apply to your life, and come up with a method for doing so. I know Financial minimalism isn’t an easy process.
But these secrets will definitely help you start your journey. Practicing financial minimalism is about more than just getting your spending under control. It’s also about reducing the number of things you feel you need to live “the good life” so that you can focus on what makes your life meaningful.
What is more important than what money can buy? Your health, relationships, passions, and contributions to society all supercede material wealth. If you ask me, being free from debt is probably the most important method to focus on. But it isn’t easy.
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