Minimalist Approach to Personal Finance
In this article we will discuss the benefits of a minimalist approach to personal finance. A minimalist budget is a strict and straight forward budget that limits the total amount of money a person spending on all of their basic needs. By implementing a “fixed expenses” budget a person can make sure that they only spend money for the things that they need, instead of splurging money on unneeded items. A good way to start implementing a minimalistic lifestyle is to create a to do list of all your monthly expenses and a rough estimate of how much money you have left over after taking care of your fixed expenses. Then you simply divide that left over amount by four and that will be your new “fixed income” amount.
So how exactly does one go about implementing a minimalist approach to personal finance?
One major benefit to doing so is the elimination of financial inconsistencies throughout the year. One of the biggest problems with personal finance is tracking your personal finances during the weekdays as well as the weekends. With a “money patrol” your financial life will be much more consistent throughout the entire month.
Also by implementing a weekly routine, a person will be much more likely to stick to that budget. Most people will simply begin the week by splurging on the things that they want and by the end of the week will be in debt to their desires. However by implementing a budget on a weekly basis, a person will have a better chance of controlling their desires and not falling into debt along the way. It is very easy to accumulate excessive amounts of impulse purchasing when trying to manage your finances on a daily basis. A person simply cannot stop their brains from doing this!
Another benefit to a minimalistic approach to personal finance is that it will simplify the whole process. The whole purpose of the weekly bank account is to maintain an accurate record of the expenditure and income for the entire month. Now if a person wants to keep track of their expenditure for that week, they are going to have to either write it down or remember to keep track of it. However keeping track of expenditure can be extremely difficult. By simplifying the process, a person is saving a tremendous amount of time and energy that would otherwise be wasted.
Now let’s look at personal finance in a more detailed manner. The first thing to realize is that there are many different aspects of finance that make up personal finance. These include your finances for your living expenses, your finances for entertainment and recreational expenses and also the finances for retirement. Now all of these categories are important, but none of them are the be all and end all of personal finance. In fact all of these categories should form just a part of your overall financial plan. The reason being is that they do tend to work in conjunction with each other.
A good example of this is your personal finances
If you want to save money for retirement you need to save for retirement accounts. This means saving money for when you will no longer be working. The main idea here is that you do not outlay money in one specific area and instead save in various areas and form a portfolio that will allow you to reach your financial goals. Therefore the concept of personal finance is really about being prudent in where you spend your money and planning for the future.
On the other hand, it is also very easy to become debt free when a person is disciplined with their money. The reason being is that a person should set aside money on a monthly basis and use it to invest in things that they know they will be able to recoup their investment value from, such as a stock market trade. So for example if a person wants to invest in the stock market then they should save that money for years before investing in the stock. However if they were to invest the money in a risky venture then they might find themselves losing money. Therefore the concept of personal finance is really one of protecting one’s investments while not overspending and instead allowing the money to grow in a secure and grow steadily type of manner.
Nowadays, it seems like people are looking at their finances a lot different than in the past. In the past, people just looked at their income or salary and budgeted accordingly. However, with the advancement of technology and the internet a person can now look at their expenses and see how much money they have coming in and maybe even save a little bit to put towards savings or investments for the future. Therefore a person is really learning to embrace personal finance in a minimal way but still achieving the same result; which is being fiscally disciplined with one’s money.