Those who paid off debt at least once in life made the first step towards wealth. That’s what the supporters of financial minimalism say. When you have to stretch finances, you revise your budget and elaborate your own rules of rational spending. If the debts are paid and you’ve managed to keep to the philosophy, wait for new savings to appear soon.
However, there is no sense in incurring a debt only for the sake of learning experience. Why should you learn from your own mistakes, if you can follow the advice of the experts? You need this article if you want to save money right now and if you wonder, where all your money has gone.
Personal minimum
The economy doesn’t always presuppose severe restrictions. If you need to bound expenses, that doesn’t mean you need to buy the cheapest food. Minimalism is about the distribution of cash according to your values. To spend money only on the staff you need and to know how to limit your wishes and dreams of the moment – that’s the superpower of real financial guru.
The philosophy of minimalism advocates dividing the money between real needs. No need to cut costs in an aggressive way: save on quality, deprive yourself of your favorite products, prohibit entertainments. Instead, it is necessary to reconsider the purchase: does spending really bring benefits and inspiration to you, and was not done to confirm status, or done mechanically or because of advertising?
Frightening means
When we try to record our expenses, we create complicated tables, divide purchases into many small categories, then get lost in all that, and start anew. Imaginary difficulties frighten us, and we refuse to give ourselves the chance to be wealthy.
The law of economy, or the Ockham’s razor, says: plurality should not be posited without necessity. To find and eliminate holes in personal finances, first understand in what category there is a hole. It’s easier to divide all expenses in large. To begin with, five categories are enough: transportation, food, entertainment, home, and other purchases. As soon as you find out which category cost you most, divide it into subgroups. So, gradually, it will be possible to figure out what is odd or to find the category you should give thought to.
Artificial difficulties
In this digital world, there are enough gadgets and applications that can simplify budget management. But this practice is good only during the first steps. If you learn to write down your profit and loss without thinking, it will not change anything: it is easy to spend, it is easy to write. But for your future savings, every waste must be conscious. And if you could not get yourself together at the time of purchase, try to think about it while writing out loss reports on a piece of paper.
Writing expenses in a notebook is a time-robbing and inconvenient process. We want to quit such work faster than a bright app with gamification elements. But as a result, artificial difficulties work for you: they allow you to think about the budget a little longer, to accept and fix the moment when you waste your money. Being aware of your silly purchase, you will most likely not make it in the future. And when you see the successful distribution of finances, you will understand what you really need.
Automatic finances
Setting by money for some mythical future is much more complicated than starting to maintain a budget. The suffering is almost as intense as if you had thrown this money out of the window because in a moment you get nothing in return (unlike a worthless purchase). Automation will release you from suffering. If you need to get your head in the game during shopping, it’s while lean economy when you don’t need to think much.
Our brain is the carrier of outdated evolutionary programs. The ancient man lived in a cruel world, and “another time” could not happen to him. But in the modern world, there are other laws, and for the sake of the future financial stock, we have to deceive ourselves. The brain of the old memory requires to spend everything while we can, and we, in his opinion, take away the resource and give it to someone from the future.
Determine the subject of savings and decide how much you are ready to set aside for these purposes as a percentage. Among long-term investments can be a stash for a rainy day, savings for holidays, spending for the next month, expenses for loved ones. Set up an automatic payment in your online bank that will send a part of the money to the target accounts for each incoming amount. Now the program will do the most painful thing – “breaking up” with cash for you. You just have to enjoy the replenishment of the savings account.
Financial times
No, it’s not about reading the newspaper. Specifying of savings helps the economy. When you imagine what you will spend money on, it’s easier for you to move to your intended goal. Visualizations are effective. Our brain produces dopamine, and we feel pleasure even from the imaginary possession of the cherished thing. If you want to improve your well-being – save up for a dream. And do not forget to remind yourself of this very dream.
British news magazine The Week advises to allocate time to talk about how much you spent and how close you are to your money goals once a day. And at the end of the month, you need to fix the result and set aside at least an hour to balance debit and credit. According to the psychologists of the magazine, if you share the budget with your loved one, such “dates with money” should be held together.
When you pronounce your expenses and incomes and estimate the money set aside for a dream, you motivate yourself to follow the track as planned and make budget management less painful. “Financial dates” help to live more consciously and not to lose the goal. The rest depends on the training of willpower.