‘Being broke’ at month-end is a common phenomenon with millennials nowadays. Let’s admit it…we splurge much more than we should, which jeopardises our financial goals. Spending mindfully is a skill which even most financially intelligent people lack, all because today we have much more purchasing power than before. With this article, let’s see what a ‘minimalist budget’ is and how it can work wonders for our savings!
A minimalist budget can help you understand your needs and wants and differentiate between them wisely. This, in turn, helps in changing your spending habits. ‘Spending the bare minimum’ is, in fact, a great skill and requires a lot of restraint and discipline. For that, one has to get rid of or minimise temporary pleasures and focus on long-term objectives in life. For instance, one can invest in mutual funds, or save to buy a house or land. Earning returns is necessary for your money to grow. And to earn returns, you need to invest.
A minimalist budget helps you recognise your goals and track the ‘where’, ‘how’ and ‘why’ of your expenditures. This shall help you monitor your spending habits and hence, cut down on your monthly expenses. Remember: To save more, one needs to spend less. You can even get rid of any financial debts you have by spending less.
How to set a minimalist budget?
- To begin with, think and determine your goals and values. Fix your long-term financial objectives.
- Then, make a list of your general expenses- divide them into categories like food, rent, transportation, shopping, monthly bills, EMIs, partying/socialising expenses etc.
- Now, evaluate what out of your expenses were really important and what could have been avoided. Segregate these unnecessary expenses from the list.
- The previous step will help you focus on mindful spending.
- Bid goodbye to credit cards or at least the ones with a very high limit. Let’s admit it- most of us are not wise about using these cards and over time, they become a burden and put us in debt.
- Follow a 60/30/10 rule! This rule can save you from a lot of financial trouble. Divide your take-away monthly salary into three categories-
– 60% for savings, investments or paying off any existing debt or loan.
– 30% for needs like rents, grocery, daily transportation, electricity, internet etc.
– 10% for wants like travel, eating out, social drinking, entertainment or any other
Balancing FUN & SAVINGS!
‘Spending the bare minimum’ doesn’t mean you stop spending on leisure activities and live a dull, boring life. At the end of the day, we are social human beings.
The idea is to be mindful, balance both and have a satisfying life! Plan and set a budget for your social expenses as explained earlier. Your minimalist budget should allow you some room and not really strangle you. One can look for free events in the city, cook meals together, enjoy movie marathons with popcorn at home, have in-house drinking, and in fact be innovative with so many things.
Minimalist budgeting can yield not just financial but mental benefits too. It helps you tackle your financial woes and put an end to the vicious cycle of ‘being broke’ at month-end. At first, it might come across as controlling, but it’s just about forming and maintaining constructive spending habits. Try it for yourself and share it with your colleagues and friends too!