Budgeting for Minimalists
What is the easiest way to give up on a budget? Make it complicated and tedious. You don’t have to plan out every single little expense. A minimalist budget can help you clarify your spending, live within your income, and allow you the freedom to spend a little on yourself without worrying.
To set up a minimalist budget, try these three simple methods:
- Keep the budget simple. If you're just starting out with a budget, keeping it as simple as possible will help you stick to it. In her book "All Your Worth: The Ultimate Lifetime Money Plan," now-U.S. Sen. Elizabeth Warren (D-Mass.) recommends allocating your net paycheck—assuming taxes and retirement savings have been automatically deducted—accordingly: 50% to needs (bills and groceries), 30% to wants (clothes, meals out, vacation, and entertainment), and 20% to savings or paying down debt. You can obviously make adjustments in those percentages, based on your own financial goals but these basic guidelines will help you establish an awareness of your bills and spending habits.
- Set up a modern envelope system. Most online banking platforms allow you to open multiple accounts and give them names that correspond with the different categories you're budgeting for—an update of the tried-and-true method of putting cash in different envelopes earmarked for specific expenses. Having multiple accounts gives your money a purpose and ensures you have enough to pay for those occasional big expenses that come up, like auto repairs or home electronic purchases or the holidays.
- Have a "guilt-free" category. Agree on a set amount you get to spend on whatever you want each month. As long as you have enough for monthly expenses, savings, and other needs, this gives you some financial freedom and allows you to indulge in "guilty pleasures" without the guilt. With this freedom comes the ability to say yes to frivolous expenses that are not a part of your plan and tempt you to spend. If that category IS a part of your plan, then there is nothing to worry about- just enjoy!
These suggestions can help make budgeting easier and feel like less of a burden, but they also assume you're doing relatively OK financially and have a steady income. If you're drowning in debt or your income is irregular or your cash flow is negative, your priorities and percentages will need to adjust accordingly. Remember that Cal Coast Credit Union has a free Financial Fitness & Coaching team that can help you set up your budget as a free benefit of membership.
Otherwise, keep your budget simple and uncluttered- you might find yourself actually using it!