Managing Personal Finance Through Minimalism.
Minimalist approach to managing personal finance.
Many people out there, aren’t very good with money; they make it and then spent it, it comes in and then goes out. They live pay check to pay check and I’m guessing that’s something that you can relate to as well.
There is something holding them back from even looking at the state of their personal finances, and how to improve them. They dig themselves in a hole so deep, it starts to even seem possible that they’d never get out. The crazy part, all that debt doesn’t stop them from spending. They may borrow to go on holiday, to get that new gadget that has just come out etc.
They continue on this path until they come to the realization that they need to make a change, they just can’t pretend that they aren’t in massive trouble, they need a way out. This is what this article is here to shine a light on; money, our problems with it, and how minimalism can help.
Learn about money and how it works.
Educate yourself about money.
There’s a basic formula to win at personal finance, and it’s this; spend less money than you make. In practice though it’s not that easy, money seems to completely slip through our fingers. No matter how much money we make, our bank account seems to have a completely different agenda.
One of the reasons why many of us are bad with money is that, we don’t take the time to learn about money and how it works, we only think of it just as a means to an end. Money however has rules that govern; how it’s made, how it’s spent, how to regulate output verses input etc. We can only improve if we start to learn about money and how it works. We need to remove our egos and actually try to learn.
One of the best ways that I found to learn about personal finance is through books, and here are three recommendations; The Total Money Makeover by Dave Ramsey, I Will Teach You To Be Rich by Ramit Sethi, and Unshakable by Tony Robbins. All three of these books lay out great advice, trusted advice, that has worked and I think that you’ll find a lot of value from them.
Avoid the status symbol trap.
Avoid the status trap.
Don’t fall into the trap of lifestyle status as this is a money guzzlers. This happens whenever we get a pay raise, we start to get a little bit more money, or land a really big project. The first thing that we want to do is upgrade our apartment, buy a better car, raise our lifestyle status, so then in some way we’re rewarding this win.
If we’re instead to be mindful about our spending, keep our lifestyle in check, and not inflate it as our income rises, then five or ten years down the road, we are going to be able to live a lot more comfortably. We’re going to have so much more security than if we continue to increase our lifestyle status every year.
Avoid unnecessary spending.
Avoid unnecessary spending.
Let’s be honest, we buy a tone of junk, and we convince ourselves in a lot of sneaky ways, why we deserve it. Not all advertising is bad, but a lot of it is driven to make us feel as if we deserve the indulgence. You’ve worked so hard, you deserve this bag, this sneaker, or this watch. The truth of the matter is that what you deserve is to be debt free, you deserve not living pay check to pay check.
We also face pressure from social media and if we are not curating and mindful of our news feeds and our social media feeds, it can be very tempting to want to keep up and have the things that everybody else has otherwise, we have the fear of missing out. But here is the thing, rich people are rich because they make smart decisions with their money, they don’t go out and lease a brand new BMW, they don’t rent an apartment that they can’t afford.
The other type of pressure that we face is the pressure from ourselves. There’s this thing called the myth of I don’t have, and it’s something that we tell ourselves to convince us that we need to go out and buy that thing. I can’t go out for that run or that jog, I can’t start my new workout routine, because I don’t have that pair of sneakers. But really the only thing that we’re doing is procrastinating ourselves from getting started with our goals and our dreams, and it’s convincing ourselves that buying that extra thing is going to solve the problem, which it won’t. You need to make sacrifices.
Make sacrifices while at the same time minimizing risk.
Make more sacrifices but mitigate risks.
You need to make some sacrifices until you get to the point where you can start to take risks. You have to be completely clear with why you’re doing this in the first place. Why do you want to be debt-free? Why do you want to have financial freedom? When we truly understand why we don’t want to be living pay check to pay check, why we would want to be debt-free, everything else comes a little bit easier.
When we think about having the security and the safety, being able to take care of our family and our friends if they run into trouble, it becomes more obvious why this is so important. You’re able then to take more risk to challenge yourself, put yourself outside of your comfort zone in ways that you would otherwise not be able to.
Overall goal is to spend less than you make and then build up from there.
All in all, the strategy couldn’t be simpler; spend less money than you make. It may be easier said than done, as you know, we face a lot of pressure to do the exact opposite. But if you can out maneuver these forces, if you can build a healthy relationship with money, and create positive habits that stick, you’ll be able to become financially free.
That’s all we have to share for now in this article, please remember to leave a comment, share, and join the community. As a member, you can host your own blog posts on the platform, or just reach out, socialize, inspire and be inspired. As always, stay positive and keep looking up.