This post is all about minimalist lifestyle tips for your finances!
Are you looking to live a minimalist lifestyle and learn to manage your finances? Well, you’re in the right place and this might be the best post you’ll find about minimalism and finances!
The financial mistakes you’ll want to avoid as a minimalist are the type of choices that result in wasteful spending and a careless mindset regarding your financial future!
In this post, we’ll cover all of the financial mistakes to avoid for a minimalist lifestyle and general personal finance tips to help you manage your money!
What Does It Take To Live A Minimalist Lifestyle?
A minimalist lifestyle may seem intimidating to attempt if you’re used to excess, however, it doesn’t have to be difficult and can be a simple transition.
To live this type of simple lifestyle, you need desire, a slight mindset change, and some effort to make the change happen in your life! If you’re ready to begin living a minimalist lifestyle go here.
Along with starting to live a minimalist lifestyle and becoming smarter with your shopping habits, you need to avoid some serious financial mistakes to keep up with this lifestyle. Keep reading to learn more about these financial mistakes!
Valuable Minimalist and Financial Tips
The minimalist and financial tips in this post are tips from mistakes that I’ve made and some tips that I recommend. Just keep in mind that this is not professional advice but advice from personal experience to hopefully help you and add some value to your life!
Even if you’re not interested in a minimalist lifestyle, these financial tips are great for anyone looking to take control of their finances and improve each day!
A Minimalist Lifestyle Can Improve Your Finances
Now I can’t guarantee living minimally will automatically improve your finances because it’s certainly still possible to overspend on food and doordash (guilty), but living a more simplistic lifestyle can help save money that would otherwise be spent or wasted on things we don’t need!
Disclosure: This post may contain affiliate links, which means I’ll receive a commission if you purchase through my links, at no extra cost to you. Please read full disclosure for more information.
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What Are Financial Mistakes To Avoid For A Minimalist Lifestyle?
In life, there are tons of financial pitfalls and mistakes that loom large, especially in a consumer-based society. Overspending is one of the most common trends that seems to affect most people month to month.
Overspending is one of the biggest things that you need to watch out for to live a minimalist lifestyle.
When we start to become more minimal and live a simple life, we should be making more money/saving more because we should be selling and getting rid of the clutter that we don’t use anymore.
We’ll cover more on that later in this post! Keep reading and enjoy these minimalist financial tips!
1. Buying Things You Don’t Need
When it comes to living a more simplified life, this is a big one! Even in general buying things we don’t need is our motto in the United States! We all have tons of stuff we may have liked or used for a week and then just let sit for months on end.
To avoid this financial mistake, we need to make sure that we’re asking ourselves if what we’re looking to buy is something we need!
If not we should let it go or at least leave potential online items in our virtual cart for at least a week or two.
Most of the time you’ll find that you’ll change your mind or find something better. I know in my case I’ve done that when it comes to amazon purchases.
I then imagine how I would have wasted money on something I easily decided I didn’t need or want any longer.
Even though I’ve downsized part of my life, I’m still in the process of decluttering a lot of the junk that I’ve spent money on over the years and no longer use.
Unnecessary Spending On Clothes
One way this unnecessary spending manifests is with the unnecessary spending on clothes! Clothes are easily one of the most common ways we tend to overspend and buy things we don’t need!
That’s why I recommend creating a capsule wardrobe so that you can limit your spending and create a simple wardrobe with tons of benefits!
Buying Random Items You Don’t Need
Another factor in the equation of buying things we don’t need comes in the form of those random items that catch our eyes and make us wanna fork over the cash for no good reason!
This is stuff like jewelry, games, books, house decorations, etc…
Now some of this stuff is certainly not useless, but regardless of its value, it most likely is something you didn’t “need” at the time and that money could have been used for better purposes. Especially because you’re younger in life at this moment and time is on your side.
You should be investing that money instead of spending it all! We’ll cover more about investing later in this post!
Buying Needless “Stuff” On Amazon
Ahh my number one kryptonite! Amazon! I both love and hate Amazon.
I only hate it for the fact that I love using it so much, probably too much….
No…. love it too much lol As in a new package arriving every week too much!!
Regardless of my Amazon addiction, I’ve gotten much better and have learned to invest and save with discipline since then.
So if you’re anything like me, take some steps to limit your Amazon shopping and maybe delete your app or keep potential purchases in your cart or your “save for later” stash.
2. Having Too Many Subscriptions
The next item on the list to avoid is filling up your bills with too many monthly subscriptions.
Now, this isn’t to say you shouldn’t enjoy some luxuries or not use entertainment at all, but more so a warning to keep track of where your money’s going and to ensure that your using each service that you’ve signed up for.
Nowadays one of the most common ways that we spend on subscription services would be our streaming platforms. With all the variety out there it can be overwhelming trying to keep up with all of our favorite shows and movies on different streaming platforms.
This has also made it tougher on our wallets to be entertained and keep up!
Many people use other family members’ login info and this is a nice way to save money, however, it’s a good idea to just take the time to make sure that your getting the full use out of your services that way your money isn’t going to waste.
Any Other Subscriptions
In addition to streaming subscriptions, there are plenty of other paid subscription services that we may have.
Amazon Prime is one of the first that comes to mind!
Here are a few others that you may have or have heard of:
- Hello Fresh
- Apple Music
- Magazine subscriptions
- Patreon for content creator
- Kindle Direct
The point here is that even if you don’t use these services, make sure that you are aware of the current services that you use and assess the amount of time you invest and decided whether you should keep or get rid of them!
3. Eating Out Too Often
Most people love good food and one of the best ways to eat good food is to try out new places and go out to eat!
This can be a great time to enjoy some great food while catching up with friends, family, and significant others, but what happens when we enjoy this a little too much…?
Well, we go broke…
Eating Out Too Much Can Strain Your Finances
Problem: Once you get a taste of a great meal and enjoy eating it’s hard to stop haha.
But if you want to live a simple life and be more minimal, you’ve got to cut down on your dining out and learn some effective ways to enjoy good food but save money as well!
Solution: Try learning to meal prep for the week and make a plan to buy groceries every week!
This can not only help you budget and save money but also help you to eat a more healthy and balanced diet over time!
I’m in the process of trying this out now and learning to consistently make my meals!
Learn How To Meal Prep
Next: I recommend picking out 5-6 easy to intermediate healthy meals that you enjoy and can consistently make every week. This will hopefully add some variety and allow you to have a plan of action when it comes to picking a meal to make each week or every few days.
I recommend keeping it simple and finding some easy recipes that don’t take too long. Cause most of us work full-time jobs and making our meals while resisting the temptation to order food is challenging!
I decided to strictly use an instant pot that has tons of settings to make my meals. This is great for a beginner cook like me who needs to make fast but delicious meals each week with minimal headache and fewer cooking tools.
Save Money Buy Learning To Cook
Again if you’re a beginner cook like me, it could also be worth it to check out some articles or YouTube videos to gather some helpful cooking tips!
Investing time in learning these skills will not only be beneficial to your ability to make good food but will also help you to increase your savings by making your food and disciplining yourself to avoid takeout.
4. Ordering Delivery Too Often
Especially now with the pandemic, the delivery service business has been booming! With more people working from home and staying home in general, ordering delivery has never been easier and more in-demand.
Delivery apps have taken over as of late and are looking to be one of the best niche services out there!
However, this money-sucking luxury is even worse than eating out for the sheer fact of its ease of ordering, fees and taxes for delivery, and amazingness of no-contact delivery!
Trust me as an introvert having the food just left at my door is simply amazing…and awful at the same time because it makes me want to order tooooo muuuchhhhhhh!!
Delivery With Doordash
My delivery poison of choice is doordash and I’ve spent wayyyyyy toooo much on delivery using their app. They make it soooo easy it’s badd. I’m embarrassed to even add up how much I’ve spent!
But my advice would be to delete these types of apps if you’re looking to spend less and save more unless you can work it into your monthly budget and it won’t affect your finances.
My Doordash Addiction (lol)
Like I said I spent and spend way too much on doordash, but I’ve improved as of late. But it is just too expensive and wasteful to be ordering willy-nilly.
You need to assess how much you’re spending compared to how much you would spend if you got groceries every two weeks, you’d probably be saving some serious cash!
For instance, say I spent $25 per order on doordash (sometimes I spent more! Yikes!) and I ordered six times per month…
The math: $25 X 6 = $150 per month
Now say I spend money on some groceries that last me for a month at a store like Aldi’s just for me (and I typically eat once or twice a day). I’ll probably be able to spend under $100 if I went twice in one month!
Even at Giant where the prices are higher, I could probably make out spending less than $150 to get everything I need to last me at least three weeks maybe. Also much healthier items as well.
The solution to my addiction: ultimately I found myself deleting and redownloading the doordash app, and thought it was undeletable.
However, I have found that making a plan to meal prep and picking meals to make along with deleting the app has helped make it harder for me to just order on any whim without discipline!
5. Not Saving Each Month
One of the biggest mistakes you could ever make financially is not saving or investing in your future.
As a minimalist or someone whos trying to simplify your life, you should be making saving and investing a priority if you value experiences over “things” or “possessions.
Save 10-20% of Income Each Month
There’s a statistic out there that states that “56% of Americans can’t cover $1,000 worth of emergency expense with their savings”.
One of the biggest problems people face in adulthood with finances is living paycheck to paycheck.
Yes, costs have risen, but a lot of people including myself for a while had no idea how to be financially literate and take a hold of where their money is going.
Now I’m no expert but saving does need to be a priority especially when you’re younger, even if your salary has increased since leaving college.
The common recommendation is to save about 10-20% of your income each month.
Example: If you made $1,000 every month, you would put $200 away into savings each month.
Tip: I’m no financial expert but along with your checking account and credit card(s) you should not only have a savings account, but separate primary savings account with a separate bank. This way whenever this money is auto transferred from your checking account you never see it and aren’t tempted to touch it.
Another Helpful Tip: You should also set a savings goal for an emergency fund. This emergency fund can be anywhere from $10,000 to $40,000. This ensures that you have a cushion and can afford any accidents that may occur in the course of your life or your family’s life.
Invest In Your Future
Just remember that saving here is about investing in your future! Not only do we want to save for emergencies, but we may also want to save for:
- New car
- College fund
All of these things are worth saving for and you should plan accordingly. Just remember to save while you’re young and while you have time on your hands.
Don’t Live Paycheck To Paycheck (If you don’t have to)
Living paycheck to paycheck may not necessarily be a choice for some, however, if you can afford to lower your spending then you must make a plan to do so.
Or else your dreams that you want to save up for in the future as mentioned above will be gone!
First: Get out of debt! This includes:
- Student loan debt
- Car loans
- Credit card debt
Next: Make sure that you pay yourself first! This means putting away that savings before you spend any money. This will get you in the habit of saving.
6. Getting Into Debt
If there is one thing you should avoid at all costs if possible it’s getting into debt! Whether you’re a minimalist or not this is a big no-no!
If you’re living a minimalist lifestyle, avoid debt like the plague!
Credit Card Debt
This is the classic type of debt most people are familiar with. This type of debt is only bad however if you’re undisciplined and have no clue how to control yourself.
Credit card debt can be a good thing if your credit card offers rewards and 0% interest for the first year or so.
This can allow you to make your money work for you and allow you to pay the minimum payment until the interest kicks in. Once that interest starts you’ll want your balance to be at zero at the end of each month.
But in general, if you’re new to credit cards, just be very careful and make sure not to spend the money you don’t have!
Cars are one of the worst investments anyone can make ever! You are buying a depreciating asset that sucks money out of you every month the minute you drive it out of the lot.
It’s recommended to buy a car in full if possible and do your best to avoid adding a car payment to your monthly payments.
Here’s the big one, the dreaded student loans. In all honesty, the cost of higher education has just blown out of proportion. It’s simply way too much money and the student loan costs that result are outrageous.
To add insult to injury wages have not gone up to match these costs, so a graduate coming out of school with a high-paying job has twice as much to pay coming out of university as they would have 20-30 years ago.
Along with taxes making a higher salary isn’t the same as it might have been in the past with the combined taxes and crippling student loan debt.
I’ve personally paid over $11,000 towards my loans and I’m almost done with them! But I got really lucky having less than $30,000 in student loan debt.
My recommendation: pay off this debt or any higher interest debt first. Because over time you’ll pay more if you let these loans sit.
7. Buying A New Car
Now if you’re just fresh out of college and you’ve got your first “adult job” (lucky you) you may want to level up your lifestyle to match that paycheck otherwise known as lifestyle inflation.
This is an easy middle-class pitfall or financial mistake. But for a minimalist lifestyle, you want to avoid this type of purchase especially if you already have a car that runs well and is in decent shape.
Why Buying A New Car Is Bad
There’s simply no need to get into debt for a car you don’t need! Even more so if it’s a brand new car. New cars are terrible investments and lose tons of value after you buy them.
This means its price plummets the minutes you drive away. That’s why you should always buy a used car or an older car because you’ll save money.
8. Not Using The Mint App To Track Your Finances
One thing I highly recommend to keep track of your finances would be the mint app.
It allows you to connect all of your financial accounts in one place and track spending, saving, investing, and debt/loan payments.
It’s super helpful if you love organization and keep track of your finances!
9. Not Investing In a Retirement Account
If you’ve been working full time and haven’t begun investing in your company’s 401k or retirement account, you’re making a huge financial mistake!
Not only is this terrible planning for the future, but you’re also missing out on free money because most companies will match a certain percentage of the number of your contributions.
401k At Your Job
A 401k is a retirement account that pretty much all companies offer for their employees. This type of retirement account has tax advantages and is company-sponsored.
Benefits of 401k: Employee contributions are pre-tax thus reducing taxable income however the withdrawals are taxed.
Investing in a personal Roth IRA for retirement is another fantastic way to invest for the future. I personally have a 401k and a personal Roth IRA.
Benefits of A Roth: A Roth is beneficial for young people especially because the contributions into this account are “after tax” dollars meaning when you withdraw this money it’s all yours and can’t be taxed. This is good because at a young age you have decades for tax-free money to grow (time on your side).
(A Roth does have a limit of $6,000 per year however, that way you can’t abuse this system.)
10. Not Creating A Budget
One thing I’m working on at the moment is creating a steady budget each month to keep track of my spending and income.
Budgets are great for tracking your spending habits and making adjustments to your financial habits. Budgets are great for any income level and are great for a minimalist lifestyle.
Why A Creating A Budget Is Important
Budgets are super important when it comes to managing your money. As life gets more complicated with a spouse and eventually kids, you’ll want to become a master of your money so that you can properly plan financially for these future events!
How To Create A Budget
Budgets don’t have to be complicated! If you’re interested check out these budgeting tips and learn to create your own budget.
The 50/30/20 Budget Rule
The 50/30/20 budgeting rule is a great way to get started with budgeting.
Basically, you allocate:
- 50% of your income towards your needs
- 30% toward wants
- 20% towards savings
Minimalist Personal Finance Tips
11. Not Selling Your Old Items When Decluttering
If you’re not selling your old items your just letting money sit around your house! Gather up your junk when you’re decluttering. Plan to sell any items that you think still have value. This can be very rewarding and who knows you might be able to make more than you expected.
There are tons of places to sell items nowadays. Here are the some of the best:
- Facebook Marketplace
12. Not Starting A Side Hustle/Business
When managing your finances it’s rewarding to make safe calculated decisions regarding your money. As long as you’re smart with your money you’re golden.
There are times when taking risks can be extremely rewarding!
This is the case when it comes to starting a side hustle or business while working full time.
Following Your Passions
Turning your passions into a business is anyone’s dream and I encourage anyone to follow what they enjoy!
My Advice: You don’t necessarily need to follow your passion or rather your passion doesn’t necessarily need to make you money. Instead, find something you’re passionate about and find ways to monetize it.
Example: For instance: blogging isn’t my passion and simple living isn’t necessarily either, buttttttt, blogging about simple living is something I’m passionate about! And when this surpasses my full-time income, it’ll give me the freedom and time to pursue other passions that aren’t necessarily monetizable. See how that works!?
Some remote side gig options include:
- Video editing
- Freelance writing
- A virtual assistant
Starting A Blog
Steps To Start A Blog
- First, pick your Webhosting (you want to use a self-hosted site with wordpress.org, not wordpress.com)
- Register your Domain name (brand/companyname.com)
- Download wordpress.org
- Pick a paid theme
Resources and Tools To Setup Your Blog
Why Blogging Is The Best Side Hustle/ Business
- Potential for passive income
- The choice to remain anonymous
- Freedom of schedule (work on your terms)
- Live/work anywhere (with wifi)
- Your income grows over time
- Faster chance of making money than with a YouTube channel
- Less risk than traditional business
- Low start up cost
Start A Blog Today!
Important Blogging Resources:
13. Making Bad Investments
Although investing is normally a good idea, you need to understand that there are also bad investments.
You need to learn about assets and liabilities!
Assets vs. Liabilities
14. (BONUS) Not Investing In The Stock Market
Investing is one of the best financial decisions you can make! Especially as a young adult! Again time is on your side and with long-term compound interest, your money will grow over time if invested properly.
This is why you don’t just put all of your money into savings because it will just sit there instead of growing. Investing in the stock market is one way to fight inflation.
I use Vanguard as my main brokerage account and I primarily invest in ETFs which are diversified shares of the market, not just one individual stock. The plan is to hold these for the long term and not to sell.
I use Fidelity Investments to manage my Roth retirement account. Now I could have just used Vanguard for both but one of my rollover IRAs used Fidelity so I decided to use them for my Roth retirement account.
Key Takeaways For Common Minimalist Financial Mistakes
- Financial advice applies to all not just those seeking a minimalist lifestyle
- Remain smart with your money, create a budget and track your spending
- Invest in your future/retirement
- Don’t make dumb or unnecessary purchases
- Take risks and don’t be afraid to follow your passions or something you’re passionate about
- Invest in the stock market
How Can You Avoid These Financial Mistakes For A Minimalist Lifestyle?
Avoid these financial mistakes by doing more and more research each day to become more financially literate. A lot of people have no idea about money and how to manage it! Let alone investing and learning to make it grow!
Check out White Board Finance on YouTube! This is one of my favorite channels to learn more about personal finance.
Final Thoughts On Financial Mistakes For Minimalists
Wow, you’ve made it this far into the post! Congrats! My final thoughts on this topic are simple…
You just need to shift your mindset. If simple living is your goal, then you should apply this to every aspect of your life. This includes your personal finances.
If you take this seriously, you can ease the stress of financial burden for yourself and your future family. Not to mention the potential to be completely financially free!
More Minimalist Lifestyle Posts You Might Like…
- 9 Honest Reasons why Minimalism is Popular Nowadays
- What Is A Capsule Wardrobe? (Plus Tips to Create Your Own!)
- 6 Super Simple Ways To Begin Living A Minimalist Lifestyle
- 9 Practical Minimalist Tips For People Who Enjoy Shopping
- Minimalist Guide: 26 MUST-Have Items to Simplify Your Life