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Week Four: Two Minimalist Money Habits

by theminimalistmom |

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Talking about Finances this week as part of the 2014 Clutter Cleanse. Have I scared you off? More about money here.

One of the tougher pills to swallow when you purge your home is all the things you bought that you didn’t really need or use. Things that you spent money on. Things that you worked hard to make money to buy.

When a bag of items heads to Goodwill and you can calculate that you worked four eight hour days to pay for everything in that bag… it’s sickening.

First, don’t despair. As I have said before, the money was already gone. It was very helpful for me to remind myself of that, sometimes daily, when I did our big home purge in the fall of 2010.

Second, use the harsh reality of your poor purchases to help you reshape your financial habits. With fresh eyes for what you really need and use, for what really brings you joy, you’ll have built-in momentum to go minimalist with your finances.

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The best strategies are simple and easy to implement.

Know Where Your Money Goes

You could be like us and enter every expense and bill into an App (we moved to Home Budget over a year ago and are still enjoying), or an Excel spreadsheet or a program like You Need a Budget (big thumbs up on this program from quite a few readers of this blog).

Or you could make a quick note at the end of the month on where all your money went from receipts, bank statements and credit card statements.

It doesn’t matter what route you take to get there but you must, must know where your money goes every month if you want to have simpler finances. One of the easiest ways I slipped into more debt was from never really taking stock of what my actual bills were and what I was spending each month. Keeping yourself in the dark about your own finances is like avoiding standing on the scale. In this case, ignorance isn’t bliss.

Tip: if you try one tracking tactic and fail at it, do not give up. I went through at least a half dozen tracking systems and twice as many false starts with them, before I not only found a system that works for me, but made a habit of tracking.

Live Below Your Means

So so simple and yet, so many of us don’t do it.

Hopefully you’re smarter than me and embrace this simple and powerful concept early in life. I was 32 before I got it. Thirty-two may seem late or like I’ve missed the boat but it’s never too late to start living on less than your pay check and available credit.

This works. Really. It’s not always easy but when you get it right and make a habit of it, it gets easier. It’s automatic. When a whim or an opportunity comes up that you can’t pay for in cash you don’t justify a splurge – you decide if you’ll still want it in the months it will take to save for it.

What about those unexpected bills? When you’re living below your means you can save up an Emergency Fund. Last month I spent a lot at the dentist. We should get 80% of the bill back from insurance but paying in cash was an easy option because we now have a well stocked emergency fund.

If you’re continually overspending stay tuned because the next post in this series will be on ways to rethink how and what you spend your money on.

Note: there are families out there that legitimately can’t get their needs – food, clothing, shelter – met on their current income. I know about that scenario because I grew up in a large single-parent family and we struggled to pay basic bills.

If that’s your situation I know that minimalism might be able to help you rethink some areas of spending, but you’re probably already living where the rubber meets the road as they say. There isn’t any fat to cut or meals out not to buy or new cars to sell and replace with older cheaper models or preschool Mandarin lessons to opt out of.

Sites like Penniless Parenting, Money Saving Mom and The Frugal Girl can give you some ideas for stretching your dollars but you may already be doing all those things. All I can say is, solider on friend. Keep going and I hope your work or life scenario improves soon.

  • My strategy is simple, I carry $ 20-30 only in cash plus a $100 stash away in a deep pocket of my purse. I only break that 100 if is imperative or for an emergency. I leave my debit and credit card at home and only take it out on grocery day and when making special purchase. One big thing that has kept me lately from browsing and spending more is to not hit the stores drink the weekend when I need to do groceries or buy something, instead I go right after work, and since I’m already tired and have to get hoe to cook, do homework with kids, I kind of rush through the stores and very often even leave things I intended to buy, just because its too late and I’m tired to carry so much. Also I realize that its less tempting to buy more stuff when the aisles are empty and you don’t see a whole lot of people stuffing their carts. Kind of like a monkey see monkey do effect that gets broken ( for me at least)

  • Totally agree on the emergency fund, it helps me sleep at night! We’ve had unexpected car repairs, busted hot water heaters etc and it turns those things from potential disaster to minor inconvenience. Even $10 a week really helps.

    Because we have worked to build good habits like the ones you’ve mentioned above, sometimes I forget that it’s not actually second-nature. We recently bought a family home and are keeping our townhouse as a rental and many of our friends (who all earn more than us) were really baffled as to how we did it, given that we don’t appear to have a frugal lifestyle.

    • The number is different for everyone but spending comfortably below what your income may allow. Unlike how I lived in my college years and the decade or so after which was spend as much or more than you make.

  • Dear Rachel,

    I purchased YNAB (You Need A Budget) on Black Friday and decided to start financially fresh this year with it. It has given me a concrete direction along with personal finance and minimalist/simple living blogs like yours. I’m positive things will be brighter as I go along. Like you, I learned some lessons the costly way. Nothing like in your 30’s plus a child to jolt you from financial coma!

    I recently signed-up (again. Because I have a love-hate relationship with them) to some social media platforms for my blog and while I’d like to be updated with the latest trends, I noticed that simple persons are more admirable.

    • Great to hear another positive review of YNAB!
      Such a fine balance with social media. I do enjoy it but can so quickly slide into the comparison game or mindlessly reading updates or news about things I don’t really care about. I recently joined Instagram but have committed to only following close friends (kind of a lighter version of Facebook so I can see pictures of them and their kids).

  • I recently posted about declutterers regret (I was inspired as I was experiencing it as I decluttered) – in that taking into account the ‘perceived value’ of an item can make you hang onto it way past its usefulness. Knowing what it cost you, how little you’ve used it, and how you will recoup a minimal amount when it’s resold or given away – is indeed a hard pill to swallow. But some of the greatest lessons learnt are the hardest to take.
    Over the last couple of years I have sold the majority of my cl;utter. One way I have done this is via a car-boot-sale. Seeing everything piled up is hard. But also cathartic. Its a reality check.

  • Thank you so much for including the last part in your post, that was very thoughtful of you. Your open-mindedness and sensitivity are part of what keep me reading here.

    I agree with tracking your money, it is indeed very helpful. We just finished our first full year of using ynab and the reports we were able to generate at the end were very instructive. I also agree that you need to hunt for a tracking system that works. I like Excel the best for really looking at numbers, but it’s hard to share it. ynab has some flaws, including what I believe is an overly rigid system, but their cross-platform (iphones and desktops, in our case) syncing is almost flawless and so we stick with them.

    Now to just get those expenses down. We live in a very high COL area in a high COL country and I’m trying hard to remember what normal prices should be and reduce our spending. When everything is insanely expensive, you start to lose your sense of perspective.

  • I too appreciate the last paragraph. Easy for people who have to only cut the Mandarin lessons to preach at others.

    I have stopped looking at many blogs about fashion and travel. They create envy, anxiety and spending in when I shouldn’t.

    We live in such a materialistic society. I am as guilty as anyone in having too much. I give many of my nice clothes to charity….since I can’t give much money right now I feel giving my clothes is a way to give back and to learn from my mistakes.

    • Dee – I’ve found cutting out magazines and most blogs about fashion/home/stuff really helpful in curbing my envy and spending too. It’s just not realistic that we’re all going to have homes, wardrobes and lives as portrayed on a professional website.

  • We were always savers but since following your blog and doing some major decluttering we’ve saved even more. Despite maternity leaves and average incomes we will be paying a lump sum into our mortage this year. It will literally save us thousands of dollars in the long run and we couldn’t been happier.

    One of the strategies that we use when we puchase items now is to break it down according to use. We don’t mind spending money on items that we will use often or have for a long time (espresso machine is used every day) vs items that are only for special occasions (like dress shoes). The $150 espresso machine costs more, but divided by it’s use is much cheaper than the $50 shoes.

    • Price per use is a great way to look for value in purchases. Just like you, we purchased a UK version of our favorite espresso machine when we moved here. Almost three years later it is still going strong and we use it several times a day. Well worth the $200 or so we paid for it.

      So nice to hear you have decluttered and it has helped you save more 🙂

  • I totally agree with you about using the strategy of ‘living below your means’ to make great financial gain. We have been doing that for the last few months, and have been amazed at how we’ve been able to whittle down our debt. Great post – really inspiring!!!!

  • Hi there!
    This isn’t related to the (excellent) money post today, but to the previous ones about paring down your wardrobe and clothes. As with so many things, I read it thinking “This sounds good! I should do that… But later…” (I hope I’m not the only one who’s been there!). I was putting my clothes away when something caught my eye – an old pair of trousers that I haven’t worn (or missed) in over a year. I just picked them up and put them in the bin! (Trust me, noone else would have wanted to wear them either.) Then I spent 5 minutes rummaging through the rest of my clothes and picked out an bagful of clothes to donate – without really noticing at all! Thank you for this series, even though I couldn’t be bothered in the beginning, you must have got through to my subconscious, and now that I’ve seen how easy it is I’ll definitely be continuing!

    Thank you 🙂

  • Such a simple and profound post. I’m definitely going to share on my Sustainable Family Finances blog. The comment about the 30 days app is great too, I’ve always made a mental list of things we want/need and wait until I’ve continued to “need” it for at least a month. I have a written “wish list” for our home to help me prioritize wants from needs. It’s not about me denying my desires, but making sure that we acquire them at a rate that is living within our means.

    Thanks for the great post!
    Darcy @Sustainable Family Finances

    • Completely agree. Very sensitive and thoughtful blogger. Way to include everyone, provide useful solutions where you can and redirect where you can’t (spreading the blog-love). Fantastic voice with responsible advice. Keep writing!

  • Love your blog! The finacial piece is my goal for this year. I cut up my credit cards and got a prepaid one. I have an ATM card, but no debit card (that was part of my problem). I get cash at the beginning of the week and that is my allowance. At this point, I don’t track that money- it is gas money, snack money etc. In order to address my insane shopping tendencies, I downloaded an app called 30 Days. It allows me to put things I want to buy in it and reminds me in 30 days. If I still want it and have the $, I can buy it. If I don’t want it anymore, I can delete it. It has definetely helped me from buying things I don’t need. Your previous posts have also helped me in the wardrobe department. Getting my closet in order has made me think more about the clothing I buy. 🙂 My husband and I are both in the military and we plan to retire in the future. He’ll retire in about 2 years and I’ll retire in about 4. We are using this time to get ourselves out of debt and ready for the paycut. We both plan on working after our military retirement, but we would rather not have the additional debt to stress us out. I am happy to announce we are taking a trip to Disneyland and it will be paid for with savings for the trip- no credit cards on the trip! It is so awesome to be able to say that!!!

  • Staying away from the plastic temptation. (Ithis will always be a very strong pull for me, so had to get rid of them all. Not for everyone, but kept me from willingly digging myself in even deeper). Cash only / bank debit card. That helped me as I do not have a stable income, budgeting is near impossible when you have no guarantee what the pay cheque will be week to week. I know my bills, those are the one constant.

    Growing up in a financially unstable environment, I fell hard into the credit card trap when they hooked me…as I tried to live the life I wanted and longed for than the reality, nor did I learn from my situation or that of my childhood. The dream-world of escape was not the comfort I longed for, it was a noose that I soon lost control over.

    I got over beating myself up seeing the clutter I spent so much money on and gave away in various purges and stopped the “wish I had never bought it / wish I had the cash now instead”. No point fretting over the past, live in the moment. Rachel, your line of “the money was already gone” is so true!

  • Thank you for that note at the end. I almost didn’t read this article because we fall into that group. When the economy crashed, it took our business with it. We never lived an extravagant lifestyle anyway thankfully, but we’re definitely just in survival mode now and praying for better days to come.

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