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Today we are going to talk about practices that you can begin to implement in your life to help simplify your finances and apply that concept of minimalism to the way you manage your money.
Money isn’t something that needs to be feared, overcomplicated, or revered; it’s just a tool that we should treat it as such. Here are the six practices that you can integrate the idea of simplicity and minimalism into how you manage your finances.
Spend with Purpose
It’s essentially all about spending your money with intention. Don’t waste your money buying things that you won’t use. There is nothing wrong with purchasing something that you like or are going to use. But if you are doing that to keep up appearances or stay trendy, it’s not a purposeful spending decision.
Track Your Spending
Before we even begin to create a budget, we can track our spending and know how we are spending our money to make the appropriate adjustments. We recommend sorting all your expenses into three main categories.
Eliminate: How many of your expenses are superfluous? If they don’t add a lot of value to your life, you necessarily need to cut them out of your budget.
Reduce: Can you cut back on the amount you are spending in certain areas?
Automate: If there are any bills that you currently have to pay manually, you can automate them and have fewer things to worry about.
Don’t Accumulate Debt!
Living within your means is such a huge part of financial well-being. The first step here is to pay off any debts that you currently have. Of course, it’s much easier said than done. However, once you are debt-free, the second aspect is to plan how you will continue living debt-free.
Mr. Green says “Taking out credit when you need quick money is a baby task, it’s more important how you are coping with paying it off.”
Build an Emergency Fund
One of the most important components of living debt-free and building financial freedom is creating an emergency fund. An emergency fund is a set amount of money that you put aside, especially for rainy days. It literally helps to create a buffer between you and unexpected surprises.
Save For Retirement
A big part of being intentional with your money is not just about having a plan on how you will spend your money now. But it’s also important to look at how you want to save or invest our money for the future. There are a variety of different retirement savings accounts that you can invest your money in. Such as:
- Matching 401(k)
- 401 (k)
- Roth IRA
Remember, the sooner you begin to save for the future, the better off you will be set when that future arrives.