8 Steps to #minimalise your life and budget in 2021

by Carol Lenzi CFP®- also known as Kit
Minimalise – synonymous with the words minimalism, downsizing, declutter.

What is minimalism?
Minimalism is intentionally living with less, and only with the things you really need.
The notion is that with less clutter, the more time, energy and money you will have to focus on the more important things in life.
But, what do you define as those more important things?

What rocks your boat?
Everyone measures success differently because we value things differently.  Some people define success as being able to manage their own time and live a well-balanced life while doing the things they are passionate about, and still make money. Others may be fulfilled and feel secure by working for a large corporate. Whatever you define your success as, make sure that it makes you happy.

Then there was Covid19
We are in the fourth and final quarter of 2020 and many of us were forced into survival mode, not only from a psychological perspective, but financially as well. Having to make adjustments to our budgets to accommodate for the changes in our incomes and also having to wrap our heads around new ways of doing things.  What may have been important to us before the pandemic, may not necessarily be as important to us now. We were somewhat forced to minimalise.

The only way is UP
To help transition you into 2021, here are 8 basic steps to declutter your life and your finances, so that you can focus on the important things that matter to you.  
Think of YOU as a business.  You are the Financial Director of YOU. Take control of the money coming in, and money going out. It is your responsibility to make YOU profitable. Looking at YOU like this, may help you to think differently.

Eight easy steps to get you on track to #minimalise
Step 1:  List your current income and expenses (Your budget):   Set this up on an Excel spreadsheet, or jot this down on paper for now.  Download a budget sample click here and to download a copy of budget sample click here , to help you.  You need to know your current position to move to the next step. You can use your last three months’ bank statements to get an average of your monthly income and expenses.
Step 2:  Prepare a forecast of income and expenses for January 2021.  Your future income and expenses may change because of increases and decreases and it is important to note these in your forecasted budget.  
Your income at the end of the month pays for the expenses at the end of that month and expenses during the next month.  For example, the salary that you receive in December is used to pay for the expenses at the end of December and incurred during January.  
Companies tend to pay their employees earlier in December, which tempts people to spend their money before their debts are paid. This may be a good time to have a plan for your money you receive in December.
Step 3:  Scrutinize your budget to find ways to minimise your expenses:  Look at each expense to see how you can reduce each one without jeopardizing what’s important to you.  Here are just a few tips:  
Reducing your living space i.e. moving:  Requires less furniture and things.
Use public or private transport: Instead of the expenses of owning a car
Some banks will review a home loan interest rate after three years. Contact them.
Review the benefits vs costs of your car and household insurances.  
Step 4:  Think of ways to increase your income:  Consider selling items that you don’t need or haven’t used in the last six months.  This will bring in ad hoc money. There are many other ways of bringing in an income and this is a topic for another discussion.
Step 5:  Do things differently:   Actively change the way you do things.  This can help reduce your expenses.  For example, the way you use electricity, how you drive your car, what and where you eat, and so on.
Step 6:  Reduce your debt with the extra money:  Use the extra money that you have created to pay your bad credit, such as accounts or loans that attract high interest rates.  Consider allocating more money to larger loans like your home loan to pay it off sooner.
Step 7:  Create wealth with experiences:  With the extra money, rather than buying things, create more experiences. This may mean saving for your child’s education, or for a better experience in retirement and even enjoying more holidays away.
Step 8:  Give back:  Living minimalistically helps you to shift your priorities and allows you to give back, whether this is with your time or through donations.
Minimimalism can be different for everyone.  Whether it is your finances or decluttering your space, your work, your life, and the people you associate with, whatever this means to you, make sure that it is something that is sustainable and adds value to you and your life.