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
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
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
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.
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
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.
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.
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.
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.
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.
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.