Three foolproof steps to nailing money minimalism

Money minimalism is all about streamlining our processes and stripping away the clutter and confusion of finance, helping us to feel excited and empowered about our money. It’s an approach that enables us a sense of full control over our money - the perfect tonic to a year shrouded in uncertainty and angst.

Let’s get right into it - here are our three top tips to becoming a decluttering pro.

STEP ONE:
REFLECT ON YOUR MONEY STORY
& IDENTIFY YOUR VALUES.

By starting with your money story, we can really gain an understanding of your past behaviours with finance and establish what has informed or influenced your decisions, as well as highlight where you’d like to make some changes.

To break it down, if we don’t understand the why behind our spending, we won’t be able to make the changes we’d like because we haven’t yet figured out what compels us to action certain behaviours. Interestingly, a 2018 study found that 86% of Aussies don’t know how much they spend each month, which is something we see a lot of at SOTM - when it comes to money, people prefer to bury their head in the sand rather than face their stressor head on.

If you fall into this percentage, that’s okay! You will get there (we promise), but we first need to develop an understanding of what our money position is and why, so that we can start making responsible amendments and move in the right direction.

We did a whole episode of our podcast on figuring out your money story, so for a full explainer, listen here.

Once you’ve grasped what your money story is, it’s a good idea to map out your values. Really sit and have a think about what your values are when it comes to money so that you can budget appropriately and realistically. By identifying those things that you value spending money on - be that the gym, your nails, your Netflix etc. it makes it easier to then rank the things that perhaps aren’t as important, so you can knock them off and rid them from your budget without much pain.

As a part of this process, it’s a good idea to look over the last twelve months of spending and see where our money went - does what we spent our money on align with our values? Or to borrow the Marie Kondo parlance - does it spark joy? If we’ve spent $10K on clothes or have dropped thousands on a gym membership that we aren’t using and doesn’t make us happy, then why are we pouring money into it? If it’s not working for you, stop paying for it.

From here we can create a refreshed budget that is more in line with your goals and allocate room in the budget for the things you do value and that spark joy.

TIP: A great way of doing this is to print out your history of spending (three months is a good start) and comb through your spending with two different coloured highlighters, one denoting discretionary spending and one non-discretionary spending – or unnecessary and necessary spending respectively. This will show you where you are spending your money and give you a clear indication of what your values are, so you can factor them appropriately into your budget.

step two:
SIMPLIFICATION.

Make things neat and tidy just like Queen Kondo by applying the following simplification techniques to your finances:

Close accounts you don’t need. The fewer accounts, the fewer statements you’ll need to keep on top of, which makes for less to do and less stress.

Automation.When it comes to organising your financial processes, utilise any automation capabilities available so that your bills are just debited without you having to think about it. This way there is literally no thought involved and you’ll never be stung with a late fee!

Consolidation. Debt and Super consolidation are great ways to take a little stress out of finance. For every loan you have in your life you’ll have a trail of statements and bills and the more of those you have, the more ‘things’ you’ll need to add to your budget and pay off each month. If you roll all of your debts into one, the process of paying them off becomes far less arduous than going through the process several times for several different debts. A broker is a great person to approach to help you consolidate your debts. Similarly, Super consolidation is a good way of maximising your Super account, rather than having multiple accounts laying around from various jobs here and there. By consolidating your Super you can save hugely on fees, which add up considerably over a lifetime. It also means less paperwork, it’s easier to monitor and to see how your retirement funds are tracking. ***Just be cautious that you’re not getting rid of any handy insurances that may be rolled up in your Super account – get some professional help to make sure you aren’t doing future you a disservice.  

Step three:
SYSTEMS, SYSTEMS, SYSTEMS

Have a physical folder where you keep all of your receipts and another one for bills, warranties and whatever other bits you have that need filing.

For lots of people, money is just one of those things we deal with when we get to it, instead of prioritising it and organising it properly. If this is you, why not break the habit by getting a little organised?! Buy a nice folder and label it (is Smiggle still a thing?), and whack all of your receipts or warranties in there so you know where you need to go for information when you need it instead of wasting hours fossicking through drawers and old emails to find what you need.

You can also do this digitally by organising your emails into ‘BILLS’, ‘WORK’, ‘PAYSLIPS’ so that everything is in its place and easily accessible when the time is right. 

This list isn’t exhaustive, but it’s a start that will hopefully help you overcome the feeling of overwhelm when you’re facing your finances. Instead of burying your head in the sand, now is the time to take ownership and understand your dollars, so you can reward and look after future you.

Trust us, they will be grateful for it.