Today I read a great post on Reddit’s minimalism forum about financial minimalism. Everyone shared the ways they’ve streamlined their finances, such as using fewer bank accounts and credit cards. These strategies helped them reduce their stress levels and get in control of their money. To help you do the same, I thought I’d discuss some of the best financial minimalism tips from the forum below.
Consolidate Your Finances
One of the best financial minimalism tips I came across is to consolidate your finances. Many personal finance experts recommend opening a new bank account for each savings goal you’re working toward to organize your finances. But at a certain point, having too many bank and investment accounts to manage can get confusing and stressful. It’s hard to get a clear picture of where you stand financially when your savings are spread out across a dozen different accounts. Not to mention how difficult it is to remember all those usernames and passwords!
Juggling too many credit cards can also overcomplicate your finances to your detriment. I’ve noticed that I spend more when I use multiple credit or debit cards for everyday purchases. It’s easier to keep track of your expenses when you can log into one portal and see all your transactions in one place. When my transaction history is spread across multiple credit card accounts, I often forget about purchases I’ve made and end up overspending as a result. I’ve pared my finances down to just one credit card and a few bank accounts, and have actually had an easier time saving money since I simplified things.
Organize Your Paperwork
In the same vein, organizing your financial paperwork so it’s all in one place can simplify your finances. Keeping all your important financial documents in the same physical location or digital folder will make your life much easier at tax time. Instead of frantically searching for your receipts from charitable deductions or business expenses, you’ll know exactly where they are. If something ever happens to you, consolidating key documents like your will and life insurance records will make it easier for your family to sort out your financial affairs, giving you peace of mind.
Focus On Your Main Source of Income
Another interesting tip I saw on Reddit was to focus on your main job instead of getting side hustles. The idea is that putting all your effort into growing in your role and learning relevant professional skills will lead to promotions. And those promotions will likely come with larger pay bumps than what you’d earn from a side hustle like driving for Uber.
This strategy will simplify your life and help prevent you from getting burned out. It’s hard to divide your time and headspace between a demanding full-time job and one or more side gigs. When you’re working that much, self-care usually falls to the wayside, which can damage your mental and physical health over time.
However, it takes some time for this approach to pay off. You might have to devote yourself to upskilling for a year or more before you get a promotion or a better job opportunity at another company. So if you’re having a hard time keeping up with your expenses and need cash right now, you probably can’t play the long game and need to get a side hustle.
Reduce the Number of Payments You Have to Make
Bills are a big source of stress, so the fewer you have, the better. It’s a good idea to go through your monthly recurring expenses and see if there are any subscriptions you no longer need. Maybe you don’t use your car wash subscription enough to justify the cost or you can live without Netflix. Cutting those costs will help you save more money and reduce the number of bills you have to keep up with and remember to pay.
Paying off debt and knocking out one or more of your loans can help you feel more financially free and simplify your life. So can consolidating your debt under the right set of circumstances. If you have a good credit score, you may be able to get a personal loan with a lower interest rate than your existing loans and use it to pay them off.
Getting a debt consolidation loan with a lower interest rate can help you pay off your debt faster because more of your monthly payment will go toward principal. Paying one loan instead of several can also lower your stress levels because you won’t have to remember to make as many payments or move around money to cover multiple automatic transactions.
What things do you do to simplify your finances and make your life easier? Do you consider yourself a financial minimalist? Share your thoughts in the comments section below!
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Image and article originally from www.savingadvice.com. Read the original article here.