I want to be a Financial Minimalist, but i'm not..

Its not about not spending money, its about spending money on things that actually matter. Recently I have started studying financial minimalism. I would say that after learning about financial minimalism, I personally am not a financial minimalist. To understand financial minimalism we must first understand what minimalism is.

Minimalism is all about living with less. This includes less financial burdens such as debt and unnecessary expenses. ... For many minimalists, the philosophy is about getting rid of excess stuff and living life based on experiences rather than worldly possessions.

When I first tried to research financial minimalism, I found there were very few videos on the topic. So I decided to break down what I believe to be the core principles of financial minimalism. The first and most obvious principle Is to spend less money than you earn.

The core Idea of financial minimalism is to not create a stressful life for yourself by constantly pushing to acquire more and more materializing objects, that we think will make us happier, only to find that the happiness from purchasing that item is fleeting.

There is good debt vs Bad debt

Good debt allows you to improve your quality of life from a financial perspective by buying investment properties or investing in companies which create income for you.

Bad debt however is debt which is used to buy thing we want which don't serve a purpose of creating money for us but simply allow us to buy something we believe will make us happier.

This is a big part about trying to be a financial minimalist avoiding bad debt. I personally have a car loan which I personally would consider to be bad debt. The car does not make me money however you could argue that It is required for my job which does generate money.

Bad debt robs you of your freedom.

The freedom to leave your current job if you're not happy, in pursuit of something that will bring you more happiness. Lots of us work our entire lives in a job we hate because we have all these commitments which prevent us from changing.

Imagine what you might change if you didn't have all of this debt to prevent you. Principle number two is simplifying your finances. This is something I feel I already do quite well

I personally have my bank accounts set up to create a stress free experience. I have my main bank which I do all of my spending and day to day life out of. Its the bank I have been with ever since my mum set me up with a bank account in primary school.

In this bank I have three accounts

#1 My Spending account

#2 My Tax Account

#3 My Small Emergency account

My spending account, you guessed it, Is where I do my day to day spending. If I want to buy a coffee from the cafe I will use the debit car connected to this account.

My Tax Account is for anything that is tax deductible which i need to log for when i comes time to do my tax. This makes doing my tax super simple because all I have to do is print off the bank statement for the year and its all there.

I buy everything from petrol from my car to items I use for work. Literally anything that's tax deductible.

Last but not least is my small emergency fund. This holds a small amount of money to be used if I spend more than I normally would that month. This saves me from having to transfer money back from my other bank which I have all my mortgages with.

On every pay day my pay will go into my Savings account which i will then divide among my three bank accounts. How much you should have in each account will depend on your personal living expenses.

Once I have topped each of my account up to the normal amount i will transfer the remaining lump sum to my second bank.

This is so the money Is not sitting in my account tempting me to spend it. I am a big believer in out of sight out of mind.

My second bank also has three accounts

#1 My Investment Savings

#2 Mortgage 1

#3 Mortgage 2

This one is pretty straight forward.

In my investment Savings I keep $5,000 which covers the mortgage payments which month and this gets topped up with the money that comes from my first bank. Once I have topped this account up back to its normal $5,000

I again transfer the remaining money into my mortgage which sits in the redraw out of sight. If a tenant moves out and I don't have enough to cover the mortgage I could redraw the funds from the mortgage when required.

By having the money in the mortgage I save on the amount of money paid in interest and pay off my mortgage faster.

I believe these two principles are the core to financial minimalism you might think that only two principles is not enough but then it wouldn't be very minimalist would it.

If you watched this video and feel a bit uninspired because your personal finances aren't remotely close to a financial minimalist but be disheartened, maybe now is the time to start?

[fififinance]

Enjoying your channel! Learning so much! 👍

[HealthyMinimalistMom]

Since I've stopped impulse buying and put investments and bill pay on autopilot, my life has become so much easier and better. Thanks for sharing.

[davidnorton]

We sold our lenses and SLR camera body to go toward the house deposit. The Huawei phone has awesome zoom, stabilised video and some of the best pictures a phone can take going by DXOmark. But I do want the new top camera phone - Xiaomi mi 10 ultra lol