Minimalist Budget: 10 Easy Steps To Simplify Your Finances & Save Money!

Last Updated April 13, 2024 by Davina Kelly

Do you want to learn how to create a minimalist budget and simplify your finances?

I know that creating a budget can seem overwhelming, but it doesn’t need to be. You can create a simple minimal budget that is effective.

In this post, I will share the steps I took to adopt a minimalist lifestyle that aligned with my values.

Doing this has helped me to create a meaningful life, save a lot of money and build an investment portfolio.

You are going to learn how to live on a minimal budget including ways to incorporate minimalist spending habits into your life.

After reading this post, you will be able to create a minimalist budget that you can stick to and reach all of your goals. 

This post is all about how to create a minimalist budget.

What Is a Minimalist Budget?

Before we define what a minimalist budget is let’s define what minimalism is. Minimalism is a tool that can assist you in finding freedom. Freedom from the trappings of the consumer culture we’ve built our lives around. This is the definition given by the minimalists who popularised minimalism. Read here to learn more.

If we apply that to finances, it is about spending money on the things that matter most to you and eliminating distractions. This can mean different things to different people. For some, it may mean spending time developing your career and spending less money on material things. 

A minimalist budget is focused on the things that you value and allows you to live a fulfilled and meaningful life. By removing the unnecessary spending you will make room for the important things like saving and investing your money. 

Applying these tools in your life can help to improve the quality of your life, find deeper meaning in the simple things and save money. This is what happened to me when I watched the first Minimalist documentary back in 2016 on Netflix. 

My Minimalist Budget Story

I was at a point in life where I was unhappy, unfulfilled and felt like I had too much stuff. After watching the documentary it motivated me to simplify my life, figure out the things that I valued and learn to do more with less. I started to declutter my home and sell my unwanted items, I stopped spending money on unnecessary things and as a result, I saved more money. 

One of the things that I valued was travelling so I made it a priority to save up money so that I could travel at least 3 times a year. This has brought me so much joy and peace and I was able to do it because I created a minimalist budget that worked for me.

I used to spend a lot of money on clothes and that made me happy. Now I prioritise spending money on experiences and I feel like my life has more meaning because it is aligned to my values. This is the power of minimalism, it can change your life!

Ok, enough about me lol let’s get into the steps you need to take to create a minimalist budget that works for you!

How To Create a Minimalist Budget In 10 Simple Steps:

1. Identify Your Values

The first step in creating a minimalist budget is to identify your values and the goals you want to achieve. You need to think about what living a meaningful life means to you and what is important to you. Do you want to travel more? Pay off debt? Start investing?  

When your goals are attached to something meaningful you are more likely to work harder towards achieving them.

Once you know the answers to these questions it will give your minimalist budget direction. You will know what you want to prioritise spending money on and what you can eliminate. 

I recommend taking some time to think about this and write it down. Writing your goals down on paper will help you figure out the steps you need to take and it will give you a sense of focus and motivation. 

2. List All Of Your Expenses & Reduce The non-essentials

One of the principles of minimalism is simplifying things and learning to live with less. This is a great approach to take with your finances, especially your expenses. You need to identify your spending habits, keep the essentials and reduce or eliminate the non-essential expenses.

To get a good idea of your spending habits you can review your bank statements for the last few months. I recommend looking at the last 3 – 6 months to get a good picture. While you are going through them identify the non-essential expenses and think of ways you can cut back. 

For example, if you can see that you are spending a lot of money on clothes ask yourself if spending money on clothes is aligned with your goals and values? If the answer is no then you can reduce your spending in that area or eliminate it. 

Once you have gone through this exercise you should be left with your essential expenses and a reduced amount of non-essential expenses. Let’s break each category down so we can simplify things further. 

Essential Expenses

Essential expenses are related to the things you need to pay for to survive and maintain your lifestyle. See some examples below.

• Rent/mortgage
• Utilities
• Transport
• Food
• Childcare
• Phone bill
• Internet 
• Petrol

 Non-essential Expenses

Your non-essential expenses are the things related to your wants. You don’t have to spend money on these things, you do it because you want to. See some examples below.

• Subscriptions (Netflix, Amazon Prime, etc)
• Gym membership
• Shopping 
• Eating out
• Entertainment

Non-essential expenses are the category in your budget where you can cut back the most and ensure that your spending is aligned with your goals.

Having a minimalist budget doesn’t mean that you have to stop doing the things you enjoy. It is about simplifying things and spending money intentionally. If the things in your non-essential expenses are aligned with your values you should include them. 

3. Create Your Ideal Budget

Now that you are clear on your goals and values and have aligned your expenses it is time to put your budget together. If you are new to budgeting you can try the 50 30 20 budget rule. 

This budget system is great for people who are looking for a simple way to manage their money and want to prioritise goals like saving and paying off debt. It is broken down as follows.

• 50% of your pay (after tax) is allocated towards your needs, the essential expenses we went through earlier.
• 30% is allocated to wants, these are the non-essential expenses we kept that are aligned with your values.
• 20% is for savings and investments. This portion of your budget will go towards your financial goals like paying off debt and saving for retirement. 

I do like this budget method, but I would make one change. I would allocate 30% to savings and investments and 20% to wants. In my opinion, your financial goals should take priority over your wants.

You don’t have to use this budget method, but it is an easy way to get started with your minimalist budget and it will ensure that your money is going to the right places. 

Once you have chosen your ideal budget you can put it together using the free printable budget and expense tracker I have included below.

4. Automate Your Bills

Keeping things simple is the goal with a minimalist budget and a good way to do this is by automating your payments. You can set up your bills and any essential expenses you can to be paid via direct debit. For your savings and investments, you can set up a standing order to transfer the money on a chosen date.

This will ensure that your bills are paid on time, save you from incurring any late fees and it will give you one less thing to worry about. 

5. Simplify Your Accounts

Over time it is easy to end up having a lot of bank accounts and it can be overwhelming. Having multiple accounts does have its benefits, but when you are creating a minimalist budget you want to ensure that you only have accounts that you need. I recommend having three accounts maximum. Let’s break them down.

Cash flow account

This is the account that you get paid into and pay all of your bills and essential expenses from. For example, your salary is paid into this account and you will set up your direct debits for rent, utilities etc from this account. You will also transfer money to your other accounts from here. 

Savings account

Having a separate savings account will help you keep your money organised and will also make it easy to track your progress. 

I recommend that you choose a high-interest savings account. This will allow you to benefit from earning interest on your savings and make your money grow. Ensure that you choose an account that is easy to access so that you don’t incur any fees if you need to make withdrawals. 

Spending

The last account will be used for spending. This is where you will transfer 20% of your budget for your wants or non-essential expenses. Things like eating out, entertainment, etc.

Having your spending money in one account will make it easier for you to spend within a budget and it will encourage you to spend mindfully. 

6. Live Frugally

Living a frugal lifestyle will help you to live below your means and save money. This is an important part of maintaining a minimalist budget because spending is the part that trips most people up. 

A lot of people think that being frugal means being cheap, but this isn’t true. Living frugally just means being smart and getting the most value for your money. This can give you financial peace and freedom to make the decisions you want with your money.

There are many ways to live a frugal lifestyle. If you focus on the areas of your budget that eat up the most money such as housing, food and transport you will save a lot of money. 

For example, you could shop at cheaper grocery stores, plan your meals, walk more, compare utilities costs to get the best deal, etc. These are small ways to cut costs without sacrificing your comfort. 

7. Think Before You Spend

Once your budget is in place it is time to adjust your spending habits. As I mentioned earlier I believe in balance, but it is good practice to take a moment to think before you make a purchase. 

Before you commit to spending your money ask yourself does this purchase align with your goals? Is it something you need? Will it bring you value? Give yourself a few days to think about the answers to these questions. If the answer is yes and you are still thinking about it after 7 days then you can buy it. This way you will know it is not an impulse buy.

I wish I had this mindset earlier because I would have saved myself so much money. I cannot tell you the amount of money I have wasted buying clothes in the past that ended up sitting in my wardrobe collecting dust lol 

8. Create a Finance Routine

To create a successful minimalist budget you need to ensure that it works. It is important to make time to review your progress each month. This will allow you to see if things are working and make adjustments where necessary. 

Once a month sit down and update your budget with your actual numbers. While you are doing this reflect on your results. Ask yourself if you are happy with the progress you have made. If the answer is no, think about what you can do to improve. For example, if you have spent a lot of money on coffee think of alternatives that you can make at home.

Next, update your budget for the next month. If there are any improvements you want to make you can include them. Doing this will help you to take control of your finances and ensure that your budget stays on track to reach your goals.

9. Educate Yourself

Knowledge is powerful especially when you apply it. If there are any areas of finance that you lack knowledge in you need to educate yourself. 

If you don’t know a lot about investing or want to learn different budget methods you can read books or blog posts and listen to podcasts to learn about it. 

Making time to educate yourself about money will expand your mindset and equip you with the tools to make your money work for you. 

10. Change Your Mindset

Changing your mindset is one of the most important things you can do when you are creating a minimalist budget. You need to ensure that you shift your mindset to align with your new goals. 

Everything begins in your mind and your thoughts will drive your actions. For example, if you have a positive money mindset you will believe things like I have the freedom to spend frivolously, but I choose to align my spending with my goals. 

If you have a negative money mindset you need to understand why and work towards having a positive money mindset. You can do things like reading money mindset quotes for inspiration and repeating money affirmations. This will help to shift your mindset fast.

Frequently Asked Questions

Do Minimalists Spend Less Money?

In short, yes they do. Minimalism is a way to find freedom from consumerism and focus on the things that are meaningful to you. By default, you will spend less money because you will be consuming fewer things. 

For most people that means spending less money on material things and opting to put that money towards financial goals like saving for retirement. 

Also, learning to live below your means and simplify your lifestyle is a constant theme among minimalists. This can help you to learn to spend mindfully and take control of your finances. 

Final Thoughts

Creating a minimalist budget is a great way to simplify your life and learn to do more with less. It can help you to spend intentionally, save more money and live a meaningful life. 

By identifying your values and goals and aligning your spending you will be able to create a meaningful budget that works for you. Automating your bills and simplifying your accounts will help you stay focused on your goals and make the process easier. 

I hope you have found this post helpful and can now create a minimalist budget that works for you. What are some of the steps you take when managing your budget?

This post was all about how to create a minimalist budget.

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