I typically revamp my personal goals at midyear - sort of like evaluating my New Year's resolutions (although I don't make those - I just call them goals). It helps me decide what to focus on for the second half, and what I can jettison for the rest of the year. This year, I was WAY off on my 2021 goals (even though there is a waning pandemic compared to 2020), so I am modifying the plan for 2021 Part II.
At mid-year, I take the re-evaluate time to analyze the financial situation of the household and myself, to ensure we meet Q3 and Q4 goals as a (family) corporation. I wondered if my readers and friends did the same, so I thought it timely to discuss my minimalist money tenets.
It seems everyone is a money expert online, from The Budget Mom to the exalted personal finance king himself, Dave Ramsey. There is a money plan for every personality and budget. Aligning with my minimalist principles, I subscribe to the Tony Robbins quote, "Complexity is the enemy of execution". This means, I cannot spend an inordinate amount of time mentally ruminating over my finance situation and goals. I have to keep it simple, or it won't happen.
Here at the ranch, the Mayor is the one with the MBA and the money sense/cents. I am the Chief Operations Officer, and I handle the trees while he oversees the forest. It works for us and our yin/yang personality pair. If you're looking to simplify your finances and investment portfolio, here are some things that work for us.
1. I don't have a budget.
What?? That is the FIRST thing that financial experts propose to get on track! I know, I know, but it's part of my non-complex plan. I do track spending (Chase makes it super easy on their banking app), and I know roughly what the monthly non-flexible expenses are, like cell phone, utilities, insurance, etc. I pay those out of the paychecks first, because they aren't negotiable. A girl's gotta have her Hulu.
2. I pay myself first.
We contribute a respectable amount into the company-matched 401K every paycheck, no matter what. I can't emphasize enough how important this is, regardless of your current age. If you don't use the company match (if you have that option) to its max, you're turning away free money. The stock market has, despite the kick in the face 2008 and 2020 gave us, historically yielded between 9-12% in the last 100 years. Trust Vanguard and keep it simple. We have even taught the kids to get an IRA and to start now if their company doesn't offer retirement benefits. Compound interest ain't no joke.
3. I (almost) never incur consumer debt.
Why? Because I sinned SO much in my 30's I vowed to never do that again. If you don't have the money, you can't afford it. Pretty minimalist ideal, right? I have bought a car with a loan and made payments, but I paid for half up front and had a barely-more-than-zero interest rate. I did NOT sign a 60-72-84 month note. Don't ever do that. Your car is not worth that.
Same with furniture/jewelry/Old Navy credit card. The 15% off is almost never worth it. You can even remove "almost" from that sentence and just stick with never. It's not. If you can't pay today, you can't have it.
4. I keep emergency savings.
I have to hide this from myself on my banking app, so I don't look at it when I check balances and budget. Because I am essentially a toddler and have little control. BUT, I do an auto-deposit each paycheck and don't touch the balance. Banks get crabby if you make savings withdrawals anyway, so just leave it for car/house/health disasters. We HAD one this year with snowmageddon and had to come up with cash for repairs beyond what insurance covered, so I was grateful I had been socking it away. $1,000 is the recommended amount per finance gurus, and that will cover most car and up front medical costs in the short term.
5. We have two checking accounts, but only one credit card.
Again, this may seem counterintuitive to minimalism by both of us having checking (and savings) accounts, but it works for us. It's not MY money and HIS money; it's my account and his account. And we are both signers on each, so any emergency won't prohibit us from access. For us, it makes things simple. I handle the day-to-day expenses, which as a part-time nurse practitioner/professor is more appropriate for my income. The Mayor handles the larger chunks like the mortgage and the investment accounts. If you're single, or you and your partner have chosen not to commingle funds (a STRONG recommendation from me if you're not in a legal partnership like marriage), then you may find that two accounts is helpful for you, too. You can split your paycheck into two accounts and pay the big things on one and the smaller, daily things with the other.
ONE credit card means that a) all the points benefits go to one account and we reap the free hotel rooms quicker and b) we are never trying to pay off multiple cards every month because we each used one (or more). Check out The Points Guy for great ideas on how to benefit from credit card points. You can also use Bankrate for comparing cards and their costs/benefits.
I can't reinforce enough how important it is to limit your credit cards and eliminate your debt. Debt is the antithesis of all things minimal. It makes decision making complicated, and it impairs your ability to keep things simple when you're buried under a mountain of debt. Debt is never minimal and is always cumbersome.
I hope my simple non-MBA background minimal money tips have been helpful. I have mostly learned these things from the incredibly stupid way I handled money in my 20-40 year old life. If your priorities are kept simple, as in kill the debt, save for retirement, and don't spend more that you make, you'll probably come out looking like a minimalist master!
