Simplify Your Financial Life

Simplify Your Financial Life - featured 2

Ah, minimalism: the buzzword of the moment. It’s more than Marie Kondo-ing your wardrobe and getting rid of knick-knacks! At its core, minimalism is all about living with less. If we apply its principles to our financial life, that would look like relieving financial burdens like debt and unnecessary expenses. When it comes to your daily routine, there’s plenty to be gained from the intentional process of learning to simplify your financial life.

 

Start at Home

Incorporating aspects of minimalism into your life can let you reap the benefits of freedom from financial worry and enrich your lifestyle by spending more on experiences than you do on “stuff.” It’s not necessary to shed all your earthly possessions in favor of complete austerity—there’s a sliding scale of steps you can take to improve your life bit by bit until you get where you want to be.

Should you decide to declutter your home and closet, you stand to make a pretty penny through resale sites like Poshmark and Mercari (which require a little more legwork on your end but yield a higher profit) or ThredUp (which does most of the heavy lifting for you but typically pays a paltry sum in credit or cash). You can go the old-school route of having a yard sale—if it ain’t broke, don’t fix it! You can also take advantage of social media marketplaces to reap the full profit from your preloved items.

If you really want go go fully minimal, you can reconsider your living situation. If you have less stuff or have children that have since grown and moved out, you can probably get by on living in a smaller place. This is a huge cost saving factor when you calculate a smaller rent or mortgage payment plus decreased utility usage. You don’t have to pivot to a full-fledged tiny home, but transitioning to a smaller rental unit (like a studio) or house can save you a ton of money each month.

 

Create a Budget

One misstep that pushes your spending from minimal to maximal is forgetting to keep track of money coming in and going out. By creating a clear budget that works for you, you can better control your financial health, stay on top of excessive spending and get on a better track for the future.

One of the things that makes modern budgeting more difficult is that we’ve got so many extra bills that previous generations didn’t have to consider—think streaming apps, gym memberships and monthly subscriptions to meal delivery and vitamins. On the flip side, there are plenty of apps and software programs available to help you keep up with every last expense and generate valuable insight.

When it comes to your banking, you can cut credit use to a single card. Preferably this would be one that offers rewards that are valuable to you if you’ve got the creditworthiness for it. (Y-12 has a great Loyalty Rewards program for cardholders! Click here to learn more.) Set up automatic bill-pay then pay off the balance every month. You earn rewards without having to worry about which card links up to each bill.

Have a single checking account and a savings account just for an emergency fund. It’s easy to transfer money between the two if necessary, especially if you use your bank or credit union’s app. You won’t deal with pesky fees and you’ll minimize your risk of being hacked. (Make sure you use a strong password or password manager!) This will help you simplify your financial life.

Consolidate Debt

Nothing brings a sigh of financial relief quite like streamlining debt and seeing the light at the end of the tunnel. There are a couple of handy ways you can do this, and Y-12 Federal Credit Union can help you with all of them. (Click here to read our previous blog post on this topic!)

You can take out a personal loan with no collateral required, which will allow you to use a lump sum of funds to pay off your existing lines of credit. Then, you pay back that principal—usually at a lower interest rate than your credit cards.

Another route you can take is the balance transfer. If you’ve got the bandwidth to responsibly add a line of credit, you can potentially take advantage of a new low- or no-interest credit card. You transfer your existing debt to the new card, then ideally pay it off during the timeframe of the introductory rate. Y-12 FCU members can move your high-interest debt to Y-12 FCU, with no balance transfer fee, and lower their monthly payments! Click here to learn more.

Cutting out extra credit card bills spares you from the monthly interest fees, enabling you to put that money toward your principal instead. Whatever route is best for you, consolidating your debt is an incredible tool you can use to simplify your financial life. The result? Money saved and less financial stress.

When you hear minimalism, don’t think “sparse, cold and boring.” Rather, aiming for a less cluttered lifestyle gives you the freedom to pursue the experiences and investments that bring you happiness and value. Incorporating a few tips and tricks from minimalist living will leave you with more time and ease of organization when it comes to your daily life—and for that reason, we say simplify!