When it comes to budgeting, no one budget is right for everyone. The key, for many, is determining needs versus wants or establishing a minimalist budget.
Make It Simple With a Minimalist Budget
A minimalist budget doesn’t necessarily mean you become the person whose mattress is on the floor and refuses to buy anything new. Setting a minimalist budget really only means one thing.
You base your budget on your needs and nothing else.Â
That is a true minimalist budget. It doesn’t mean you need to get rid of worldly possessions or even change your lifestyle drastically. Determine your needs and build your budget around that.
- Determine your cash flow. Before setting a budget, you’ll need to know how much money you are bringing in (and from where). Make sure you only tally regular source of income – don’t count windfalls, gift money, or bonuses.
- What are your needs? Once you’ve determined cash flow, you can sit down and make a list of your needs and how much they cost. As MJ discusses in the video above, these are usually things like rent or your mortgage payment, insurance, food, and various other necessities. If you have kids this can also include daycare costs and other childcare-related bills.
- What is left over? Take your income, subtract your needs, and what is left over is what you have left to spend on fun, invest, and save.
What makes this budget minimalist is that there is no entertainment or unnecessary costs built into your budget. For instance, some people may budget around $400 for things like date night, going out to dinner, or seeing a movie. This budget allows for that (after your needs are taken care of) but it isn’t planned for.
Readers, would you try a minimalist budget? Do you think you could do it?Â
Find more helpful budgeting methods:Â
- How to Create a Moving Budget
- 5 Simple and Free Budgeting Tools You Should Be Using
- Start Planning With This Free Budget Planner
- Why is Saving Money SO Hard?
- The Best Budget Grocery Shopping Shopping List
