How to set a Minimalism Budget - The Ultimate Guide

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What does budgeting means?

What does the word budget mean to you? Restriction? Or freedom?

What about minimalism budgeting? Have you heard of that term before or you became recently interested? If you didn’t, don’t worry I’ll explain in a moment.

But regardless of your definition of budgeting, it all depends on your financial goals.

Here are 2 things want you to be aware of before starting budgeting:

Budgeting won’t make you rich

Budgeting won’t make you live a frugal life

I want to explain the budgeting concept first, then I’ll explain minimalism budgeting.

Quick Overview

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What does budgeting means?

Budgeting is to set an amount of how much money you’ll spend each month and it depends on how much you earn.

What are the basics of budgeting?

There are 5 elements for basic budgeting:

Income:

That includes any source of income that you currently have.

Fixed Expenses:

The expenses you pay from month to month but never change, such as car payments, rents, etc.

Flexible Expenses:

It does change from month to month, such as extra activities or extra house update.

Total Expenses:

The total amount of the flexible expenses and fixed expenses.

Disposable income

The total amount you get after cutting out taxes or paying off debt.

Taking that into account you’ll be able to choose the type of budgeting you’re comfortable with.

Did you know there are several types of budgeting, but the most known of them all are 3 types?

What are the 3 types of budgets?

Short-term budget:

This what it sounds like, to create a budget for 3-6 months depending on a goal you may have that needs a current budget.

Long-term budget:

Setting the amount of budget for the next 5-10 years to achieve a bigger goal.

Lifestyle budgeting:

You don’t have a specific date to set a budget, it’s a way of living and managing your money more efficiently

And the popular lifestyle is minimalist budgeting, which I’ll cover later in this post.

Budgeting rules

Did you know that there are “rules” for budgeting? While I wouldn’t call them rules, they’re more like a guideline to help you reach your financial goals (which is what everyone wants, right?)

What is the 50 20 30 budget rule?

I want to mention this budget rule first cause it’s the most popular in the budgeting community.

It’s 100 percentage divided based on your financial goals.

50% Paying off debts.
20% Saving
30% Expenses

While there’s is no “rule” to how to divide the percentage, it comes down to 2 things.

What is your big financial goal?

What type of budget do you prefer?

It would be obvious to set the highest percentage to paying off debts if your goal is to be debt free in 3 years and, it also counts in the long term budgeting type.

The next rule I want to mention is the 70/30 rule.

70:20:10 Budget Rule

I was blown away by this method of budgeting that I’ll start using this method to see if it does work!

But what does the 70:20:10 rule means is to:

spend
save
invest

Set an amount of percentage to your desired outcome, if your goals to invest more in your self then 70% of your budget goes to invest category and the other 30% percent goes to the other 2 categories.

The rule of thumb is that spending shouldn’t be over 70%.

So in this case, it sounds something like:

70% Investment

20% Saving

10% Spending

Whatever floats your boat you can do it, this is just a general guideline.

Now we got that of the way, in this post, I am teaching you what minimalism budgeting is and how to create one and how I do it.

What is minimalist budgeting?

It’s a way of living that cut unnecessary items from your life while keeping what you value the most and it’s a way to reach your financial goals.

For me, I use the minimalist budget to simplify the way of living, while I have only known about the term earlier when I became interested in the budget topic but I have been practicing minimalism budgeting since I started to work.

Before we processed making a minimalist budgeting plan, I want to explain most of the questions about the basics of budgeting?

What minimalism budget is not?

It’s not get a quick rich scheme

It’s not about saving money hacks

What it is, is to make you reach your financial goals as I mentioned before.

If you wanna know how to achieve your goals this year, then you can check this post about simple ways to achieve your goals.

How to create minimalist budget plan using notion — Ready?

How to start a minimalist budgeting plan?

First things first.

Set financial goal

If you’ve been reading my blog for a while now you know I always mention setting goals for every area in your life, and the financial area shouldn’t be any different.

How to set a financial goal?

Before you set any goal you need to know where you are.

What type of job you have? how much you earn? how much debt do you owe? How much money do you save?

Write down your answer to each question.

Second step

Where do you want to be?

Now you know where you’re, it’s time to set goals for where you wanna be.

How much you wanna save? How much debt do you want to pay off? How much money do you want to earn?

Or whatever financial goals you want to achieve.

This post contains affiliate links, which means if you decided to purchase through my links I’ll receive a commission. No extra cost to you. Read full disclosure here.

Third step.

Break your financial goal into mini goals.

This way you won’t feel like you aiming too high (hint* you should)

Breaking goals means writing down an action list of all the possible things you can do to reach that one big financial goal.

You can call it a brain dump process as well.

Now you see how your goals look like after breaking them down

it’s time to schedule them.

I always use a goal planner to write down my goals, but since we talking about budgeting, check this budget planner out.

Since now you’re able to identify your prioritize and value, let’s move on.

Make a list of all your expenses.

I’m a paper and pen gal and things don’t stick unless I write them down but recently I’ve been using Notion to list my expenses.

If you’re not familiar with Notion let me tell you, that it’s all in one type of software from writing your grocery list to organizing work. I use it for everything now.

Okay, back to making a list of your expenses.

Open a new page in Notion and create a table.

Make 6 columns of expenses, amount, tag, notes, goals, date.

I want you to list down all your expenses in 8 different categories as follows.

(Home, food, expenses, extra expenses, investment, saving, income, entertainment)

Budget template on notion — You can create any category that fits you.

I ask you to do it in 8 different categories cause not everyone has the same expenses also you get to understand where most of your spending habits go.

This will help you to manage your budget effectively.

Or, you can use the template I use to track my expenses from here, so you don’t have to do all that I just mentioned.

But before we do that it’s important to track all your spending habits from the previous month.

Your question might be I don’t know what I spend most of my money on, so how can I list my expenses?

How to list your expenses?

There are 2 ways to do that.

Bank Statement.

Get a bank statement for the last 3 months and you can see what your money spending habits look like, it’s a long process but it’s worth it by the end.

Another way to list your expense is to go through your bills.

It’s a tedious task but not like the bank statement one where everything is listed in 3 to multiple pages, this one requires more effort, since you get to categorize all bills and list down the expenses.

But one way to make this easier for you is to only grab bills and list them down by category.

Food bills, shopping bills, utility bills, and so on.

Once you list all your expenses whichever method you like, it’s time for cutting out.

Don’t panic, it’s more fun than what it sounds like.

Cut out expenses

This where your budget goals are starting off. When you cut out expenses there are a couple of things to consider.

First, is to look at the expense list you wrote down and look at each item and ask yourself this question.

Does this align with my value or what I prioritize in my life? If it doesn’t, cross it off.

Or in the case of using Notion, just delete the item.

Get your free template to track your expenses and set a budget here.

Keep doing that to each item and then just copy and paste the remaining items that you value spending money on.

I recommend using software such as Notion to list what I mentioned above, unless you love to write a lot, then go ahead and do it.

Free Budget Tracker
Easy Plug and Play

to track your expenses and set your budget.

Take me there.

Calculate, calculate.

I don’t see many bloggers talk about this, but it’s essential.

I mean after cutting out expenses you want to see some pleasure after doing that, and the pleasure lies in numbers.

Here’s what I want you to do.

Calculate the expenses of the items you crossed off at step 2 and then calculate the expenses of the items you decided to keep on the list.

Then, subtract the amount of each result.

The number you get is how much you can have each month if you spend only on necessary items.

It’ll grow as long as you keep your money on necessary items.

After all, that’s what the minimalism budget is all about.

If you’re here so far, I want to congratulate you for how committed you’re. The hard work is done, all you need to do now is the rinse and repeat method.

How to create a minimalist budget?

Let’s rinse and repeat

I asked you to create 8 different categories and you want to do that for the current month you’re reading this.

You can use Notion software to do this step, but if you prefer pen and paper like me (I use both) you can get this budget planner off amazon and can still proceed with the next step.

You can get this free template that I use to track my budget.

Free Budget Tracker
Easy Plug and Play

to track your expenses and set your budget.

Take me there.

What is the value of a minimalist lifestyle?

To answer that question I’ll go through it from the perception of minimalist budgeting.

Called the 3 MS

Managing your money:

One of the best benefits of minimalist budgeting it helps you manage your money more efficiently, without having to worry about where does the money go.

Managing your stress:

Money equals stress, there is no way around that unless you know how to spend your money and how to pay off debts you’re good to goes.

More freedom:

We all set different goals that equal the emotion we hope to gain from those goals, and budgeting (whichever method you choose) does create that freedom.

Because you know where each dime goes, you’re no longer captive to the expenses and the stress that comes with money.

More resources you’ll love:

4 budget methods you need to know in 2021

Simple Budgeting Tips for beginners

we all know that starting something new can be motivating and exciting but when it comes to managing our finances and to budgeting we need more than just motivation.

So here are my best tips on budgeting:

1- Schedule it

My life has changed ever since I started scheduling results I want to produce for the next week, and when it comes to budgeting it shouldn’t be any different.

schedule time of the week to track your budget weekly at least for the first 3 months.

This brings me to my next point.

2- Track weekly

Sounds like a daunting task but it’s so worth it.

When you force yourself to budget especially in the beginning phase it’s important to find the time to track your budget every single week.

And from there it’ll be like brushing your teeth.

3- Keep reminders

Set an alarm on your phone to remind you to schedule your monthly expenses, or to help remind set a target for the upcoming month.

4- Fail and repeat

Everyone has a different reason to budget but regardless of your reason to budget it’s important to try different methods of budgeting.

Don’t get stuck on just one method, keep experiencing until you find something you can stick to.

5- Evaluate

How would you know if one type of budgeting works? That’s why it’s important to see if your end goal from budgeting is met.

If 2 months in a row you overspending, something is definitely not working.

6- Remember the purpose of your budgeting

The “why” is behind successful budgeting.

If your reason is meh, your budget will be meh.

7- Emergency fund

One of the best tips you’ll hear in your life is starting an emergency fund cause crises do happen.

You can set another budget (If you budget for another reason) to save money that you can live off for at least 3-6 months in case of emergencies.

Wrapping up

Phew, that was a lot to cover in one post but the idea is that creating a budget or in that case, minimalist budgeting is to create more of what you value most in life.

Let’s be real not everybody would consider the idea of budgeting but the fact that you’re here does tell you’re longing for that money freedom that you hear about, but that money freedom comes from your own thoughts and thinking about money.

Know what you really want is the key step to have all that you want or creating more of what you have.

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