Financial Minimalism: What's This Lifestyle All About?

Reducing expenses, increasing savings, and finding ways to improve financial habits to more quickly and better achieve our short-, medium-, and long-term goals isn't always easy.

In addition to the importance of creating a monthly budget that allows you to monitor and plan your expenses, or avoid impulse purchases or splurges, you should find a financial lifestyle that suits you.

One of the philosophies you can apply to the way you manage your wallet is financial minimalism, according to experts. It's ideal for those who believe that less is more and want to achieve one goal at a time.

What is financial minimalism?

The concept of minimalism is defined as a lifestyle based on focusing on functionality and the essentials, sacrificing what may be considered unnecessary. But how can it be applied to your financial life?

According to personal finance experts at Nu Mexico, financial minimalism isn't about living with only the bare minimum or cutting back on every possible expense, but rather evaluating your spending and determining what's essential for you and your family, and what you can do without. This way, you can focus your resources and efforts on what can be beneficial.

For example, decide whether buying the latest cell phone, the best sneakers, or the best restaurant meals are priorities for you and start eliminating expenses that you think can be eliminated from your daily routine.

"It's not about giving up everything; it's about simplifying your finances and focusing on clear goals that bring long-term well-being and satisfaction," explained the Nu experts.

The steps to apply financial minimalism

It's not always clear how to begin implementing a new philosophy; however, in the case of financial minimalism, experts recommend a series of steps that will gradually lead you toward adopting this lifestyle and help you find balance.

For example, Nu experts recommend starting with more responsible spending and avoiding fads or purchases that "fill space." For example, instead of buying fast-fashion clothes every month, buy items that can be worn on different occasions and last longer.

Secondly, you should implement recurring savings measures and channel funds into savings or investment accounts. Experts assure that this prevents you from hesitating about investing and helps reduce impulse buying. Some investments, such as Cetes (Spanish Central Banks) or other digital platforms, offer regular deposit direct debit tools to achieve this.

Automation can play an important role in this process: in addition to automating savings and investments, some basic service or subscription payments can be debited to avoid forgetting to pay and avoiding unwanted fees or surcharges.

Eliminating debt and incurring it only when necessary, and reducing the number of bank accounts to the bare minimum, based on your ability to pay and your debt, is another step you can take to gain greater control and oversight of your transactions, experts say.

On the other hand, RappiCard experts assure that an occasional financial review should be conducted to evaluate expenses and eliminate those that are unnecessary, that become mundane expenses, or that are not useful, such as unused subscriptions, coffee or snacks, and transportation.

What to expect?

The goal of adopting a lifestyle that can be restrictive is to modify consumption habits to prioritize the purchase of necessary goods, in addition to having greater savings capacity, avoiding additional costs due to interest rates or fees, and, in general, reducing financial stress.

It's important to keep in mind that financial minimalism requires discipline and setting concrete, achievable goals. If you think it'll be difficult to adapt, it may not be ideal for you.

The documentary The Minimalists: Less Is Now, available on Netflix, takes a closer look at this lifestyle.