Yup, I'm doing it. And by it, I mean I'm hopping onto the minimalism-is-super-trendy train. But I'm not doing it just because it's the super hip zeitgeist of our time. It's because I think it just actually makes sense. At least for me, having less crap literally creates more space for the non-crap in my life.
Most of American society has had a pendulum swing from rampant consumption to mindful curation. The reasons are likely both by design and by default (The Great Recession). If you're like me, you've at least haphazardly implemented the KonMari method in your home. You've thrown out all your 8-year-old underwear and dusty text books. Now it's time to overlay this philosophy in your financial house.
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More Accounts But Less Clutter
I'm about to tell you that you need more accounts. You're probably thinking, "WTF, Paco? This is contradictory to minimalism." To which I will respond, "Chill and hear me out." Each account will have it's own purpose. I'm not trying to Wells Fargo your ass. Separating your funds allows you to see very clearly how much money you have for each purpose.
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The Bills, Bills, Bills Account
Step 1: Set Up a Bills, Bills, Bills Account
Yes, get your ass to the bank and set up a new checking account. This checking account will be for your personal bills only. Will the bank charge you a monthly fee? Maybe. Sorry, but let's just say the bank fee is a small price to pay to have your shit together so you can sleep like a beautiful, beautiful baby every night. If you can find a bank that won't charge you a monthly maintenance fee, that'd be super clutch.
Step 2: Calculate Your Monthly Bills
I would suggest adding up all of the monthly expenses that you must pay to keep yourself alive plus debt you must pay each month. The list includes, but is not limited to the following: The roof over your head, the water and power, your almighty and powerful cell phone, internet, food, health insurance. If you pay for your auto stuff from your personal account, add that shit in too. Student loan payments, credit card payments and any other debt payments you must make each month. Chances are your expenses in these categories are relatively fixed. You can figure out what this number is by looking back on the last few month's of expenses. And you can make adjustments when necessary.
Step 3: Fund Your Bills Account Each Month
Exactly how you fund your bills account each month will depend on how you get paid and what works for you. If you get paid monthly, you can probably fund your bills, bills, bills account in one fell swoop. If you get paid twice a month, you might need to break things up so that it works with your bill payments due dates. If you get paid via payroll, you can even set it up so a portion of your paycheck goes directly to your bills, bills, bills account.
If you're living paycheck to paycheck right now, figuring out how to fund your bills account might take getting used to. You might want to go into an existential crisis. I feel you. Don't freak out. Just sit your ass down and realize that you might need to not spend on nonsense for a month or two while you get your bills account funded. Coolio?
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All of the Savings
Step 4: Set up your various savings accounts.
Yes, multiple savings accounts, I know it sounds crazy, but chances are you have multiple things in your life that you're saving for. Some examples include, but are not limited to your emergency fund, a pile of cash you're saving to start a business, retirement, holiday, a pet fund, or Coachella tickets. Whatever it is, each month you gotta squirrel money away for the long-term shit. I know it's annoying and abstract because it's the future, but you just gotta do it.
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Step 5: Feed your savings accounts.
For all your savings, you should set up an auto transfer to remove yourself from the equation. If you get paid via payroll, you can even set it up so a portion of your paycheck goes directly to your savings accounts. If you pay yourself based on how your business does, it's a little tricker because you might not be able to set up auto transfers. If that's the case, I recommend setting aside time every other week to review how much you can save.
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The Pocket Account
Step 6: Set up a pocket account for spending on whatever you want to spend.
I'm a big proponent of the pocket account. Some people might call this a spending account or an allowance account or a party and bullshit account. A pocket account is a checking account that is used for discretionary spending. You can spend the pocket account money on whatever the fuck you want to spend it on. i.e. as many artisanal ice cream cones as you can afford, clothes that you don't need, but you want or too many or very cute outfits for your dog.
Step 7: Fund your pocket account.
Whatever isn't allocated towards your bills and savings can be put into your pocket account. Use these funds to spend on all the fun stuff like brunch and booze and bullshit.