A minimalist approach to your retirement spending

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Sometimes you need a budget. If you’re saving for a significant purchase or investment in the future, a budget is useful to keep track of how much you’re putting away. Take the amount you will need, divide by the number of months until you will need it, and you know how much to put aside each month.

Many people also track their overall spending, especially in retirement. The conventional budgeting process says to devote a certain percentage of your income to essential expenses like bills and insurance, a certain percentage to discretionary expenses like dining out and vacations, and a certain percentage to investing for future needs. If that’s you, then that’s great – more power to you. But if you’re not like that, there is another way to go.

Minimalism sometimes gets a bad rap; it conjures images of people living in tiny homes, subsisting on leaves and tree bark, and walking everywhere. Actually, minimalism is more about being conscious and deliberate about deciding what material possessions you acquire and keep. The Financial Diet says minimalism is “being intentional about what you bring into your life … That can be objects you own, but it can also be about what you choose to experience or how you spend your time.” In today’s materialistic culture, where success is often defined by such things as a luxury home and expensive cars, minimalism is a means to focus on what’s important to you and not let excess possessions get in the way of your life’s purpose.

Applying the minimalist principle to finances means buying what you need. This doesn’t mean watching every dime and depriving yourself, it just means being deliberate about how you spend money. This mindset can be beneficial to your finances because it lowers the chance of running out of money in retirement.

One way to apply this is to make a shopping list before you go to the store. The list should have items you need. Following a list minimizes the risk that you’ll fall for the store’s clever marketing wiles and make impulse purchases on items that you don’t need and will never, or seldom, use.

Knowing in advance what items you buy regularly enables you to save money by planning ahead. You can buy nonperishable items when they’re on sale and store them to use later. You can take advantage of coupons and discounts. You can buy in bulk or buy generic brands.

This approach also makes it easier to clean out the excess clutter in your home. Knowing what you need and use, you can sell the rest to raise extra cash, or donate it.

When you do spend, the minimalist approach helps you make more efficient use of your cash. Instead of buying a cheaper pair of athletic shoes that will wear out in one summer, you might consider a higher quality pair that will last several years and save you money in the longer run (and might be better for your body). Rather than buy some books or videos that you might never look at and just occupy space in your home, you could get a more valuable book that will give you more benefit.

Being mindful in your cash outlays makes you focus on other ways to save. Can you download recipes and make dishes at home instead of dining out? Can you use a coffee maker at home sometimes instead of going to Starbucks? Could you cancel the gym membership and substitute brisk walks around the neighborhood? Can you watch an Internet video and learn to do a simple repair yourself instead of calling a handyman?

This also applies to other spending areas. Instead of just taking a vacation because you haven’t had one in a while, or don’t have anything to do, consider what you will get out of it. That doesn’t mean you never take a vacation, just that you spend the money (and time) with a purpose. Is it to visit a new place, get a new experience, get together with friends or family, or just relax? Those are certainly all valid reasons – just know what you want to achieve. Why travel to Italy for a painting class if you can get what you really need at your local college?

Not everyone has the same amount of breathing room when it comes to retirement savings and income. Sometimes you have debts from medical expenses, student loans, or other costs. And some people simply work better off of a budget. But for those who have difficulty keeping written records, this minimalist approach to spending can help you keep control over your expenses just as well and also keep your focus on the things that are important to you.

In this video, a couple gives some minimalist budget tips.

 

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