For years I avoided budgeting because of how restrictive it felt. I didn’t want to feel guilty every time I spent my own money.

Then I discovered the concept of a minimalist budget, and it was a total game-changer. Rather than spending money on things you don’t really care about, you can spend more money on the things you care most about. 

You’re probably familiar with the concept of minimalism, but minimalist budgeting might be a mystery to you. It’s the same concept — You’re eliminating the non-essentials to make room for the things you truly value. 

In this post, I’m explaining what a minimalist budget is and how you can create one to help you manage your money without the guilt and restriction that often comes with budgeting.


How to Create a Minimalist Budget For Your Money


What is a minimalist budget?

Minimalism is the practice of eliminating the non-essentials from your life to make more room for the things you truly value. Most people use the term minimalism in reference to physical belongings, but you can apply the concept of minimalism to any part of your life. 

I particularly like to use it as it applies to budgeting. A minimalist budget is one where you eliminate the non-essentials and the clutter from your budget to leave more money for what you value most. 

A minimalist budget can help you to reduce your monthly expenses, simplify your financial life, and get out of debt. 

It’s important to note that budget minimalism isn’t the same thing as frugality. A minimalist budget isn’t necessarily about spending less money. It’s about spending money on fewer things, so you’re only spending money on what you truly value.


How do you create a minimalist budget?

Like many things, creating a minimalist budget is easier said than done. I’m not going to lie – this doesn’t come naturally, and you’re going to be hesitant to make cuts to your budget. Here are a few ways to help you create a minimalist budget that actually works for you.



One of the key benefits of a minimalist budget is that it allows you the freedom to spend money on the things that are truly important to you. To do that, you first have to identify what your values are. 

Identifying your values and priorities is an important piece of the puzzle. Consider how often you allow yourself to spend money on something because it’s a “necessity.” Maybe it’s hitting the bar with your friends or that new outfit you’ve been eyeing online. 

Sure, those things might seem like necessities. But what about when you compare the importance of a new outfit to being able to afford to fly home for the holidays? The outfit doesn’t seem like such a necessity when you identify your real priorities, one of which is that annual trip home for Christmas. 



One of the first things I think everyone needs to do when it comes to setting up a new budget is to take stock of where they’re currently spending their money. To do this, you need to make a list of all of your expenses. 

The easiest way to do this is to literally go back through your last three to six months of bank and credit card statements and document every single expense.

Yes, it sounds exhausting. But I promise you’ll get so much clarity from this one exercise!

I remember the first time I set up a budget for myself. I really had no idea how much I was spending on anything each month. I set up a budget and was honestly shocked to see how much I’d spent on take-out every month. It was a LOT.

Not only is this step important to figure out where you’re spending too much, but it also helps you to identify how much you should expect to spend. It’s simply not realistic to start budgeting $200 per month for groceries when you’ve been spending $600. 



Alright, you knew this part was coming! Once you make a list of all of your expenses, it’s time to start cutting. Go through that list and figure out what you didn’t need to spend money on or what you could have spent less on.

Some of these will be easy, as with my example of eating out. As soon as I saw how much I was spending, I knew I had to cut back. Others will be more difficult because lots of things seem like necessities. 

If you’re struggling to make cuts, refer back to step 1, where you identified your values and priorities. If something doesn’t fit within your values, cut it! 

For example, suppose you’re spending way too much on food, partially as a result of regularly grabbing lunch and dinner out. If friendship is one of your top priorities, then you probably don’t want to cut that weekly dinner with your best friend. 

But you could reduce your food spending by bringing lunch to work instead of ordering out. You’ve managed to cut your food budget without sacrificing one of your most important values. 

Here’s the good news: Only you get to decide what spending is necessary and what isn’t. You can decide you want to splurge on eating out or clothing, or anything else. Something that will seem unnecessary to someone else might feel necessary to you, and vice versa.


USE A 50/20/30 BUDGET

One of the toughest parts of setting up a new budget is knowing how much you should be spending on everything. After all, there’s no handbook that you get when you become an adult that tells you how much to spend on groceries. You just have to figure it out as you go. 

One of the best ways I’ve found to break up the budget is to do so by percentages. More specifically, I recommend the 50/30/20 budget

The 50/30/20 budget is a framework that says you should break down your take-home pay like this:

  • 50% for needs, such as housing, transportation, and groceries
  • 30% for wants, such as eating out, entertainment, and hobbies
  • 20% for savings and debt

Remember, this framework is just a guide, and it’s not going to be right for everyone. For example, when Brandon and I had $150,000 of debt that we were paying off, we would spend more than 20% of our budget on savings and debt. 



Listen, I know it’s popular advice in the personal finance community to have separate bank accounts for your different savings goals. At some point, though, it all becomes more work than it’s really worth. And if you have a good system in place, you don’t need a bunch of different bank accounts. 

First, popular online banks such as Ally (the one I personalize use) allow you to set up “buckets” within a single savings account where you designate different cash for different purposes. 

Additionally, budgeting apps such as You Need a Budget (YNAB) allow you to budget money for certain purposes. My banking app might say I have $10,000 in my savings account, but I can look at YNAB and see that I have $X budgeted for my emergency fund and $X budgeted for our new car. 

Another popular piece of financial advice is to shop around for the savings account with the highest interest rate. But then what happens is you’re constantly obsessing over whether your current bank still has the highest rate and constantly moving your money as banks change their rates. 

Here is some honesty for you — The difference between a 2% interest rate and a 1.75% interest rate on a savings account can literally come down to a few dollars, depending on how much money you have in the account. Just pick a bank with a high-yield savings account and let it go. 

Finally, credit card hacking. Far too many people take out loads of credit cards with different types of rewards, and then only use their favorite. Credit card hacking might be effective if you do it right, but for most of us, it just adds extra unnecessary credit cards to our wallets. 



I don’t know about you, but I have a lot of monthly bills. Every month I pay bills such as my mortgage, car insurance, utilities, phone bill, and more. We also pay off our credit card each month so we never carry a balance. 

If I had to manually log onto my various accounts throughout the month to pay my bills, that would be a huge pain. In fact, I would probably forget once in a while, and that would cause a whole different set of problems. 

These days, you can automate just about everything having to do with your finances. And I recommend that you do just that. Automate your bills, transfers to your savings account, and anything else you can. 



One of my biggest pet peeves about life these days is that everything is based on a monthly payment. For some things, it makes sense — I’ll happily pay my Netflix bill every month. 

But now, there are buy now, pay later apps that allow you to take out mini loans for large purchases. That way, instead of paying the total amount upfront, you’re paying it off over six months or so. 

But here’s the thing. Those services encourage you to buy things you can’t afford. If you can’t swing the cost of the shoes in a single payment, you can’t afford the shoes. 

These services also cost you more money. Nothing comes for free. If someone is lending you money, they’re getting something in return. Usually, it’s an astronomical amount of interest. And even if that’s not the case, they’re normalizing debt, which is not okay. 

One important component of getting out of the monthly payment mindset is getting out of debt. It’s easy to think about your debt only in terms of what it costs you each month. 

Your $5,000 credit card debt might only have a minimum payment of $85 per month. Or your $25,000 student loan might only have a minimum monthly payment of $150. And while those numbers don’t seem all that high, they’re costing you so much more than that. 

Let’s do some painful math real quick. Suppose you have $5,000 of credit card debt with a minimum monthly payment of $85. If you only pay the monthly payment, you’ll pay over $7,900 in interest before you pay the card off. 


You’ll pay more in interest than you had in credit card debt in the first place. All because $85 per month seemed like a perfectly reasonable amount to pay to have credit card debt. 

Here are some rules to live by when getting out of the monthly payment mindset:

  • Prioritize paying off existing debt
  • Don’t take on any additional debt
  • If you use a credit card, only spend what you have in your bank account and pay it off each month
  • If given the choice between a monthly subscription fee and an annual one, pay the annual fee. It’s almost always cheaper. 



When you’ve been spending money on the same things for years, it’s easy to see those things as necessities. One of the adjustments you have to make for a minimalist budget is to start questioning every purchase. 

Minimalist budgeting is about spending money on fewer things, even if it means spending more on those items. It’s about focusing on quality over quantity. 

Maybe you have a go-to pair of shoes that you buy, but the heels wear out in just a few months. This was me for a long time! I would always buy the same $25 pair of high heels for work. When the heels wore out a few months later, I’d replace them. I didn’t think anything of it because they were only $25. 

It turned out that once I started spending more money per pair of shoes, I started spending less money overall. Instead of buying a budget pair that only lasted a few months, I could buy a more expensive pair that lasted infinitely longer. 

Think about what expenses in your current budget you could replace with a higher-quality item. Instead of buying coffee out every day, what if you invested in a nice coffee or espresso machine? Instead of buying bottled water at the grocery store, what about buying a nice water filter? 

The goal is to spend money on quality items that last longer. 

Read More: How to Reduce Impulse Buying Once and For All



I know I said that budget minimalism isn’t necessarily about spending less money, and it’s not. But just like any budget, the most important rule is that you have to spend less than you make. 

It’s easy to rely on credit cards and monthly payments that trick us into thinking we can afford more than we really can. But if the amount you’re swiping on your credit card each month is less than the amount on your paychecks, it’s time to change direction. 



I think we can all relate to a situation where we set up a brand new budget that we swear is going to change our lives, and then we forget about it in less time than it took us to make it. 

I’ve gotten out of this habit by scheduling regular budget meetings for myself and my husband. We do one budget meeting around the first as I’m planning out the budget for the month and a quick check-in each time we get paid.

Even if you’re the only person sticking to your budget, these check-ins are still important. Putting time on your calendar will ensure that you’re actually checking in with your budget and noting whether you’re still on track. 

Read More: How to Create a Monthly Budget


Final Thoughts

Whether or not you practice minimalism with your physical belongings, a minimalist budget can be a great choice for anyone! Minimalist budgeting is all about eliminating the non-essentials from your budget to make room for the things that you value most. 

While budgets often feel restrictive, the minimalist budget is all about freedom — freedom to spend on the things you truly value without letting the less important expenses get in the way.