Building Up from the Bare Minimum

Posted by Mike Smith :: January 21, 2008 @ 7:57 am

Aspects of my recent posts on After Christmas Cleanup and a New Year Budget Review can be combined into a valuable exercise.

By reducing the number of objects in your home, you can determine more easily what areas need to be renovated, updated, or complemented with new purchases. You may miss these areas if you have too much clutter in the way. Once we cleaned up our home, we noticed the gaping space above the mantle, where a large piece of artwork would really add to the room.

In your budget, cutting back to the bare necessities is also good. The ways you planned to spend, save, or invest your excess income in the prior year are not necessarily going to be the same in the coming year. Simply rolling your budget over may leave some assumptions that are no longer valid. Using your old budget is a great starting point, but pay particularly close attention to how you allocated your budget surpluses.

My budget usually shows that I have $0 left at the end of the year because all of the money that I would have left over is earmarked for saving and investing, and to a lesser extent spending. For example, if your budget showed that you should have $100 left over at the end of each month, you might want to add budget items for an emergency fund, long-term savings, and investing in a person-to-person loan portfolio from Lending Club to “spend” that extra $100 each month. If you stay on track with your budget, at the end of the year you’ll have saved that money that might otherwise have been spent.

Combine the two ideas of de-cluttering your house and your budget, and you’ll know what you may want to spend your money on and how you’ll be able to afford it. By placing desired spending and saving levels into your budget, you will help automate the process of meeting your goals. It will often reduce the amount of unexpected purchases for the year as well, by allowing you to better identify what some of your needs for the coming year will be.

It seems as though getting back to a minimum starting point is beneficial for multiple aspects of our lives. We can always add more later, but in planning purchases for the year and revising your budget, removing the clutter is a great way to get off to a good start.