What Is a Minimalist Budget and How Do I Create One?

A couple sitting down at a table, calculating their budget while one writes in a notepad and the other types on a calculator.
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If you’ve struggled with budgets and finances in general in the past, you may want to consider adopting a minimalist budget. It can help you break free from bad spending habits and can reshape your entire outlook on your finances.

What is a Minimalist Budget?

The minimalist lifestyle as a whole is about decluttering your life and prioritizing what truly matters.

This same mentality can also be applied to your finances. Embracing minimalist finances isn’t about maximizing rewards or taking advantage of saving every penny. It’s about simplifying your finances.

Creating a minimalist budget is about setting up budgeting rules that enable you to spend money thoughtfully and wisely. It helps you hone in on the essentials and allows you to prioritize your goals, financially speaking.

Gaining the upper hand over your money through this kind of minimalistic simplicity is key. It can bring a tremendous sense of clarity, purpose, focus, and meaning to how you handle your money and can enable you to maintain a frugal mindset over the long term.

Minimalism Vs Frugal

While a minimalist budget does involve a frugal mindset, it’s important to differentiate it from a frugal lifestyle. Frugality is typically about looking for deals, choosing the cheapest option, and generally saving a buck.

Minimalism, on the other hand, doesn’t sacrifice quality for quantity. As previously mentioned, it’s about simplicity, but that simplicity can still be expensive. A minimalist may opt to pay more upfront for the most durable, top-tier product available. If your lawnmower breaks, rather than heading to the local hardware store and picking up the cheapest push model available, a minimalist budget will enable you to invest more money in getting a higher quality alternative or even a rider mower.

A mower that will last you ten years is worth spending more on than one that will break by the time the next season rolls around. The goal isn’t to find the cheapest option possible, it’s to weigh your need and invest in a quality solution that will meet them.

The point is not trying to spend less, you’re trying to spend wisely.

The Pros and Cons of a Minimalist Budget

While a minimalist budget can look attractive at first glance, it’s worth taking a moment to break down some of the pros and cons of adopting this approach towards your finances. After all, everyone’s situation is different, and setting up a budget is a very personal experience.

For some, a minimalist budget may be the answer they’ve been looking for, while for others, it may clash too harshly with their established lifestyle.


  • You’ll gain a sense of priorities regarding where your money is being spent.
  • Your finances will be dramatically simplified and become more understandable.
  • You don’t have to be a minimalist to set up a minimalist budget.
  • You’ll become incredibly aware of your financial decisions every time you make a purchase.


  • A minimalist budget can still lead to an expensive lifestyle.
  • It can require sacrificing entertainment and fun at times.
  • It takes work, effort, and commitment to maintaining.
  • It often necessitates being willing to change your financial habits, on a broad scale.

How to Create A Minimalist Budget

If you’ve gone over the pros and cons, and you’re still convinced that creating a minimalist budget is the right move for your finances, here are some minimalist budget tips to help you get started.

They’ll help you gain some initial momentum and begin to walk you through the process of how to create a minimalist budget.

Prioritize Wants vs Needs

It all starts with prioritization. You’ll want to begin by sorting through your expenses and prioritizing what is a want and what is a need.

Needs are bills that you have to pay whether you want to or not. Things like your rent or mortgage, groceries, and your car payment all count in this category. Wants include things like eating out, unnecessary tech, and entertainment in general.

This categorization isn’t done so that you can eliminate all of the needs. It simply gives you a greater understanding of what is genuinely essential to your day-to-day existence.

For example, a minimalist budget would push you to look at your list of five different streaming services and consider how essential having all of them is to your daily life. You may have a recognized “want” to have an entertainment option via a streaming channel, but a minimalist budget would dictate that having one or possibly two at a time is sufficient.

Look for Excess

Once you have your wants and needs sorted, you’re going to want to start looking for areas of excess. This can apply to both wants and needs.

The important thing is that you analyze where you’re spending more than is necessary. This will help you further understand your spending habits as a whole.

The 50-30-20 Rule

50 30 20 rule, also known as the 50 30 20 budget, is a quick and easy way to apply a minimalist budgeting mindset to your finances. The method is right in the name itself. It involves breaking down your income into the following:

50% of your income goes towards your essential costs and needs — which is another reason why it’s important to identify wants versus needs in the first place.

30% of your income is reserved for things you want. Again, if you’ve already categorized these, you’ll naturally know what you can invest in with this money.

20% of your income goes directly into savings. This can be savings of any nature, from short term “rainy day” funds to long term and retirement savings.

The 80-20 Rule

Finally, if you feel the 50-30-20 budget is too complicated to sort out, you can fall back on the 80-20 rule.

As you might guess from some quick math, this budget rolls the “50” and “30” parts of the 50-30-20 rule into one lump “expenses” category. The important thing is, the 20% savings rule remains.

The important thing to remember is that a minimalist budget is a mindset change as much as anything else. You don’t necessarily need to give up a certain lifestyle or downgrade and get rid of all of the things you care about.

At its core, a minimalist approach to finances is about establishing a healthy, simplistic mindset towards how you handle your finances. That, more than anything else, will yield dividends far into the future.

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