Throughout the centuries across various cultures frugality has been idolised and presented as the harbinger of a happy life. Whether it be the renunciation of Earthly pleasures by the Buddhists or Christian ascetics living and praying in monasteries. Given how hectic and seemingly complicated the world around us is today, it is no surprise that minimalism which started as an art form quickly spilled over the personal finance. So, what exactly is this way of living and how can it help you achieve a better financial position in the long run? Let’s find out in today’s deep dive on financial minimalism and how you can live more for less.
What is Minimalism?
The minimalism movement primordially started off after World War 2 in a battered and shellshocked western hemisphere. The artistic interpretation of this philosophy could be summed up as expressing more by ways of moving away from the usual standards of abstract or modernist artform. To leave more up to the subjective interpretation of the viewer.
This idea was quickly adopted into a lifestyle of owning fewer items, it encourages its practitioners to have life of more freedom by having less belongings and thus fewer material responsibilities. The minimalist lifestyle has been summed up by Joshua Fields Millburn & Ryan Nicodemus through their article which debunks some of the most common misconceptions. To quote them-
By incorporating minimalism into our lives, we’ve finally been able to find lasting happiness- and that’s what we’re all looking for, isn’t it? We all want to be happy. Minimalists search for happiness not through things, but through life itself; thus, its up to you to determine what is necessary and what is superfluous in your life.The Minimalists
That finally brings us to the question of financial minimalism. Much like the artistic and philosophical interpretation of minimalism, financial minimalism too focuses on finding financial freedom. I personally have been a long-term advocate of the importance financial education gives knowing that financial stress is one of the most prolific reason for premature death and other complication in adults.
Financial minimalism is widely regarded as the philosophy and lifestyle to help one find financial freedom. This is the most important kind of freedom one could enjoy, freedom from fear and from financial concerns, free stress, guilt, and from anxiety over self-imposed excesses and living above your means. It’s means to the end where you are allowed to have freedom of choice and the headspace to prioritise what matters to you the most in your life.
How To Become a Financial Minimalist?
I hope I could convince you so far, the rationality behind subscribing to the idea of minimalism and that you are now intrigued to actually know the secret key, the ultimate solution to all your financial problems. Well, not exactly. You see, financial minimalism is a lifestyle choice, and its practice will vary from one person to another. For someone, living in an off grid converted van is minimalism and from another a villa in the suburbs is. In the end, it’s your goals and your personal definition of freedom and happiness which will show you the way to financial minimalism. However, I have compiled a four step guide as a steppingstone for your journey into financial minimalism.
- Financial Awareness
A key metric when it comes to your fiscal management is undoubtedly your ability to manage your finances. Tracking your finances and being aware of your spending will give you a better understanding of whether you are splurging on your ‘wants’ and whether those satisfy your ‘needs’.
One of the key tenets of financial minimalism is taking accountability of your financial decisions and tweaking those with conscious steps slowing but surely inching closer towards your personal goals. Now we mess this up all too often, shopping on Amazon you must have been recommended ancillary products which you definitely would not have bought alongside the original item you required but seeing a discount you ended up buying it anyway.
Some of the easiest ways to achieve this state of accountability is to use apps such as Wallet, Monefy, Bluecoins Finance, to name a few.
- Financial Sustenance
You might have noticed by now that some of our key considerations with regards to financial minimalism pertains to having a financial freedom. In essence, you should be able to set up your finances in a way that even if you stopped working, your assets would be able to sustain your lifestyle. This can be achieved through having a frugal lifestyle and saving plus investing a majority of your earnings into asset classes that can turn you an income.
This could be anything from rent generating real estate to dividend paying stock options. The best-case situation would arise from deriving your expenses entirely from the earnings your assets earn you. This will give you the scope to invest more and diversify your position. However, you might be thinking that this is a risky move as the market is often volatile and there’s a real chance that I might end up losing all my money. That is an unlikely situation, we must aim to put time in the market and not time the market to ride out any unwanted market cycles and enjoy perpetual but stable gains.
- Budget Your Spending
This could be considered as an extension of financial awareness, one of the key undertakings for you as a financial minimalist is to plan out your expenses and allocate financial resources to the best positions in advance. This will not only help you have a better chance at improving your financial awareness but will strongly aid your personal discipline goals of financial frugality. Again, the first consideration is to understand and distinguish between your needs and wants. To allocate your cash first to expenses that you need to make, setting aside the money you require for your investment goals and then saving the rest.
Much like tracking your finances, budgeting is also one the aspects which you can manage through apps like YouNeedABudget (YNAB) and Goodbudget both of which are easy to use and most importantly, free.
- The Right Mindset
All of the technical know-how when it comes to managing your finances would not yeild any practical result unless you approach it with the right mentality. In simpler terms, your mental setup will make or break your journey towards financial minimalism. You have to be driven towards achieving your goals and believe in your actions, looking forward to the end goal of financial freedom and possibly even early retirement.
Too often the pre-existent notion of consumerism does us way more harm than good and is the leading cause of overspending. You should feel empowered in spending less and liberating yourself from the shackles of circumstances and taking control over your money and life through a difficult yet ultimately rewarding outcome. Finally, don’t compare yourself with anyone, you are special in your own way and your financial situation is different from your neighbour’s.
I sincerely hope this guide could influence you to research more into financial minimalism and to get on track to adopt this lifestyle if you feel it benefits you in any practical way. I would love to end the article with an iconic line from the movie Fight Club to shine some light on an aspect of modern life that should serve as food for thought for you –