If you have read articles about the personal finance community or FIRE (financial independence/retire early), you may have come across how many practice minimalism.
Those who have achieved early retirement in their 30s for example, live a minimalist lifestyle that was a part to their financial strategy.
This idea is not necessarily new or revolutionary today, but more people seemed gravitated towards this way of living or fascinated with those who practice it.
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While there are benefits to your finances, at what cost to your quality of life are you sacrificing? Or maybe it’s the quality of life you do want?
Below, I’m going to cover what the minimalist lifestyle is, how it can benefit your finances, and if it’s right for you.
What is the minimalist lifestyle?
The minimalist lifestyle is a philosophy that focuses on simplifying your life by getting rid of excess stuff and living life based on experiences rather than material items.
The goal is, you aren’t controlled by possessions and ridding your life of the need to constantly consume. It’s all about improving your quality of life, by removing the quantity of things that you think are important to how you live.
And from reading all that, you can probably see how this lifestyle of having less stuff can help your finances (more on that in the next section).
I think the minimalist lifestyle also sometimes scares people off.
Some get the impression of living in a shack in the middle of the words, living off the land, no electricity or running water, etc. That can very well be some people’s choice, but that is more on the extreme end of minimalism.
However, a lot of what you might read from those who have achieved FIRE is living in a tiny home, maybe traveling in an airstream camper, don’t own a car, etc. There are plenty of examples and it’s pretty interesting to read these stories.
There is also a huge Reddit group dedicated to minimalism too, with has over 350,000 subscribers currently.
But, it doesn’t mean you have to abide by every minimalist philosophy. Minimalism is just about having less and doing less of the things that don’t matter.
How the minimalist lifestyle can help your finances
I’m sure you already might be thinking about the ways the minimalist lifestyle can help your finances. But, I’m exploring a few impacts that I think minimalism can have on your money.
There are a bit more you can come up with, but for the sake of this post I wanted to keep it relatively simple (See what I did there? No? Nevermind). Below are the main areas I think minimalism mainly helps your financial health.
Minimalism helps you from overspending
I think one of the big aspects to the minimalist lifestyle is it helps stop you from overspending on things. It doesn’t mean you never buy anything or that you should be 100% against buying things occasionally.
Instead, it helps you prioritize your spending happens and forces you to think more about why you are purchasing something. Instead of buying things at random because you have the impulse to buy it, you think of what the immediate impact is on your finances.
If you are looking to save aggressively or stay debt free, knowing how to prioritize your spending habits will be driven by your financial goals. This is also not easy at first, if you are used to consuming things on a whim.
But the impact by not overspending, is more to save! Additionally having more to save, also helps you knock down any debt quicker too because you can afford.
Minimalism helps you recognize needs vs. wants
This also brings us to this point, minimalism helps you recognize and prioritize your needs versus wants. This also affects your finances in a good way and helps you stop overspending (see above).
Our society no doubt has a consumption problem on things that we want to have, but it’s stuff that doesn’t necessarily add much long-term value.
Needs are something that improve your quality living or are necessities to life. The money spent, can save you financially later.
Instead, the “wants” are things we got have in the moment because we feel the need to have them. Like clothes, video games, etc.
The “wants” also have more long-term consequences on our finances like going in debt or not having any savings because we buy for instant gratification.
And if you’ve read my content, you know I’m not against buying things occasionally that make you happy. But, it’s about balance and being more self-aware on your needs versus wants.
Minimalism helps shift your mindset
A big advantage I see with practicing some minimalism, is transforming your mind set from a consumer to an investor. This sort of coincides with the overspending aspect, but I think it still is a separate advantage.
With a minimalist lifestyle, you’re spending less and living with less things. This may be hard at first, but it’s the first step to transitioning into the investor mentality.
You might not even realize it, but you’re buy less things and now:
- Only investing in purchases that are of only the most value
- Investing time back in your life by dropping costly activities that do not add value
- Investing in yourself by not overspending and saving
- And most likely investing your money in assets instead of liabilities
Those things shift your mindset into an investor mentality, which is easy to see why that is so impactful to your personal finances.
Is the minimalist lifestyle for me?
Now that you understand the movement and how it can help your finances, is this type of lifestyle choice right for you? I think it depends on your personality and your financial situations.
What brings you joy in life? What are your financial aspirations?
I think what’s cool about the lifestyle is you don’t need to be extreme or abide by what every minimalist might be doing. You can be selective on what things to simplify, which even in small doses can improve your finances.
For me, I think the tiny homes, living off the land, and traveling in an Airstream are pretty cool. But I know, that is not a long-term quality of life to me personally.
I enjoy the idea of going out and trying new restaurants from time to time. I also like nice cars, having some cool things, and traveling often. But, in moderation and when I know I can afford it without putting myself in financial jeopardy.
However, I have also cut out a lot of things too like shopping in general, decluttering stuff I had, not upgrading just because I can (like housing), etc. Stopping overconsumption and being happy without overspending are the simple things that have helped my wallet for sure.
So in a way, you could say I do somewhat practice the minimalist lifestyle, but it doesn’t consume my entire life nor do I really think about it much. It seems some of the parts of this lifestyle have naturally started to fit into my life.
Is the minimalist lifestyle right for you? For most people, I think practicing some of the basics is important for your life and finances. No need to be too aggressive or on the extreme end of minimalism (of course you can be if you want).
It’s ultimately your preference and choice if you practice minimalism in some way.
This article originally appeared on Invested Wallet.
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