You may have heard a little (or a lot!) about minimalist living.
Sure, you’re thinking – it’s a nice idea. Decluttering your home, having fewer things to trip over… But it’s not something I could ever do. To get rid of everything I own – and live in a room with just a bed and a lamp, and religiously track the number of socks I own? Nah. It’s too restricted.
Hey – I get where you’re coming from.
When someone says you gotta give up the things you worked 50-hour weeks to be able to afford – and stop buying new things you really want – I’d be surprised if it didn’t leave you feeling annoyed!
But what if minimalism is more than just religiously counting the number of things you own?
According to the authors of “Minimalism” – Joshua Millburn and Ryan Nicodemus – the concept of minimalist living is a lot broader than that. It encompasses all areas of your life – and can give you more time, creativity, better health, relationships – and financial freedom.
After all, seeking more financial freedom is why you’re here, right?
So, which aspects of minimalism could we borrow to be better off financially? Could minimalist living help us make better financial decisions – and regain control of our finances? Could it help us create better spending habits – and have more money?
If you want to find out the answers to these, then you’re in luck. Read on!
What is minimalist living?
Before we look at how minimalism can help create better financial habits, let’s define what it actually is.
The Minimalists have come up with an elevator pitch, which sums it up pretty well:
“Minimalism is a lifestyle that helps people question what things add value to their lives. By clearing the clutter from life’s path, we can all make room for the most important aspects of life: health, relationships, passion, growth, and contribution.”
So, essentially – it’s about decluttering and simplifying your life to make it more enjoyable, and more meaningful. And that covers all areas of your life – whether we’re talking about your physical possessions, your expenses, or your relationships.
What’s important to remember, though – is that everyone’s understanding of minimalism is different.
My idea of living a minimalist life could be very different from yours – and that doesn’t mean that either of us are “doing it wrong”. I would want to give up all my physical possessions and move into a tiny house – while you may want to own a big house, and simply reduce the clutter in your home, and cancel a few subscriptions.
There is no strict set of rules you should follow to be a minimalist – but there are guidance and advice that has resonated with many people who feel side-tracked and unhappy because of their cluttered, and stressful lives.
So, let’s get to the most important point.
How can minimalist principles maximize your wallet?
Minimalism is about simplifying your life – and that includes minimizing your physical possessions, as well as reducing the time and money you spend on stuff you don’t need.
Think about all the things you own. Can you even begin to count them all? What about subscriptions, gym memberships, the expensive cell phone plan – do you really need all of that? Do they add meaning to your life – and are they useful? Or are these services just something you see on your bank statement, costing you money month after month?
While minimalism isn’t about obsessively counting things or your monthly subscriptions – thinking about how much money and time you’re spending on things like that can help put everything into perspective.
So, here are the 5 minimalist finance and budgeting principles Joshua Millburn (The Minimalists) lives by.
1. Keep your expenses simple
A minimalist lifestyle is all about reducing unnecessary spending – and keeping things simple.
One of the key principles is making sure you never spend less than you make. Sounds pretty easy in theory – but can be quite difficult in practice. Did you know that 54 percent of Americans spend more than they make? Eek!
Think about what your absolute expenses are – like your rent, utilities, gas, health insurance, etc. Anything on top of that could be cut out.
Also, make sure you’re not overpaying for things like internet, cell phone bills, subscriptions – and other stuff you may not even notice you’re paying for any more!
Check out these tips on how to better manage your finances to make your money go further.
2. Create a budget – and stick to it.
Budgeting doesn’t sound like the most fun of tasks, but it does wonders in simplifying things and helping you reduce your spending.
If I asked you to tell me exactly where your money is going – would you know the answer to that? The truth is, most of us have no idea how we’re spending our money! We think we know – but we don’t, really.
Do yourself a favor and establish a monthly budget – in writing. Identify the three categories that your spending falls into: the need, the want, and the like. Write down every expense in each of these categories – knowing what’s in each category will help you prioritize your spending.
3. Question ALL your purchases.
This minimalist principle is particularly important in helping you curb your spending. According to a recent survey, Americans spend up to $5,400 a year on impulse purchases! Don’t be one of those people – and you’ll get to financial independence sooner.
Earning money takes time – so when you’re making a purchase, think about the freedom you’ve given up to earn the money you’re spending. Is the purchase worth it? Does it really have meaning to you, will it make your life easier, will you use it – or is it something you’re buying because you just really want it?
It’s incredible how quickly we can spend money – and how often we do it without thinking much. It may be challenging at first, but when you change your mindset to think of purchases this way, it’ll become easier to pass up an opportunity to spend your money on something new and shiny!
4. Pay your future self: invest!
Thinking of investment as paying definitely makes it seem less daunting. According to Joshua, investing in your future is critically important – and there is no better time to do it than now!
The good news is that there are so many investment opportunities and platforms out there, whether you want to invest a little or a lot!
Not sure where to begin? Check out these posts:
5. Prioritize getting out of debt.
No matter how little you spend each month, or how much you invest in yourself – you can never really reach financial freedom until you’re free from debt!
When you’re in debt, you’re encouraged to spend more than you can afford, and you’re stealing money from your future income. Getting out of financial debt should be your number one priority – especially if you have a lot of it.
For tried and tested advice on how to free yourself from debt, check out our piece on how to get out of debt fast.
6. Get rid of stuff you don’t use.
Many of the things we own we don’t really need. Review your things and pick a few items you haven’t used for a while (and don’t think you’ll use anytime soon!) – and get rid of them. The Minimalists use the 90/90 rule to determine if they really need something, making it a lot easier to spot the things that just add to the clutter in our homes:
“Look at a possession. Pick something. Anything. Have you used that item in the last 90 days? If you haven’t, will you use it in the next 90? If not, then it’s okay to let go.”
Plus, selling the things you no longer need could be a nice way to turn them into cash! Check out our post on how to make money recycling for ideas on what you could sell, and how.
The main minimalism takeaway for the MM reader
So, can using minimalist principles help you in your path to financial freedom? Absolutely.
Financial freedom is about making smart financial decisions. About spending as little as possible and banking as much as you can. About investing to create passive income – which will ultimately generate enough money so that you don’t have to work 50-hour work weeks – and can quit working altogether and retire early!
Minimalist principles are definitely heading in the right direction!
However – there are so many things to think about if your goal is to financial freedom. The mission of Millennial Money is to make financial freedom attainable to all – and if you haven’t yet, I strongly suggest checking out Grant’s book, “Financial Freedom: A Proven Path to All the Money You Will Ever Need.”
If financial independence is what you’re after – this book will show you how it’s done, step by step.
So you can quit working – and start living!