by Scott Henderson, AFC®
Let me start by telling you a story about wanting less.
Have you ever had to fix a broken faucet?
We recently bought a house that had a leak in the guest bathroom. I shut off the water to the house for a few minutes and took apart the bathtub faucet. An internal part was broken which I learned from watching a few YouTube vidoes. I didn’t have the part that I needed so I took a trip down to the local Lowe’s.
I left the water to the house off because the tub was taken apart. Kenzie was worried about not having running water to make dinner while I was gone and I told her I would only be a few minutes. By the time the water was turned back on it had been almost two hours. Just in those two hours, we went to the kitchen sink at least 8 times to turn the water on, and nothing came out.
Going to the sick to turn the water on is so common that we don’t even have to think about it. At dinner, we talked about how much we take for granted the fact that we have running water at all times. After dinner, I told my Kenzie I’d be back in an hour to fetch a pail of water (joke).
Could our ancestors have ever imagined all of the luxuries of life that we get to enjoy?
We have it so good
An air conditioner cools our house, a microwave heats up our food, a fridge keeps our food fresh, and we have the ability to connect to anyone in the world in a matter of seconds. We can even hop on a plane and in a few hours land anywhere in the world. Not even the greatest kings and pharaohs could’ve done that no matter how much wealth they had.
Perhaps I’m weird for always thinking about this but the bottom line is we have it sooo good.
Why are so many people unhappy?
Even with all of these things that we take for granted, why do people feel like they will never have enough?
We’re in the most abundant country in the world. Literally anything you want can be delivered to your door in two days. We live a place that provides everything you could need.
So why are so many people unhappy? Why are so many people broke and in debt?
Too many people are focused on acquiring more. More money, more status, more stuff. It leads to discontentment. It’s called the “Comparison Trap.“
In the words of C. S. Lewis: “Pride gets no pleasure out of having something, only out of having more of it than the next man. … It is the comparison that makes you proud: the pleasure of being above the rest. Once the element of competition has gone, pride has gone.”
When we fall victim to the ‘comparison trap,’ it’s just another way to find fault with ourselves and engage in self-sabotage. If you’re constantly comparing yourself, it’s almost impossible to achieve full happiness.
It’s so counterproductive when we use arbitrary standards to compare ourselves to others, ultimately affecting our self-confidence and self-worth. Who has the bigger house. Who has the best lawn … the best car … the more prestigious job? The circle of comparison widens in a never-ending battle of who has made it?
Intrinsic worth and net worth can and perhaps should be mutually exclusive. The basis of self-regard and confidence should not be dependent on a faulty foundation (e.g., the size of a house).
Owning less is good, wanting less is better
Is it possible to be financially free by wanting less?
Simply saying, “I don’t want anything else,” won’t make you financially free. It doesn’t happen like that. But what if you could change your desire over the next year or few years to be content with where you are and who you are?
What if you could get to the point where you actually had everything you need?
One of the great challenges in life is learning to be ok with what you have, even though it’s human nature to always want more.
Have you heard the common phrase, “I’ll be happy when…”? I’ll be happy when I get that car … I’ll be happy when I finish school … I’ll be happy when I buy a house … I’ll be happy when the kids are out of the house… etc. By falling prey to ‘someday syndrome,’ you also set yourself up for discontentment.
How to start on the financial freedom path by wanting less
Not only do you have what it takes to start filling fulfilled but you have what it takes to be financially free through wanting less.
I want just enough money and stuff to be financially free, and I don’t need hundreds of millions of dollars to feel free.
How much do you need to feel good with your life the way it is today?
At Simplifinances, my mission is to help you become financially free not just by making more money and increasing your wants, but by living simply and wanting less.
I want you to enjoy the journey, not succumb to someday syndrome. You have what it takes to be financially independent.
It first starts with your mind set. You may never feel satisfied if you’re always pursuing more.
How can you free yourself from unhappiness and debt and start living the financially free life that you desire?
Gratitude
It’s easy to get caught in the fast lane and forget to stop and show your appreciation for what you do have. A life well lived is one of gratitude and thankfulness.
Gratitude will help you feel financially free even if your financial situation is not what others would classify as financially free.
This is foundational in building the life you want. More won’t make you happy.
I put together a free PDF that you can download to help you start feeling grateful for all that you have.
Build this foundation, and you will have more opportunities come into your life but this time you will be more selective.
You have what it takes to be financially free by wanting less.
Self Awareness
Self-awareness was first theorized in 1972 by Duval and Wicklund in their book, “A Theory of Objective Self-Awareness.” This book argues that if we focus our attention inwardly on ourselves, we tend to compare our behavior in the current moment to our general standards and values. This triggers a state of impartial self-awareness.
Self-awareness is a vital first step in taking control of your life, creating what you want, and mastering your future. Where you choose to focus your energy, emotions, personality, and reactions determines where you will end up in life.
Conclusion
I’m not promising you will have all the riches and wealth you will ever need. I’m not saying you won’t ever have problems in your life if you’re just grateful and self-aware. But what I am saying is you have what it takes to feel free. You will not be happy if you always want more. Stop comparing yourself to others.
I look at financial freedom slightly different. It doesn’t have to be a jet and expensive hotels every other weekend. It starts with your thoughts of wanting less and being happy with what you have.
by Scott Henderson, AFC®
Are you someone that recently discovered minimalism and now wants to be better with money? Or perhaps you’re like me and are interested in personal finance which has led you down the path to minimalism.
Why is that? Why do frugal people discover minimalism and visa versa, minimalists discover frugality?
These are questions I hope to answer today as I explain 8 ways that minimalism and money are related.
How I Discovered Minimalism
As a kid, I showed signs of minimalism in at least three ways:
- Each time I cleaned the kitchen I had to have everything off the counters
- I got so much satisfaction out of finishing all of the food in the pantry
- I loved the feeling of getting rid of unused stuff
At times, I still show the same behaviors and now I think it drives my wife nuts!
In a way, I’ve always been somewhat of a minimalist but I’ve never defined myself as a “minimalist”.
I consider myself more of an “aspiring minimalist.”
I don’t rank high on the minimalism scale but I do love living a simple life, having a neat and clean home, and getting rid of stuff I don’t need.
It wasn’t until I watched the documentary on Netflix called Minimalism that I discovered there are other people with my same tendencies.
I began to see it as a life optimization strategy.
Since then, I’ve learned more about it and discovered that when you’re trying to get the most out of your finances there is a natural progression towards minimalism.
You start to ask yourself, “what do I value and what am I willing to spend my money on?”
Those that actually reach financial independence do it by adopting some level of minimalism in their life.
What is a Minimalist Lifestyle?
First off, what is minimalism?
“Minimalism is a tool that can assist you in finding freedom. Freedom from fear, freedom from worry, freedom from overwhelm, freedom from guilt, freedom from depression, freedom from the trappings of the consumer culture we’ve built our lives around. Real freedom.”- The Minimalists
It’s about eliminating clutter in your life. Both physically and mentally.
Minimalism is cutting out the unnecessary stuff in your life so you can focus more of your time and effort on the things that really matter.
When some people first learn about minimalism, they think, “why on earth would I do that to myself?” But as they learn more and adopt this way of living, it’s hard to go back to your normal way of consuming.
Minimalists search for happiness not through things, but through life itself.
Other than when I was in high school, when I had to have the nicest pair of basketball shoes, I’ve never been that interested in having nice fancy things.
I’ve always driven an old car paid for in cash, had few possessions, and tried to put my money towards savings or just watching my stash of cash grow.
Minimalism is a tool to rid yourself of life’s excess in favor of focusing on what’s important—so you can find happiness, fulfillment, and freedom.
When you call a person a minimalist, you’re describing their interest in keeping things very simple.
What Minimalism Isn’t
Minimalism is not about deprivation. My purpose in living a simple life has never been to get rid of everything in my life.
Many people may associate minimalism in a negative way with these things:
- Getting rid of everything you own
- Intentionally making life harder
- Being cheap
- Not wanting to have fun
- Getting rid of your hobbies or collections
- Having a house that is cold and uninviting
- Being a part of some crazy cult
- Not having kids
- Just getting rid of your stuff
How to Apply Minimalism
It comes down to getting rid of what you don’t value in your life and adding in what you do value.
One way I heard it described is a “valuist.”
These means, if you have a ton of crap you don’t value, get rid of it.
If you have destructive relationships, figure out how to make it better or get rid of that person.
Related: Financially Free By Wanting Less
If you find yourself mindlessly wasting time and scrolling through social media, place limitations.
Each decision you make in these areas of your life has a consequence. Your future self will thank you for making the right decision.
How Are Minimalism and Money Related?
People who find themselves living a simpler life are not worried about keeping up with the Joneses and typically have more money and more peace of mind. On the flip side, people who try to save money and avoid debt, naturally begin to adopt a minimalist lifestyle.
Here are eight ways minimalism and money are related:
1. Minimalism Helps You Prioritize Your Spending
Spending money is a huge determining factor in reaching financial independence. When you have a clear goal in mind you’re less likely to spend money on things that you don’t care about. And as a minimalist, why would you spend money on something you don’t care about?
When you take the time to focus on the things you value, you’ll find that your spending will begin to align with your values.
2. You Spend Less Money On Stuff
It’s scientifically proven that people who spend money on experiences are happier than people that spend money on stuff. By having less “stuff” and more money, you’re going to be able to do more.
As a minimalist, your desire to acquire stuff is lower. Because of this, not only do you have lets things to take care of, you probably have more money in the bank because of it.
3. Save Money On Housing
Because you decided you don’t care about other people’s opinions you buy a house that actually fits your needs. Not just a house or apartment to impress your friends.
Guess what happens when you purchase a home or rent an apartment that fits your needs and is affordable based on your income? You end up with more savings! It’s a miracle, right?
4. Having Clearer Goals
When you apply minimalism to goal setting you delete all the goals your not committed to and you focus on the two or three goals with an insane amount of intensity. Because you’re focused more on a few goals, you’re more likely to reach those goals.
Most goals require some amount of money. If you’re trying to save money and get out of debt, maybe a minimalist lifestyle will help you get there faster?
5. A Focus On Living Debt-Free
This is probably one of the biggest benefits of living a simple life.
You do everything you can to shake off the chains of debt. That way all of your extra money at the end of the month isn’t going to pay off things that you already experienced.
You actually get to keep the money and have peace of mind of knowing you’re 100% debt-free.
6. Making Money Selling Stuff
Looking to make a little extra side income? Perhaps you’re looking to make a quick $500 this weekend?
The best way that I know how to do that is to sell your unwanted stuff. Things lie an old computer, old phone, clothes, etc. Not only are you simplifying your life, but you’re also building up your bank account.
7. It Can Simplify Your Financial Life
If you live a minimalist lifestyle, you’re most likely going to apply your habits to managing your finances.
Related: How to Simplify Your Financial Life
When you look at simplifying one area of your life, you begin to see new opportunities. There’s a ton of tools out there to help you get out of debt and stay on top of your money.
8. Gives You More Time to Spend On the Things You Value
Money is great, and we all want more of it. But it’s not the actual paper that we like. It’s what we can do with it that makes us happy.
By having more money, less debt, and less stuff, you’re automatically going to have money to spend on things that you value.
Financial independence is largely controlled by your expenses.
What do you get when you combine simplicity with your finances?
You get financial independence.
How to Get Started With Minimalism
No one becomes a minimalist after one day of learning about it. It’s a constant gradual progression into weeding out the unnecessary and replacing it with what you value.
You may be interested in The 30-Day Minimalism Game.
How it works is you get rid of one item a day for 30 days. I’ve heard this is a great way to get started.
I would also encourage you to watch the documentary on Netflix that I mentioned above.
Good luck!
by Scott Henderson, AFC®
When it comes to personal finances, simplicity is the key to success. What can you do to simplify your financial life?
Never in the history of the world have we been faced with so many options that compete for our time, attention, and money.
The options seem endless. In the U.S. there are over 631,000 financial brokers, 3,700 securities firms, 6,799 FDIC insured commercial banks, and hundreds of personal finance apps that are changing daily.
All of these options are available at the touch of a button. Some of these services have simplified finances for many, but the 21st century with its gazillion options has also made the century the most complex. The easiest of times and yet the most complex of times.
In the book, Your Money or Your Life, Vicki Robins published a happiness index graph showing that happiness actually begins to decrease at a certain point of excess spending. Partly because life becomes too complex, cluttered, and not simple enough.
When we over-purchase we risk being “time-consumed” with too many things.
“A rich man doesn’t own his things, rather his things begin to own him.”
Lynn G. Robins
Another concept called the Paradox of Choice, says that having options is good, but when we have too many options it can start to affect our happiness level from the decisions we make.
If you have a few minutes, please take the time to watch this video.
How to Simplify Your Financial Life
So, what can you start doing today to start managing your personal finances better and simplify your financial life?
The following are six steps to help you simplify your financial life:
1. More Money Isn’t Always the Answer
Many people think, “If I had more money, my financial problems would be solved.” This may prove to be true under some circumstances, however, this is typically not the case.
More money will not simplify your financial life, managing what you have, will.
If you’re the average American, you work 40 hours a week and spend less than 40 seconds managing your paycheck. More money not only doesn’t make your life easier, but it can often complicate it.
“Mo money, mo problems.”
The Notorious B.I.G.
Focus on activities that are going to bring in more income to help you reach your goals. But, understand that more money alone will not solve financial problems.
According to the Pareto Principle, personal finance is 80% behavior and 20% numbers. It’s about behavior and spending habits not how much money you make.
2. Eliminate Debt
Each time you eliminate debt, you are simplifying one part of your financial life. When you owe money to multiple people it can cause a significant amount of stress.
This is one of the best ways to simplify your financial life and bring peace of mind into your life. Eliminating your debt is not going to happen overnight, but creating a plan and making small consistent steps towards being debt-free will get you there.
This starts by creating clear goals that will help you tackle your debt.
3. Simplify Banking
Most people are often confused about their finances and feel taken advantage of when it comes to their bank, insurance, investments, and credit cards.
Luckily, there are banks that are trying to make things easier and more transparent.
Look at your bank as the most basic root of your finances, from which everything else flows from.
Related: 8 Ways Minimalism and Money Are Related
It may make sense for you to consolidate your different banks into one bank. As well as consolidate all of your checking and savings accounts into one checking and one savings account. Often banks charge fees for extra accounts.
However, if your bank does not charge fees, multiple savings accounts can be helpful for different financial goals. I have five savings accounts for different purposes which makes reaching my goals easier. I know what the money in that account is going to be used for.
4. Income and Then Expenses
Do you make more than you spend? Do you spend more than you make? Are you unsure?
Life can get busy and complicated but if you want to improve and make your financial life simpler, you need an understanding of where your money is going.
“You can’t manage what you don’t measure.”
Do you look at your bank accounts or credit card statement at the end of the month and say, “where did all of my money go?”
If yes, it’s because you’re not budgeting and tracking your expenses.
I’m not going to spend any time talking about how to budget (you can learn more here) but that is a necessity.
It’s as simple as looking at what you have coming in and what’s going out. You can make it as complex as you would like but it doesn’t need to be.
5. Pay Yourself First
The one simple thing that you could do each time you get paid that will set you on the path towards financial independence, is deciding a percentage of your paycheck that you are going to pay yourself first.
Whether that be 5% or 30%. Transfer the money to your savings accounts before you pay any bills or expenses.
You may be the type of person who is frugal and saves quite a bit of money after you pay your expenses. But you also may not have as many expenses at this point in your life.
What happens if one month your tire blows out, or your pet takes a trip to the vet? These events, for most people, means they don’t save money that month.
You are usually the last person to get paid after taxes, bills, and periodic expenses, but get in the habit of paying yourself first and investing in your future consistently every time you get paid. More important than the amount you save is the habit.
Divide your money every time you get paid into a savings account. If you’re a saver or a spender you’ll enjoy watching your accounts grow.
6. Automate Everything But Actively Track It
Automate as much as you can.
Automate your savings, your bills, your investments, even your income and elect to receive electronic documents.
Along with automating your finances, try using budgeting and expense tracking software like Mint or Personal Capital to stay on top of all of your accounts in one place.
You’ll only have to log into one place versus five others to try and understand where you are. Plus, they give you graphs and visuals to easily track bills, investments, and net worth!
Start Simplifying Your Financial Life
Related: 6 Ways to Get Financially Organized
There are a lot of tools and resources available. Implementing even a few will go a long way in helping you simplify your financial life.
Now, I’d love to hear from you. What have you done to simplify your financial life?
