Financial minimalism is about using your money, and making financial decisions, in an intentional way. It is an approach that encourages you to avoid unnecessary expenditure and prioritize experiences and purchases that bring real value to your life. In short, it is a way of bringing minimalist values and simplicity to your personal finances.
For a long time, I assumed that to live comfortably, I needed to earn more. But when I was still struggling to live within my means, despite various pay-rises, I realized I had to consider doing things differently to get free from the monthly cycle of living paycheck-to-paycheck. According to a recent study, both those on lower incomes and high-earners can fall into a spiral of debt and unintentional (and even unwise) spending, so the pursuit of financial freedom is not just for those with more limited means.
Benefits of Financial Minimalism
I came across the idea of financial minimalism in the context of learning about minimalism generally, here are some of the benefits I’ve experienced so far:
Savings and debt reduction: the obvious advantage is that by cutting out unnecessary expenses and focusing on what is essential, you can free up more money to save or pay off debts faster. Adopting this new approach to my finances helped me to address the debts that I had not been prioritizing.
Reduced stress: simplifying your finances can lead to reduced stress. With fewer financial obligations and a clearer budget, I felt less overwhelmed by money matters and had more spare cash to treat myself on self-care Sunday!
Increased freedom and flexibility: with fewer financial commitments, you will have more flexibility to pursue opportunities or make changes in your life without being tied down by excessive financial burdens.
Environmental impact: minimalism generally aligns with reducing consumption, which can have positive effects on the environment by reducing waste and excessive resource usage. This is personally important to me, as I am very keen to live a more eco-conscious existence, but even if the environment is not your main concern, consider it a positive side-effect of financial minimalism.
Remember that financial minimalism really is not about depriving yourself, nor is it about being cheap. It is about making deliberate choices that lead to a more fulfilling and less stressful financial life.
6 Simple Ideas for Financial Minimalism
Here are 6 simple ideas for financial minimalism, I hope you find them useful. Please note that these suggestions are based entirely on my own personal experience – I am not a financial advisor. If you need financial advice, consult a financial planner or seek support from a debt charity such Money Management International.
1 Declutter / audit
One of the fundamental principles of financial minimalism is decluttering your finances. Just as you would declutter your physical space, simplifying your financial life involves cutting out unnecessary expenses and obligations.
For me, this meant firstly scrutinizing my subscriptions. You can start by looking through your recent transactions and writing down all your subscriptions, how much they cost you and, then, rank them by their value and importance to your life. Determine if there are any that are surplus to your requirements, then cancel to save yourself some money each month.
I also managed to negotiate better deals on utilities and services, such as my internet service and cell phone provider. This was something I had needed to do for a long time, but if you are anything like me, sometimes you put doing this off because life gets in the way. A financial audit can be a great opportunity to see if you can save money, sites like Nerdwallet are super useful for comparing financial products, such as credit cards.
2 Live Within Your Means
A big part of financial minimalism is living within, or even below, your means. I completely get it if, you’re anything like me and, your natural instinct is to think: I work hard all week so I deserve this. The challenging part is to train yourself to take the longer term view: making sacrifices now will mean, in the medium term you will have less stress and further down the line, you will have more freedom financially.
Ultimately, it’s about distinguishing between needs and wants, and making intentional choices that support your financial goals. I found that tracking my expenses and creating a budget have been instrumental in adopting this approach. By understanding where my money is going, I can allocate resources more consciously, ensuring that everything I spend serves a purpose.
3 Get Debt Free
Embracing financial minimalism prompted me to rethink my relationship with debt. I made a concerted effort to pay off high-interest debts and avoid taking on unnecessary lending. This shift allowed me to start breaking free from the cycle of debt, and was liberating.
If you are in a position to do so, move credit card balances to 0% interest deals or consolidate any debt into one loan, you may save money in the long run, as well as simplifying your payments out each month. Remember to close any old credit card accounts that you are no longer using once you’ve transferred any balances.
4 Invest in Experiences
Investing in experiences over material possessions is the cornerstone of any financial minimalist’s plan. Instead of splurging on items that offer fleeting satisfaction, I have spent on experiences that I felt enriched my life – traveling, learning new skills (for free if possible, check out Coursera which has lots of free courses), and creating memories with loved ones. These experiences bring lasting joy and fulfilment, far surpassing the temporary gratification of material possessions.
5 Additional Revenue Streams
Adopting a minimalist mindset influenced my approach to earning money generally. I explored side hustles that aligned with my skills, creating additional streams of revenue while maintaining flexibility and balance in my life. My favorite was definitely Airbnb hosting because this allowed me to generate extra income from my spare room, as well as giving me a chance to practice various languages and learn more about other cultures from the guests that stayed at my apartment. If you have a space that you want to monetize and are interested in getting started, you may be able to claim a bonus payment by using this referral link: airbnb.com/enyedowling.
6 Do More Free Stuff
In most communities, there are a whole host of free activities available and engaging in these is a wonderful way to embrace financial minimalism. Here are some examples:
- Hiking or nature walks: explore local trails, parks, or nature reserves which is also a great opportunity to practice mindfulness.
- Street Art: free or pay what you wish walking tours are available in many major western cities in return for a donation.
- Picnics: pack a meal and enjoy it with friends or family at a nearby park or scenic spot.
- Beach days: if you are lucky enough to be close to a beach, spend a day soaking up the sun and enjoying the water.
- Stargazing: head to a dark spot away from city lights and gaze at the stars.
- Outdoor workouts: exercise outdoors – run, jog, practice yoga, or do bodyweight workouts at a park.
- Library visits: borrow books, attend free workshops, or join book clubs.
- Museums and art galleries: many museums have free exhibitions or offer free admission on certain days.
- Local events: check community calendars for free concerts, festivals, or cultural events.
- DIY workshops: attend free DIY or crafting workshops offered by local stores or community centers.
Final Thoughts
Financial minimalism is not a one-size-fits-all solution. For some, myself included, it can become a deeply personal journey that requires introspection and may make you change your view of wealth and success. If you want to design a life that prioritizes freedom, purpose, and contentment over accumulating stuff, then it may be for you.
In conclusion, my venture into financial minimalism has been an eye opener. It has helped me to take control of my finances, and focus on enriching my life with meaningful experiences. The path to financial freedom through minimalism is not easy because it requires sacrifices and a change of mindset, but the rewards are worth the effort.
Thanks for reading, I hope you enjoyed this piece about financial minimalism. Feel free to pin and share this article, and come back soon to discover the latest posts!