One of the most universal desires of just about every human being on the planet.
In today’s world, freedom has a particularly close relationship with money.
Some seek freedom by acquiring vast amounts of wealth and becoming rich. To them, freedom is gained through having more. You earn more so you can afford more, sometimes even at the expense of other meaningful areas of life.
But this isn’t you. Chances are, your needs and desires are much simpler and revolve around having less instead of more.
Perhaps one of the following describes your ideal freedom;
- To be able to devote the financial resources you already have to the things that make you truly happy instead of being left with nothing after all your bills are paid.
- To have enough money so that you don’t have to worry as much when a disruptive event occurs in your life
- To have and enjoy more free time so that you don’t have to work as many long hours in a boring dead-end job
If even one of these describes your desires, then you have my respect.
At first glance, it would seem that improving your finances means to improve your skills with money. Logically, this makes sense.
More often than not however, minimising unnecessary expenses actually has more to do with your lifestyle and habits than it does with money skills.
People who have a habit of regularly buying brand new clothes will likely spend more money than people who are satisfied with the clothes they have. People that smoke spend money on cigarettes whereas nonsmokers typically don’t.
I once had a habit of overeating. While this might seem health related, the truth is this single unhealthy habit was actually the bane of my finances.
Without even thinking, I’d buy convenience foods and eat out at restaurants every other day and by the end of the month I’d have spent almost every penny that I earned.
In order to reduce my spending, I had to overcome my unhealthy eating habits as well.
With this in mind, I encourage you to think about how you’d like to live when you acquire the freedom you desire.
That motivation might be the single most important drive that will help you get past the initial discomforts as you move to a healthier, freer version of yourself.
Let’s talk about how you can do that.
1) Track your spending
A defendant in a courtroom chooses what they say carefully knowing that every word is recorded and documented. Drivers pay closer attention to their speedometer than normal whenever speed cameras are nearby.
In other words, the act of measuring, monitoring and recording has a tendency to change people’s behaviour.
Since it’s part of human nature, why not take advantage of this and use it to improve your financial habits? Create a spreadsheet (or an alternative expense tracking app), list the following categories and record where every penny (or cent) of your money is spent;
- Mobile phones / broadband
- Utility / Energy
- Food / Drinks
- Entertainment / Leisure
- Other (such as gifts or debt payments)
While keeping track of your expenses can feel like extra work, it can be a big help in helping you spend less;
- You’ll be able to see exactly where your money being spent and which expenses you need to reduce
- You’ll be able to see which (if any) expenses are disproportional to your current level of income and to your other expenses
- You may feel discouraged to spend money needlessly knowing that you’ll have to go through the effort of recording it later
- Knowing that your expenses are being tracked can encourage you to spend more mindfully
You don’t have to do this for the rest of your life (especially if it feels like a drag). Usually thirty days of expense tracking can reveal a great deal about where your money is flowing.
But if you want to improve your finances by spending less but aren’t sure where to begin, I believe this to be the best place to start.
2) Prepare your food at home
As nice and luxurious as it can feel to eat out at cafés and restaurants, more often than not the amount of money that a typical meal costs is enough to feed you for several days if you had spend it on grocery shopping instead.
Sure there’s convenience in having somebody else prepare your meals for you and it’s nice to get out of the house every so often. But if you desire more financial freedom and to do the things that you truly value, you need to be willing to make changes.
If you eat out several times a week, start by reducing it to just once per week. Then reduce it down to only eating out on special occasions with friends and family.
If you spend a lot of money on convenience foods while at work or education, make yourself a packed lunch instead. Salads can make a more affordable and healthier alternative than processed snackie foods.
Can this feel uncomfortable? Absolutely!
In the end, it comes down to a simple question; is the temporary discomfort you experience worth the money you’ll save in the long term?
If your answer is yes, then making this change should be much easier.
3) Buy second hand
Companies love to glorify the process of buying and unboxing their products.
But as a minimalist, you don’t buy things simply for the sake of buying them. You buy things because you see the value that they can bring to your life.
And things don’t always have to be brand new to be of value.
We live in amazing times where it’s easier than ever for ordinary people (like you and me) to buy and sell their unwanted things to each other with very few limitations on where we live.
A few months ago, I started buying most of my clothes and electronics second hand. At first it felt uncomfortable especially when I’d see the imperfections of what I bought.
But as I reminded myself that I’m still getting the same benefits as a brand new product while paying only a portion of the full price, my grip loosened.
Now, I show even more appreciation for my things purely for their usefulness and beauty as opposed to the amount of money I spent on them. And I give thanks that somebody else was kind enough to sell their product to me for less than they paid for it.
4) Become a low energy consumer
There are some expenses that are very difficult to control such as your rent and taxes.
Your energy and utility bills however, you have a great deal of control over.
When I first lived alone, I learned this lesson the hard way when I consumed more electricity than I was paying for and the account went into debt.
The first of the month came, and my electric bill was more than triple what I expected it to be!
Be mindful of the energy you use and make a conscious effort to minimise it.
If your current lifestyle consumes a lot of energy, adopt newer hobbies and activities that consume less energy. Spend less time in front of the TV and more time reading, walking or playing sports.
Negotiate with your suppliers and see if there are cheaper tariffs you can move to. In the meantime, here are some simple things you can do to get started on reducing your consumption.
- Hand wash clothes instead of using a washing machine
- Air dry clothes instead of using a tumble dryer
- Wear more layers of clothing instead of using central heating
- Have quicker showers
- Never leave the TV on in the background when you’re doing other things
5) Live car-free (or car-lite)
Most people I know who own cars, consider them to be the second biggest expense from their home.
While cars are ubiquitous in most of the developed world and owning them is largely considered the norm, the truth is that driving your own car is just one option of transportation. Sure, it has it’s advantages.
But one of it’s biggest disadvantages is that it’s arguably the most expensive method of transport you can opt for. Besides the payment(s) to buy the machine in the first place, you also have to pay to maintain it, insure it, refuel it and much more.
While my faith is that fully autonomous self-driving cars have great potential to solve a lot of the problems associated with today’s car ownership model, it’ll likely be a good number of years until this possibility becomes reality.
If you own a car and you feel like it’s costing you more money than you would like, you may want to consider alternative methods of transport.
Whenever possible, walk to save money on fuel. If you’re fortunate to live in an area that provides decent public transport, take advantage of it and see if you can save money by using it instead of your car.
Of course, most suburban areas make living without a car difficult since. If you happen to live in one of these areas, it might be worth considering a new location that’s closer to the places you need to be so you can minimise the amount of money you spend on transport.
How much more could you do if you could reduce (or eliminate) your car related payments?
6) Pay off debt consistently
Joshua Fields Millburn from The Minimalists often says;
“There is no such thing as good debt.”
It’s quite true. While society encourages you that getting into debt and then paying it off will increase your credit score, the reality is that being in debt is by far the opposite of being financially free.
When in debt, it’s tempting to procrastinate and avoid paying it off because there’s practically zero instant gratification.
If there is any gratification, it’s lived by the future version of yourself who can live more freely because your present-self decided to live more frugally today.
If you do happen to have debt, make sure you pay a consistent amount towards it on a consistent basis. Doing this sets a firm date and time in the future when you will be debt-free instead of leaving you wishing someday it will all magically disappear.
Whether that day eventually comes is up to you.
7) You don’t need a mortgage
While a roof over your head is an important survival need, this simple need is complicated by the option of whether you should own or rent your home.
Truth be told I don’t have a mortgage.
I rent and probably always will. This is because in my ideal freedom, renting a home has far more advantages than buying a home.
Moving in is far quicker, cheaper and simpler. And any repair or maintenance is the responsibility of the landlord and doesn’t cost me a penny.
These are very justified reasons why you might to consider renting instead of owning.
However, I’ve also lost count of the amount of times people have told me that I should be saving as much money as I can so that I can someday buy a house.
The common argument in favour of home ownership goes something like; when you rent a home, you’re practically throwing your money away whereas when you pay a mortgage, at least the money that you pay is going somewhere.
As much as I can empathise with this argument, I can’t help but feel that it fails to recognise the advantages of renting a home and the disadvantages of buying one.
I’ve rented for several years now and have never once felt as though my money is being wasted. The money I pay provides four walls and a roof for that month so I don’t have to live on the streets to which I couldn’t be more grateful for.
There’s also a common argument that the lack of ownership is an unquestionable disadvantage of renting.
As a minimalist, your experience and intuition likely tells you that ownership can actually be more burdening than freeing.
When you own your home, you also inherit the responsibility of dealing with maintenance and repairs (which of course costs money) and if the day ever comes when you no longer wish to live in your new home, moving out becomes a much more complicated task.
Entrepreneur and founder of CD Baby, Derek Sivers one said;
…renting a house is buying the option to move at any time without losing money in a changing market
I’m not saying that mortgages are evil and that it’s wrong to want to own a house. Some people have noble desires of owning a home so that they can pass it on to their children which I totally respect.
And of course, if you know full well that owning a home will make you happy then by all means you should do so.
I can’t say this describes me though.
I simply don’t value a house enough to give it so much commitment and priority over the things that I truly want to do in life (and if you feel the same, that’s okay).
And even if I did make the commitment to spend the next thirty to forty years paying off a mortgage, it’s not like there’s a guarantee that I’ll even live long enough to reap the benefits of my labour. Life’s just too uncertain like that.
What I’m trying to say here is, there’s no law which demands that you devote your life to buying a house even when you know full well that it won’t make you happy.
If there are other things in life that you find meaningful, your financial resources should be devoted to them instead.
I believe that happiness comes from the things you experience in life and the people you experience them with.
You don’t need to own a house to live a full and meaningful life.
You decide what you value
People (and companies) will always tell you what you should value and what you should be spending your money on.
Often times, the people closest to you will do this with the very best of intentions but won’t always understand what truly makes you happy.
I encourage you to know yourself so that you can decide for yourself.
If buying a house, owning a car or acquiring all sorts of other material possessions doesn’t make you happy, then give your resources to the things that do make you happy.
Thank the people close to you for their well-meaning advice and concerns then politely tell them how you truly feel.
There’s little you can do to control the economic machine we live in. But there’s plenty you can do to control the resources at your disposal.