7 Benefits of Minimalism for Your Money

Minimalism helps us focus on what we truly value, but it also provides significant benefits for our money. Here are 7 ways minimalism can bolster your personal finances.

It can feel like minimalism was designed for our age. The relentless fight for our attention and consumption elevates its ideas into piercing relevance.

But minimalism has been around for a long time. In fact, there’s evidence of its ideas as far as recorded history stretches.

Born in 412 BC, Diogenes, the Greek philosopher, became a well-known figure in Athens, both for his philosophical ideas and his simple but public way of life. He criticised what he saw as confused social values and cultural conventions in the city, and he led a life that embraced the idea of simplicity and nature above materialism.

Such was the extent of Diogenes’ commitment to simple living, he is said to have slept in a large ceramic jar in the city’s marketplace. Scarcely clothed and living with just a few possessions, he believed that virtue was better revealed in action than in theory.

One tale in particular encapsulates Diogenes’ minimalism. Upon seeing a peasant boy drinking from the hollow of his hands, Diogenes discards one of his only remaining possessions: a wooden bowl. “Fool that I am, to have been carrying superfluous baggage all this time!” he exclaims.

Minimalism and Money

While it’s apparent that Diogenes was on the extreme side of minimalism, we can all learn from his ideas. While the world has changed, the principles of eliminating the unnecessary stand more relevant today than perhaps ever before in history.

But minimalism needn’t be a protest against capitalism and money. After all, it’s this mechanism which is capable of setting us free.

If like me, you want to secure your financial independence so you can fully call the shots on how you live your life, you should take Diogenes’ story seriously. Not because Diogenes lived at odds with the prevailing economic system, but because eliminating the unnecessary saves time, money and mistakes – and that can set you free.

Yes, minimalism can make you happier and accelerate your journey to financial freedom. Still don’t believe me? Here’s how.

#1: Minimalists use less space.

Reducing the physical clutter in your life invariably means you occupy less space. That, of course, means you can save money on the space that used to hold that stuff. A two-bedroom apartment might now suffice instead of a four-bedroom house. You get the picture.

Alternatively, you might be able to monetise the space you’ve freed up, renting space for income. But whatever the choice, the financial result of less space can equate to a smaller mortgage, lower rental costs and a bigger income. In short, minimalism saves space and money.

#2: Stuff sells.

All that physical clutter you’re getting rid of needn’t go straight to the bin. You accumulated it in the first place for a reason: people like stuff. Indeed, many of them are constantly on the lookout for it.

Here, then, is an opportunity to make money from your decluttering. Have a garage sale, put items on eBay, sell stuff to friends and family. Your decluttering will feel less sacrificial if it makes you some extra cash along the way.

#3: Minimalism changes spending priorities.

Minimalism steers us from the material things we want to the experiences we need. As we focus on things that bring us sustainable value as opposed to temporary satisfaction, we can cheat the hedonic treadmill. But while we’re doing that, we’ll likely to save a whopping chunk of money avoiding the purchases we now deem unnecessary.

The superfluous is often the most expensive. The change in our spending priorities that comes with a minimalist mindset begins to recognise that.

#4: Minimalism helps simplify your personal finances.

Simplification can extend across all walks of life, including personal finance. How we bank, invest, save and track our money shouldn’t be immune to the scrutiny of a minimalist. By simplifying our approach to managing our money, we can capitalise on some serious financial benefits.

Automating how our money is invested, for example, can remove the temptation to spend income on something else. A simple system for tracking our money all in one place can improve our awareness and management of our personal finances. Simplification, as is so often the case, is optimisation.

#5: Less decisions mean better decisions.

Decisions are exhausting. As we encounter more and more decisions throughout a day, we can face decision fatigue. Our decisions can begin to suffer. That’s why minimising our decision waste can help combat against fatigue and improve our decision making.

Investing provides a great example of where less can be more for the ordinary investor. By automating regular investment in simple diversified funds, we can mitigate against some of the cognitive biases that afflict investors. If the lessons of psychology are anything to go by, less financial decisions often mean better financial decisions.

#6: Minimalism increases our focus on debt reduction.

Expensive debt is a huge drag on net worth, but it also takes a psychological brunt. Just as owning material possessions occupies physical space, owing money can occupy mental space.

And minimalism, at its heart, is about precisely this point: freeing up mental space so we can maximise the meaningful in our lives. It can therefore play an important role in focusing our attention on addressing our debts. This, of course, is a crucial step on the road to financial freedom.

#7: Time is money.

Less clutter, less distractions, less decisions – less of the unnecessary and the unhelpful. The choices we take on the minimalism journey can make us more efficient and more focused. And time saved is time that can be applied somewhere else. We can pursue ‘passions with potential’, pick up extra work hours, start a side hustle, or simply pursue the experiences we hadn’t had time for before. Our free time is what we make of it.

What are your wooden bowls?

Before he tossed away his wooden bowl in favour of his cupped hands, Diogenes asked himself an important question: Do I really need it?

He was onto something. The unnecessary can be a burden to living the lives we want to live. We should all ask ourselves the same question. Not necessarily because it feels good, nor because it’s a protest – but because it can set us free.

So, tell me, what are your wooden bowls? And what are you going to do about them?

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