Tip 6: Save rather than spend

There’s a lot of different minimalist philosophies out there, here’s my take on financial impact of a simplified lifestyle.

I always have a budget and I try to stick to it. My budget considers: 

  • the basics (rent, food, insurances, the cost of running my car etc) 
  • savings
  • clothing
  • electronics (including camera gear and accessories)
  • travel
  • gifts and donations
  • other

In my mind being a minimalist means thinking carefully about my purchases. Is this the camera I really want? How many tops do I really need for work? Should I pay more for accommodation this trip or continue looking for a cheaper alternative? Do I really need several bars of dark chocolate? (Silly question, I always need more dark chocolate!) By having a budget I find it easier to consider the pros and cons of my potential purpose in the context of the impact it will have on my finances.

I was recently exposed to an idea that has changed the way I view purchases. At a young age I had been told that saving 20% of your income, and investing it, would lead to financial security in retirement. I liked that sound of that so I usually ensured I saved that much. Recently it was bought to my attention that the natural extension of that idea is that by saving an even larger proportion of your income you could reach the point of financial independence ahead of retirement age (meaning you could retire early or be more selective about your work). 

To me minimalism is about aiming to live a simplified life, but one focussed on doing my favourite things. For me this has always meant there’s no point spending money on doing things I’m not that passionate about and being deliberate about the purchases I do make. But now I also consider if a purchase needs to be made at all and it’s surprising the number of little potential purchases that seem very pointless when considered in this light.

I think sometimes saving has been seen as the killer of all the fun, but my own experience suggests that it can be used as another tool to focus one’s time, energy and resources into the things that bring the most joy. For me some of the trade offs I make are, picking cheaper accommodation when traveling but being happy to splurge on activities I know I’ll enjoy like scenic flights; homemade lunches and dinners but occasionally dining out at a local restaurant and buying new camera but keeping it awhile. Each of these choices might be a tad different if money was no object at all, but in my current situation I’m happy accept the trade offs.