Problems with managing money can stem from a number of different causes. For many people though, one cause that doesn’t generate much discussion is philosophy. Many of us, without even realizing it, are caught up in a philosophy of consumerism that leads to excess and sometimes entirely unnecessary spending.
One way to counter this is to embrace minimalism as an alternative. This is a financial mindset that is increasingly associated with millennial consumers, who have had to find ways to cope with difficult economic circumstances throughout their young adult lives. Millennials came of age amidst financial crisis, and are also famously burdened by student debt. Partly as a result of having less money than their parents did at this age, and partly in the name of strategy, many young people have learned to deal with this by taking a minimalist approach. They value experience over materialism, they delay or forego unnecessary expenses, and they buy less stuff.
Adopting this general approach — whether or not you’re a millennial — can save you a lot of money. But in a number of ways, it can also improve your relationship with personal finance.
IDENTIFY UNNECESSARY LUXURIES
When you adopt a mindset of limiting expenses, rather than being drawn to them, you might be surprised how quickly you become better able to identify unnecessary luxuries. One example has actually become quite prominent of late, as people look for ways to simulate their real-world experiences at home during quarantines. People are finding ways to work out at home, and it’s a good bet that a lot of them won’t go back to their gyms, yoga studios, or personal trainers. While there are certainly things you can do at a gym that you can’t do at home, a little bit of brainstorming and some internet searching can land you a very effective home workout that doesn’t cost a penny.
People who embrace minimalism can find little trade-offs like this throughout their lives and not just with non-essential spending. The clearest examples are cooking instead of eating takeout; opting for sustainable and affordable modes of transport; and reducing energy expenditure at home.
TAKE A SUSTAINABLE APPROACH TO SPENDING
Minimalism and sustainability share very similar values— living simply and unencumbered by material things, and finding purpose for all aspects of life. Following a minimalist lifestyle, you’re probably reducing your overall consumption of goods, like electronics. This can also be sustainability in practice because it calls individuals to avoid purchasing products in volume for environmental and ethical reasons. So by abstaining from buying the newest gadget for the sake of being trendy, you’re not just saving your money, but the planet and its stakeholders as well.
In fact, sustainability has become such a vital topic that it’s not just a practice that people follow, but a subject to be studied. And sustainability isn’t just changing the way families and individuals consume goods, it’s also changing the financial mindset of many industries. Across the world, big businesses are switching to renewable energy, eco-friendly packaging, and healthier working conditions — all of these pave the way for a more sustainable future.
These efforts are also applicable to the individual level. For instance, installing solar panels, though a bit of an initial investment, can pay off in the long term. Cooking vegetables that are in season or taken from one’s own yard could save you substantially over time. You’re also promoting personal health and avoiding potentially expensive medical conditions. What these examples highlight is the importance of thinking for the long-term to promote financial growth.
We mentioned before that millennials often value experience over materialism, and this is a fairly fundamental lesson one can learn from adopting a minimalist perspective. The clearest example of this practice in action can be found in how many young people are planning their weddings. Many are spending less on engagement rings (with the majority of Gen Z and millennials believing rings shouldn’t cost more than $2,500). As a result, they’re finding the early days of their marriages less stressful. Some are enjoying more relaxing honeymoons, or even more “perfect” weddings.
The point is that experiences have come to matter more. As a financial minimalist, you’ll likely start to recognize numerous situations like these, in which expensive things can be traded for richer experiences. These aren’t limited to huge events, like weddings, but even simple get-togethers can be made more meaningful in different ways. For example, families can cook together to celebrate birthdays, rather than go on a luxurious trip. Or going on a picnic with friends is just as, if not more, enjoyable than attending a glamorous party.
In the end, these are all surprisingly easy adjustments to make in your mindset. But the effects on your relationship with money in your day-to-day life can be profound.
Interested in one-on-one help re-imagining your relationship with money? MMI offers free financial counseling sessions 24/7, online and over the phone.