Will Minimalism Make You Rich?
It will definitely require a commitment and patience to continue.
I have always been interested to save money and watch my bank account growing slowly but surely over the time. This slow growth was somewhat disappointing at some points in my life, but at least I was in the right direction to achieve my first goal of saving $10,000. It was a realistic goal at my early twenties, but once I accomplished that, I thought that this is not enough and I need more. I only had one income and all savings had to come from my paycheck, so the only way to save more was to cut expenses such as: dining out, shopping, and pretty much reconsidering every plan that requires spending money. I did not know that there is a term called “minimalism” that calls out a similar lifestyle that I am living. Many minimalists claims that they became rich by adopting this lifestyle, but the question is: did I became rich from being a minimalist?
The answer for the previous question is not simple, and I need to summarize my observations about the lifestyle of a minimalist (myself) first:
- Monitoring spending is tiring: I had to analyze thoroughly my spending habits on daily basis, and determine if I can eliminate some expenses or if there is a cheaper alternative for every purchase I do. This analysis consumed my energy and time in sake of saving money.
- Cheap is expensive: I learned the hard way that cheap is expensive. When I purchased my necessary items, I was making sure to select the lower quality and cheaper option, because I thought that the expensive items are not worth it. I probably was right when it came to things like shorts or flip flops, but there are many cheap kitchen appliances that I bought did not last me long, and then I had to replace it with other cheap brands that had the same problem again. I understood that I cannot save in every single item I buy; in the contrary, I was spending more money in the long run on bad quality items. You need to spend money to save money some times.
- Dining out: Many minimalists will suggest not going out to restaurants or dinning out only during happy hours. This lifestyle could be achieved easily; actually I lived it for a long period of time, but I ended up stressing out as this activity monitoring habit started to cause me depression. I figured that balanced life is much better than being extremely conservative when it comes to money.
- Income: Income plays a big role in maintaining this lifestyle. I noticed that people with higher income could save a big portion of their pay checks by being a minimalist. For instance, let’s assume you make $50,000/year and after deductions, you take home $34,000/year; this is a decent amount of money, but it is so hard to be rich from this income even if you are a minimalist. For people who make $100,000 and more, they most likely will be rich, not only because they are minimalists, but also because of their high income. I believe that people who make a high income they will be more committed and motivated to save money, because getting to their financial goals will be quick; I am not discouraging anyone with lower income from saving, but I am stating my observation that the slow growth in savings could affect your spirit and dreams of being rich.
- Necessary expenses: Being a minimalist does not mean that you do not have essential expenses that you have to pay monthly such as: rent, transportation, utilities, phone bill, insurance, medical bills and others. So if your income barely covers the essential expenses, how would it be possible to be a minimalist and save money. I feel that minimalism could help anyone but it will not make anyone rich easily.
After listing my observations, I am going to share with you how minimalism affected me, and if I became rich after 5 years of adopting this lifestyle:
- Being rich is subjective: The word rich is different from person to another. Some of us will consider someone who has $10,000 in the bank account rich, so if that is the case, then being a minimalist will help you to be rich. However, rich in my definition is to own a house (no debt), own a decent car that has no mechanical issues, have a family and can support them comfortably, and to have extra $100,000 in cash. Minimalism will never help me achieving those goals; therefore, I will still be conservative in my spending, but I will not spend my time and energy to save extra couple bucks on a shirt!
- Does it work? Being a minimalist definitely helped me with saving a great amount of money. However, if I followed this lifestyle for the rest of my life, I will never be rich. simply because what I make minus my essential expenses is not a huge margin that will accumulate to a million dollars over the time!
- Anxiety: Monitoring my daily financial activities and thinking twice before purchasing a needed item started to give me anxiety and depression. I am all about saving but when I became obsessed about that, I started to feel stressed and lost true meaning of happiness. I had to make a change in my spending where I had to find a balance between being happy and able to accomplish my financial goals
- Diversifying my income: I learned that it is important to save money, but to diversify my income is even more important. I met many minimalists that focus only on cutting expenses and eliminating many fun activities, but most of them were not giving me ideas to invest or have a second job. I started to believe that investing is the way to be rich; for example, use your savings to buy stocks (learn more about the market first), contribute to 401(K), consider real estate investments, freelancing, ask for financial advice from a professional financial advisor to learn more about your options. It is important to learn how to generate more income and grow your savings instead of consuming hours to find a 10% discount on a $10 shirt!
As a conclusion, being a minimalist helped me to save a decent amount of money, but I also made many mistakes by purchasing cheap items that I should not buy. I no longer follow this lifestyle, but I still keep a balance and monitor my expenses in moderation. Instead of spending a long time analyzing my savings, I started to invest this time to learn more about real estate, stocks, online business, and other methods of diversifying and increasing my income. I believe my issue in the past was focusing only on growing my bank account, but I missed many opportunities to understand how a wealth could be made through investing.
