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At first sight, we assume that this topic is about cutting down expenses, living a low-cost lifestyle or simply living a cheap life. However, Finance Minimalism is quite the contrary. Finance minimalism is all about investment on things that really matter.
We buy stuff on a daily basis, but does it give happiness? Yes, but only temporarily. Not everything that we buy adds value to our life. We make certain investments, not because it is essential but because that item makes us feel happy.
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We tend to troll the iPhone yet some people find peace and solace in the iPhone, they feel the joy it provides justifies investment. Some people will find happiness in the basic Nokia phone and would prefer it over an expensive iPhone. Whatever their preference, it could stem from an emotional connection or the value associated with it.
Sometimes people decline an offer from an expensive restaurant, to eat in a roadside shop and vice-versa. The ambiance, service, people, delicacy, and food choices mould their preference.
In simple terms, finance minimalism is all about investing in things that matter to us, what adds value to our life and what kindles joy in us. Investing in things we have an emotional connection with is the primary concept of finance minimalism.
Why is it necessary at this fast-paced life?
In this restless lifestyle we tend to forget our happiness. We run to earn money, but ignore what we actually need. By making investments in valuable things, we can find joy. Planning to Invest for things that we love will motivate us to move forward. Every time we see that kind of investment, we can sense calmness or motivation.
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Buying your favorite car and taking it to a meeting or to a party will give you a sense of pride and self-confidence. Getting out of a dirty, mundane car will make us feel self conscious. So, to an extent investing in things that are valuable to us boosts confidence.
In the era of being barely able to pay attention to self, these items of value can help us gather joy, confidence and motivation.
The core principle of Finance minimalism
“Not spending on things that don’t kindle joy” is the mantra of finance minimalism. Let it be a block of solid gold or a garage of jewels, if it does not make you happy, it is not worth buying.
A piece of chocolate can kindle joy. Anything that can make you happy is worth investing for is the core of finance minimalism.
Likewise anything that we don’t find joy in, doesn’t necessarily need an investment. Curtailing investments that don’t add any value to our life is the simple core feature of finance minimalism.
Spend intentionally
Make deliberate choices about how and where you invest. We need to ensure that all our investments align with our values, needs and long-term goals.
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Breaking free from unconscious or impulsive spending by adopting and embracing mindful spending habits is the core practice of intentional spending .
Prioritize needs over wants
We need to know what we spend money on. Despite the given satisfaction we need to learn how to control our desires. With expensive desires comes robust responsibilities which are unnecessary. Having minimal needs and practical desires will help us move forward quicker towards our larger goals.
Declutter financial obligations
Reducing our financial responsibilities will help us to focus on our long term goals. Clearing loans, closing unused bank accounts and minimizing the use of credit cards will help us to declutter our financial obligations.
How to start your journey
- To start your journey you need to start assessing your income and expenditure. Have clear data of what you earn, how much you spend along with your profit and loss. Identify and decrease unnecessary spending and look for room to improve.
- Draft your long term and short term goals. Make sure they align and follow them diligently. If you aim to build a home in the next two years your short-term goals must let you work on your home goal. Otherwise a financial crisis might arise when you come to build your home.
- Buy items that you value and actually have a connection with you. Prioritize quality over quantity.
- Have an emergency fund. Draining your income will always lead to trouble. Instead try having funds for the future. Let a part of your income be saved to manage future crises.
- Always have a backup plan. In times of unforeseen crisis, this will come in handy. For e.g., who would have thought the onset of COVID would throw then careful financial plans of thousands of people into disarray.
Financial Minimalism and Long-Term Impact
To summarize finance minimalism we need to first chalk out our long-term and short-term goals. Based on this, build a financial plan that is achievable. Include a Safety Net for emergency fund, insurance with protection and debt free life.
Second thing is aligning finances with personal values which means purposeful spending, mindful consumption and sustainable choices.
Final one is to invest in experience rather than materials. Choosing to spend calm and valuable time provides a deeper satisfaction. It reduces clutter and creates a stronger connection with people we love and value.
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To Wrap up
Finance minimalism is a lifestyle. It serves a significant purpose in life with lasting fulfillment. It encourages mindful consumption benefiting both individuals and the environment. It is a sustainable practice which provides wealth and freedom.
This kind of stress free living choice gives us more clarity and control over life and helps us to make better life choices.