The math of minimalism is easy.
“There are two paths to financial freedom: you can buy all you want or learn to need less,” said Andrew Latham, certified personal finance counselor and managing editor of SuperMoney.com, adding that one way to streamline your needs is to apply the Pareto principle (also known as the 80/20 rule) to your everyday life and purchases.
“Clothing is a good example: On average, we wear 20% of our wardrobe 80% of the time,” Latham said. “The average household spends approximately $1,800 a year ($150 a month), according to the latest data from the Bureau of Labor Statistics [on apparel].
Paring the size of your wardrobe to 20% of its current size could save you $1,440 a year. If you invested that money in your retirement fund, you would have more than $92K after 20 years, assuming a 10% return rate. A smaller wardrobe will also save you time because you will spend less time on laundry, shopping, and deciding what to wear.”
Taking a minimalist approach can obviously save you money, but how do you actually embrace this mindset to reap the financial benefits? Here’s a look at what the experts recommend.
Know the Difference Between a Want and a Need
“Many people today want what they want when they want it, regardless of the long-term negative effect it will cause them,” said Nancy D. Butler, a certified financial planner, author, and business coach.
“A need is food, clothes, a roof over your head, and other necessities. But that does not mean brand names or designer clothing, eating out at the best restaurants, or owning or renting a home above your means. It does mean living today in a way that enables you to save enough money to have a good life in the future, including when you retire.”
Look at Your Life From the Outside
Benjamin Bush, a financial advisor with Northeast Sequoia Private Client Group, recommends those seeking financial freedom via minimalism to look at their lives from the outside.
“You can doubtlessly identify excessive spending and downright waste,” Bush said. “Imagine the financial freedom you could have achieved if you had saved rather than spent resources on things you wanted but didn’t need. You can’t recover past waste, but a minimalist lifestyle could make your future better.”
Declutter and sell.
“Minimalism can look different for everyone, but the main component is to live with less,” said Laura Durenberger, founder of the eco-minimalist blog Reduce, Reuse, Renew and the podcast Raising Eco Minimalists. “Living with less can mean decluttering your space to get rid of things you don’t use or that you don’t enjoy.
“You can sell some of the items and make money that can go into savings or towards debt,” Durenberger said, adding that her family has sold over $2,500 worth of items on Facebook Marketplace. “We also have gifted many items through local community groups (including the Buy Nothing Project).”
Shop with intention.
“Uncontrolled spending is one of the main reasons that a lot of people struggle to manage their budgets, but the very point of minimalism is to only buy what you actually need,” said Anna Barker, personal finance expert and founder of LogicalDollar.
“This means that the purchases you do end up making will be a lot more intentional. That is, you probably won’t be buying something because it popped up in a marketing email, with the result being that you have much better control over your spending.”
Give it 72 hours.
Sometimes, when we’re tempted to buy something, we may tell ourselves to sit on it for a day before making any moves. This is sage advice, but Ohan Kayikchyan, Ph.D., CFP, the founder of Ohan The Money Doctor, actually recommends waiting longer, which can help in the long run.
“I always suggest my clients wait for 72 hours, not only for big-ticket items but also for clothing, electronics, subscriptions, or a new fancy item that catches their eye,” Kayikchyan said.
Kayikchyan also encourages people to think about whether they really need that new phone or other upgrade “if the old one just works fine.”
Think about the savings and the sigh of relief.
“Consider how it would feel to remove the excesses from your life,” Bush said, noting, however, that the promise of financial freedom alone might justify a minimalist future.
“How much money could you save? What else could you create with resources otherwise wasted? Minimalism’s rewards include more financial freedom, not less. The amount you save from the wants in life gives you the opportunity to support your actual needs.”