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Those who practice minimalism describe its usefulness as a tool for shifting your mindset away from consumer culture and toward intentional living—whatever that looks like for you.
As a lifestyle, minimalism can look like cutting back on activities that don't add value to your life, such as decreasing scrolling on your phone in the morning so that you have time for things you love, such as a slow-paced morning routine. Aesthetically, minimalism can look like decluttering your possessions so your space feels calm and reclaiming your attention to focus on your relationships, goals and hobbies.
When it comes to your budget, minimalism can save you money by reducing unnecessary spending, lowering your cost of living and streamlining your finances. Here are five ways that minimalism can help you save money.
1. Spend Less Money
Minimalists aim to find satisfaction in owning fewer possessions and buying less stuff. For example, a minimalist might:
- Opt to cook meals at home rather than go out for dinner regularly.
- Ditch the habit of buying into seasonal fast fashion trends and instead buying only what they need, choosing a few high-quality, versatile items rather than a stuffed closet.
- Live with fewer items of furniture.
- Use their current phone as long as possible, rather than upgrade when a new version comes out.
- Live with very few entertainment subscriptions.
- Live without a car, if their location and lifestyle allow for it.
By slashing the spending that doesn't add value to your life, you can free up funds to afford things that bring you joy, or funnel the money into a high-yield savings account.
2. Make Money Selling Old Possessions
When you simplify your life and pare down your possessions, some items that don't spark joy for you could have value to someone else.
Audit your closet, kitchen and other spaces for unwanted possessions. Decide what could be sold online, what could be donated and what should be recycled. If you direct spare funds from selling your stuff into savings, you'll build financial stability while continuing your journey toward owning less.
3. Less Need for Space
When you pare down your possessions to the essentials, you'll naturally find that you don't need as much space to store your stuff. This can make it easier to live comfortably in a smaller space.
Some minimalists own only what fits in a backpack and travel the world. Some fit their lives into a tiny house or enjoy the mobility of van life. More typically, owning less means simply having the freedom to rent a smaller apartment or buy a smaller home.
If you're already in a large home, minimalism could free you up to downsize to a smaller space, potentially reducing your cost of living. If you own your house, downsizing can be a means to free up equity and direct it toward another goal, such as retirement or college savings for your children.
4. Easier Budgeting
Apart from the cost-saving benefits of buying and owning less, minimalism can help you build a simple budget. The less information you have to manage, the easier it is to stick to your budget.
- Consider a simple budgeting plan. Regimented budgets offer built-in control, but the simplicity of budget plans like the 50/30/20 budget offer reduced complexity and less regular time commitment.
- Automate your savings. Use automatic retirement contributions and scheduled savings transfers. If you're living more frugally through minimalism, gradually increase your savings ratios to stash away more funds.
- Pare down. If you have numerous bank accounts, try finding one bank that offers the services and interest rates that are best for you. If you have multiple 401(k)s or HSAs from previous employers, consider consolidating these investments into one brokerage. Make sure you research and avoid taxable events.
5. Avoid High Interest
Minimalism can help you avoid debt by finding satisfaction in spending less money. That can help you lower your living standards to live comfortably below your means. As a result, you'll be less likely to take on debt from retail purchases.
In addition, as you make saving a habit, you'll also be more likely to have funds stashed away when you do need to make a large purchase, which means less reliance on credit. In addition to not getting into a financially perilous position, reducing your reliance on debt makes it easier to stick with good credit habits, such as always making on-time payments and maintaining a low credit utilization ratio.
If at any point you do need to finance something, such as a car or a house, your credit score can help you save on interest by qualifying for good rates and terms.
Financial Pros and Cons of Minimalism
Minimalism looks different for all who practice it, so the upsides and downsides vary person-to-person, too.
Here are some general financial benefits of minimalism:
- Increased spending clarity: Minimalism can help you clearly distinguish your needs from your wants, which can put an end to impulse spending and debt.
- Buying for life: Buying fewer, higher-quality items (called "buying for life") can help you avoid fast fashion and trends and keep your shopping to a minimum.
- More savings: Spending on only what matters can free up funds for saving for short-term goals. That can help you invest in experiences that bring long-lasting happiness, such as enriching classes, trips abroad or family gatherings. If you invest your money, it can give you more financial freedom in retirement.
On the other hand, here are some potential financial costs of plunging into minimalism:
- Restrictive: If you attempt to embrace minimalism in an extreme way, feeling restricted can have the reverse effect and increase your desire to splurge.
- Upfront costs: Buying for life isn't cheap, and if you invest in zero-waste reusables or replace many of your possessions all at once in pursuit of an aesthetic goal, you'll overspend. The true minimalist solution is to use what you have for as long as you can and buy only what you must.
- Accessibility: Critics point out that minimalism requires privilege. Decluttering your possessions requires a starting place of abundance, and food insecurity or an income below living wage can preclude many from accessing the chosen simplicity of minimalism. Choosing to buy higher-quality items that last longer may be economical in the long run, but it isn't possible without the required income now.
The Bottom Line
Minimalism can help you reduce spending, live with less and save on housing and interest. In addition to the benefits of minimalism on your bank account, living well within your means can help you maintain a high credit score.
In addition, borrowers who don't carry a balance month-to-month won't have to worry about accruing interest over time, which means they can prioritize competitive rewards structures over low interest. Check your credit score through Experian for insight on what your credit score qualifies you for, and then search for rewards cards that fit your lifestyle. For example, if you're a globetrotter, travel rewards cards can help you earn points and miles to redeem toward your travels.