7 Financial Benefits of a Minimalist Lifestyle

Mimimalist.com sums up minimalism like this, "Minimalism is a tool to rid yourself of life's excess in favor of focusing on what's important -- so you can find happiness, fulfillment, and freedom." Minimalism is also a great way to improve your financial situation. Here, we'll talk about how minimalism and finances intersect.

Döstädning

The Swedish have an exercise they lovingly call "death cleaning," although the Swedish word for it, "döstädning," sounds so much nicer. Once a Swedish adult reaches the end of middle age (or sooner), they get rid of all the stuff they've accumulated over the years, the pots and pans of their lives they no longer have use for. The idea is to do it themselves so their loved ones won't have to deal with it after they're gone.

It's a loving, intentional act. As they go through their possessions, they are able to enjoy the memories associated with a particular item. And then, they let it go.

Minimalism is about more than saving loved ones from the chore of sifting through your possessions. And it's about more than minimizing the amount of "stuff" that surrounds you. Being a minimalist is about removing everything that distracts you from what you truly value in life.

For example, it's not the crudely shaped piece of pottery your child made for you in kindergarten that you hold so dear. It's the memory of that child at age five. It's the feelings you carry for them today.

Financial benefits

There are many known benefits of minimalism, such as:

• You experience less stress
• You have better focus
• You spend less time cleaning
• You spend less time looking for things
• You get to help the environment
• You live in a visually appealing space
• You have more time for rest

Becoming a minimalist has the added benefit of giving you a financial boost. Here are seven ways that happens.

1. You're less likely to run up new debt

As you're learning to tell the difference between needs and wants, walking away from unnecessary purchases begins to feel more natural. After a while, you may find that you've trained yourself to enjoy saving.

2. Spending less will leave you with more cash

Once intentional spending becomes a habit, you're far more likely to have money left over at the end of each month. That's money you can use to build an emergency savings account or invest for retirement.

3. You're more likely to live below your means

In 2022, the average person spent $314 per month on impulse purchases. That's nearly $3,800 a year that could be put to work in a certificate of deposit (CD) or money market account (MMA). Living below your means simply means spending less than you could if you wanted to.

4. You're far more likely to reduce or eliminate debt

Having extra cash makes it easier to get rid of existing debt, particularly if that debt carries a high interest rate. That also means you can save more, as you won't be paying interest charges.

5. Your credit score will likely increase

Thirty percent of your FICO® Score measures how much debt you have compared to how much credit is available to you. The lower your debt, the higher this portion of your credit score.

6. More money means getting to follow dreams

Spending less on things you don't need should leave you with more money to pursue the things you care about. That may mean going back to school, traveling to your grandfather's birthplace across the sea, or donating to an animal rescue organization.

7. You're likely to purchase high-quality items

Let's say you've had the same fall sweater for 10 years, and it's looking a little ragged. Intentional shopping is likely to lead you to replace it with a high-quality sweater that will last for many years. Bringing high-quality items into your home means not having to buy a replacement very often, ultimately saving you money.

Steps to get started

If you want to become a financial minimalist, it won't happen overnight. However, small steps can slowly integrate it into your life and bank account:

• Create a budget: If you don't already have one, create a simple budget. If you do have a budget, go over it and decide what expenses you can realistically get rid of without feeling deprived.
• Make each purchase intentional: Being intentional means taking control of your actions and thinking them through before deciding what to do next. Not only does intentional spending lead to higher-quality purchases and saving money, but it also serves as a reminder that you're in control of your finances. You're done working for money. Now it's time to make money work for you.
• Chip away at debt: Few things are more satisfying than feeling the weight of debt lift off your shoulders. Getting rid of debt is a tangible result of your decision to prioritize what really matters and letting go of the notion that your stuff defines you.
• Get rid of things you can live without: Selling the possessions that no longer serve you is a great way to come up with money to reduce debt.
• Invest if possible: Investing isn't about trying to get rich (for most people). It's about investing for your future, creating a financial situation that allows you to continue living your dreams.
• Create a mantra: Although it may sound silly, having a mantra to repeat when the going gets tough can be helpful. For example, "I am not what I own," or "Being financially free feels better than living large" are examples of simple things you can remind yourself of when you're tempted to splurge on something you can easily live without.

Minimalism represents the attempt to simplify your life, to strip it down to what really matters to you. If that sounds good, you're the only one who can make it happen for you.