If you have spent some time on financial education, you’ve probably come across the term financial minimalism, this is the mindset and action to cut out all expenses, and only live on rice and beans.
The advantage is that you can always have more focus and money on experiences and things that allow you to have a better quality of life.
This is a strategy I use at times when I see that my expenses are getting a little too high, I sometimes feel that it’s a challenge to see how much I can cut down on things that I don’t really need or use.
Doing this has also given me access to keep more money in my pocket and invest it without feeling like I’ve missed out, or had to lower my standards of living.
Doing this has finally allowed me to shift my thoughts to things that I enjoy the most, for example, watching YouTube videos all day in my PJs, or being able to walk the streets at any time.
Financially it’s a great idea since it makes you consider, the value of a dollar, spending habits, delayed gratification, and not buying dumb stuff.
But
As much as I love financial minimalism there is one issue that needs to be shown, I know that it took more than just saving my money and living in a shed to make my wealth.
Because that alone wouldn’t be enough to make a serious income, and finally live life on my terms.
Here’s the issue with financial minimalism and how you can solve it.
Financial minimalism is all about taking a really simple approach to your finances, and cutting back on things that you don’t need.
So, you can spend more money on things that you truly desire, this means you need to know what to prioritize and delaying your instant gratification for the long term.
This means you can have more money left over to invest, which will then give you the financial stability to do whatever you want, and say no to things you don’t want.
However, there is a side that people aren’t talking about that I think needs to be revealed, and it’s that you can only save and cut back so much money until you can’t possibly go any further.
What do you do?
Let’s start by saying this is as simple as taking into consideration these two things.
“How much do you spend?”
And
“How much can you invest?”
Financial minimalism fits perfectly into this, since the more you save the more you can invest.
In addition, all the other benefits that saving gives you, for example, if you were to cut down $1 it’s actually worth $1.30 compared to if you were to work for it, so in theory, you’re being paid to save.
Here’s an example.
If you were to buy a Coca-Cola for $2 but you know it’s extremely high in sugar and extremely unhealthy for you.
It would cost more than just the $2, since you would have to deal with the other issues, compared to if you didn’t buy it.
You would have just earned yourself more health and saved yourself an extra $2 that can be used for something healthier.
This shows that it’s a lot easier ignoring unneeded expenses, than it is trying to make more money to cover those expenses.
The other perk is that you need less money to become financially independent, think about it like this.
Most people add up what it would take for them to become financially independent by multiplying their yearly income by 25 or 30.
This is also called the safe withdrawal rate, for example, the average salary is $56,516 in America so if you were to multiply 25 by $56,516 it would equal $1,412,900.
This would mean you would need this amount of money invested to be retired, and spend $56,516 in whatever way you feel fit.
That also means for every $1 you spend you will need $30 invested to keep feeding the cost.
The moment I realized this I was pretty spooked since this meant that a $200 a month car payment is actually $72,000 invested to keep the cost of sustaining that car.
This is why cutting back a tiny amount will have a big impact on how much money you will need in the future.
Think of it like this, if you were able to cut back $100 a month, you would have $36,000 less that needs to be invested, for me recognizing this was a big “Ah-ha moment”.
And thirdly saving back will have the biggest impact on your finances and it’s something you can do instantly.
It doesn’t take much to stop dining out all the time and start making some food at home, you decide if you want to drive a really expensive car, or switch it for something more affordable.
However, what if you didn’t feel happy and had to give up on all things you enjoy? This can make your financial minimalism feel like torture.
After all, what’s the point of all this saving if your life is miserable? I would recommend that you discover what you want in life and play your savings towards your goal.
This would make you feel way more motivated, since you’re no longer saving for the sake of money.
But, you’re saving towards that nice Lamborghini (If that’s what’s going to motivate you), just make sure you aren’t going to use your money to fill a void in your emotions, or to impress others.
So, give yourself an incentive so you can enjoy life now instead of some random time in the future.
There were times when I would scrimp and save a little too much, which would make me miss out on great experiences with others, just because I wanted to save an extra $25.
Even though you should definitely be cautious of how many times you go out, just realize that life should not be enjoyed in some far-off future.
You can still live life now by prioritizing your spending, living within your means, and investing your money.
What most people think one side is financial minimalism which is living on the bare necessities, and the other side is making more money, which is attached to spending like crazy
The best solution when you’re struggling, even if you’re cutting back like crazy, is to increase your income.
In this situation increasing your income is a better use of your time, instead of trying to cut back even more.
Since you’re earning potential is limitless which will speed up the process of reaching your financial freedom.
What can I do to increase my income?
- Ask for a raise, sometimes the best way to make more money without much effort is just to ask for it.
- Switching jobs, multiple studies show switching jobs every 2 to 3 years make people 50% more than someone who stays in the same company.
The reason why switching jobs is better is when you’re hired, you’re given a base salary and they raise you on the percentage of that.
Although if you move to a new company altogether, you can start that baseline off at a much higher amount.
In simple terms, if you’re happy with the company you’re with now, then stay with them and ask for a raise, but sometimes there are opportunities out there that are too irresistible to decline.
I understand that asking for a raise from your boss can be scary, so I got a video from Dan Lok that teaches you how to handle this, and get your well-deserved raise, it’s called Salary Negotiation: 7 Tips On How To Negotiate A Higher Salary.
In summary
This is why making more money has just as much use as cutting back, and instead of seeing the two as completely different, you should see them as complementing each other, to get you closer to your goal of becoming financially free.
And this is why I highlighted the main problem of financial minimalism, which is when you get to the point, you’re miserable and can’t cut back anymore.
You need to look at other alternatives to make the living you truly desire, instead of waiting centuries for it.
I understand that I ran over these topics briefly, so I wanted to give you a resource that will guide you in the right direction to mastering your personal finance it’s called 30 Day Summit and it’s made by Russell Brunson.
It’s a COMPLETELY FREE SUMMIT that will take you by the hand, and guide you through every step on how you can handle the biggest financial killer in your life…
I know for you to be interested in this, that money is tight, maybe you barely have enough money to get past tomorrow.
But how long can you live like that?
Surely something has to change, so I beg of you, don’t walk away from this opportunity, and think everything will turn out fine.
Make a commitment to yourself that you will make a positive change in yourself and the lives of your loved ones.
Ask yourself all the reasons why you want to increase your income, then use those as fuel to push you towards your dreams…
Do you really want to be one of the unfortunate people in this statistic…?
I gave this to help you climb out of the hell hole you’re in, no matter how deep it is, all I’m asking is for you to dedicate a small amount of your time since it’s COMPLETELY FREE to unlock your financial freedom.
Isn’t that worth it?
Trust in yourself, that you will make a positive difference, especially if you have family and people, you love that have to suffer through this pain with you.
You know it’s killing the life that you and your loved ones can live, when will you take charge? If you’re always on the fence Come on!
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