Get Rich, Be a Minimalist!
When I first started trying to understand finances, I spent time researching minimalist perspectives on the subject as well. Most blogs, videos, and websites share ideas like “5 ways Minimalism can save you money,” see for yourself. Few links talked about building wealth, and I think that ‘Rich’ has become a rather taboo idea given the values and language of minimalism. Heck, I felt kind of guilty just using this title - did you feel guilty clicking it?
Bare with me here… If you are a person who is interested in building wealth, which I imagine you might be given that your reading this, there are two actions you can take to get you there: earning and saving. Both are great, but if they are all you are doing, you’re unfortunately wasting time and money. To me, as a minimalist, I prefer to waste neither.
Let’s consider if you maxed out your Tax-Free Savings Account each year for the next 30 years, you would have saved $256,000. That sounds great, right? Well, that pales in comparison to the same amount invested at a modest 5.5%, which results in a return of $326,774.05, totalling $523,274.05. Furthermore, if that continued to year 40, you would hit $1,187,749.64 (tax free!), rather than $399,500. Feel free to check out these numbers yourself here.
If you hope to retire, put children through school, buy a home, travel, or contribute more, then saving is certainly not enough. Just like you might curate your wardrobe, home, or time, make a habit of curating your finances too!
I am not trying to criticize other outlets for the content they put out, but rather raising the fact that there is so much more to finances than just saving, and minimalism can be a part of it. Unsurprisingly, The Minimalists wrote a great blog that outlines the bigger financial picture. To me, as I talked about in my first post, minimalism is a solid means to an end. It is a framework that can help you get started and stay focused on your financial quest, but it is necessary to learn more about your money and how to maximize it, however you see fit, for the future.
Now, I don’t want to leave you hanging after having you read that you can be a millionaire with regular contributions and modest return rates, so here is my “5 steps to get rich, while using minimalism a bit, but also developing financial literacy skills”
Step 1 – Use minimalism to simplify your lifestyle, and thus, your finances so you can figure out exactly how much money is coming in and going out. This includes building a budget and paying off debts.
Step 2 – Understand the magic of compound interest
Step 3 – Figure out where to put your money (ie – TFSA, RRSP, etc.) and how to employ it (invest in stocks, bonds, GICs, real estate, etc). This is a hard part, so it is worth getting help from an accountant and/or advisor!
Step 4 – Keep contributing and building a solid financial foundation while maintaining your minimalist roots to assure you don’t get caught up in the craziness of the financial world.
Step 5 – Enjoy a life where you are building wealth and living happily with the few things that you need around you!