This post is part of a 30 days series called the 30 steps program to financial independence. You can check the list of other posts here.
Minimize your wants
If you want to reach financial independence quickly, it is necessary to save as much money as you can. While you can brown bag it to work or ride your bicycle instead of driving your car, most of your efforts can be reduced to nothing if you make a big purchase.
So before you splurge on that purse, or go on that expensive all-inclusive cruise, just ask yourself a few questions
Do you REALLY want this item/holiday/night out with the gang?
Could you do it cheaper?
If you go for it, how much will it set you back, how far behind on your savings goals will you fall?
Do you want to proceed in spite of all that?
I’m not saying that you should lock yourself at home and never go out again. But you should prioritize, and differentiate what you NEED from what you just WANT.
I NEED to have a roof over my head. I WANT a guestroom, a chimney, and a back garden. But if my budget is too tight, I will go for a smaller, more affordable house. Or try to find roommates for the big house to share the bills.
I NEED food three times a day. I don’t NEED a second helping every time, nor do I need a three course meal when I go to a restaurant. I am usually full with a main, and rarely order dessert if I feel like it or if I am still hungry.
By being able to identify my bare necessities from my wants, I am able to ponder unnecessary expenses. An by cutting on those expenses, I don’t really miss what I am not buying, and I can work faster towards my goal of financial independence.
If you minimize your wants, you will save money at a higher rate, without really depriving yourself. Try to break that morning coffee routine. Prepare a fresh pot of coffee and take your mug to work. It will save you money and time. Invite your friends over for drinks or a meal. Once in a while, there is nothing wrong with going out. If you go out every night after work, you won’t even appreciate that outing, and you will spend a ton on drinks. Try doing the same at home for a while.
I find that in the end, I have very little WANTS. I enjoy staying at home with friends because I don’t like loud music in bars, and prefer to hear the conversation. I enjoy hiking and going to the beach or cycling around rather than extreme expensive sports. I like cooking so I have a hard time in restaurants getting over the fact that the same meal costs about 5 times what it would cost me to prepare at home.
All those things save me lots of money, just by being myself. On my list of belongings, which is pretty reduced, you will find nice things though. I am by no means advocating that you should go for the cheapest items just for the sake of saving money. I have a laptop and an Ipod touch. I didn’t WANT them because they would look good on me or to show them off. I NEED them to conduct my day to day work, writing blogs and articles, communicating with my family and friends, reading and educating myself, and so on.
Those items are valuable to me and I shelled out quite a chunk of money to acquire them. Nevertheless, I stuck to what I NEEDED, and didn’t go for more expensive versions. I think they will last until they die, I backup regularly and don’t plan on buying newer versions just because they exist. As long as those items keep doing what I need them to do, I will keep them.
By doing that, I save money, time, energy, and get closer to my goal of being financially independent.
For me this was the biggest deal. Dropping the amount of wants, therefore the amount of money I spend, I have been able to drastically improve my savings rate. Hopefully as my income continues to grow I will keep my spending down and only increase my savings rate. This is such a big deal to getting a hold of your finances.
Pauline P says
True. People should look more often at their piles of stuff and get rid of what they haven’t touched in five years. Then one year. You can live with so little even I seem to be a hoarder compared to some minimalists.
Yeah, I by no means am a minimalist but I do try to adapt aspects of the idea. For me, it’s stuff like musical equipment that I have a hard time parting with. I have an amp I have not used for quite some time but it has great sound and is a vintage model, but I honestly don’t really need it. I have another that I use to play out, but at the same time it is nice to have a back up if I need it.
See how easy it is to reason for things you probably don’t need. Ha ha!
Elle @ New Graduate Finance says
This is something I’m working on.
I’ve gone through periods where I just WANT something incredibly expensive. For no good reason. I just feel like I want it, see someone else with it, then suddenly I am trying to rationalize why I “deserve” said luxury.
I try to think about minimizing wants as a way to make my life easier to move around, more freeing, less stressful or anxiety-inducing.