For the past few months, I've been reading personal finance blogs. I find them fascinating, specifically seeing how other people are spending (or not spending) their money. Most of the blogs read aren't very heavy on investment advice or telling you how to most effectively minimize your tax penalty. Most of them focus on saving or, perhaps more accurately, not spending money. It was a whole new world, because my idea of not spending is passing on the book I'm looking at or ordering a less expensive item in a restaurant. Imagine my surprise when I found out that a few people have declared "no spending years" and it's not uncommon to declare a no spend week or month. (No spending, if you're wondering, generally isn't literal. People buy groceries, pay rent, buy gas, etc... they just limit their spending to necessities). I've been inspired to try to do a "no spend" day once a week, but it seldom works out...not because I'm routinely spending huge amounts of cash on a daily basis. I usually get tripped up by little things, like a soda or a coffee or realizing I forgot to pick something up I really need. It's mainly due to poor planning on my part combined with a slight lack of impulse control when it comes to very small purchases.
Another topic that seems to be closely related to personal finance (at least in the blogs I'm reading) is minimalism. Very few of the blogs I read embrace "true" minimalism. If you want an entertaining (highly exaggerated and very tongue in cheek) explanation, check out this video. One thing I see frequently with minimalists is counting their possessions and occasionally posting the lists of what they own. 100 things or less seems to be a goal for a lot of people. I like having possessions and can't imagine ever limiting myself to less than 100 things, but on the other hand, I'm not sure that I need the 100 ink pens and pencils I seem to have, for example.
One thing I like about it, though, is the idea of really putting thought into what you buy. Even if you budget fairly carefully and limit the amount you can spend in frivolous categories, you're possibly only preventing yourself from spending more than you can afford, which means that you still may be buying things you don't really want or need because the money's there. This was the subject of a debate between myself and my roommate in terms of budgeting. If you limit yourself to spending X dollars on entertainment each month, what happens if you spend $50? Her opinion was that anything she didn't spend in the course of a month should go into savings. That's a good thing, I think, but I voted for at least some rollover. First, she might want an item that costs more than $100 one month. Second, I think that no rollover could possibly encourage a "use it or lose it" mentality, where she bought items that she didn't really want that much just because she had the money and wasn't' going to use it.
Weighing the value of your purchases certainly isn't a new concept. I can't remember how many times my mother asked me "Is that really worth the money you'd spend?" or dismissed something, saying "I like it, but I don't like it $xx worth." And a few years ago, when times started getting tough for everyone, I remember Suze Orman suggesting that people should try to live on half their actual income. It seemed like a good idea, but it didn't really resonate with me until I read Everyday Minimalist's announcement that she had earned enough in January-March to cover her expenses for the year and had declared 2011 "The Year of Travel." Granted, she has a relatively high income (according to her blog, $17,000-21,000 per month), so this probably isn't feasible for most people, but still... Wrap your mind around the idea of being able to say in before the year's 1/3 over "Okay, I've earned what I need for the year...what do I want to do now?"
Even if I were in that position (and I doubt I'll ever be that lucky), I don't think I'd take the rest of the year for world travel. I have too many attachments here and I don't like the idea of professionally dong nothing for a year while I travel around the world. Plus, I hate long plane rides. That said, I love the idea of being able to do it, especially in light of life's unpredictability. What if something happened that put me in a position of being unable to earn income for a year? Or what it it happened to someone I cared about? How much better would you sleep at night knowing that you've made enough to live on for March 1, so even if something happened that prevented you from earning money, it wouldn't matter for nine months because you'd covered your expenses for the year? Furthermore, there's a lot of concern about retirement nowadays. If you work from 22 to 65 and succeed in living on half your income for those years 43 years and saving the other half, that would mean that, even without interest, you'd have saved enough to live on for another 40 years. (Granted, it's a huge over-simplification, but the fact still stands that every dollar you don't spend now is one you can spend later).
And, honestly, even though Everyday Minimalist is making a very good income, I doubt it was easy for her to accomplish this. It's just as easy to get caught up in the cycle of "more, more, more," whether you're earning $6,000, $60,000, or $600,000 per year. To do it, someone would absolutely have to learn to really weigh the value of everything they buy and learn to pass on things that you sort of want and can easily afford. I don't think it means being deprived or giving up all your worldly possessions, but it definitely means a new mindset.
There's also the issue of how much can you really reduce your expenses. Some things can go pretty easily, like the whole Latte Factor. If you're buying a $3 drink from Starbucks on the way to work every day and you work five days a week, fifty weeks per year, then you're spending $750 a year. If you're buying one bottle of $1.25 soda or water from the vending machine at work, then you're spending another $312.50. Cut those two out and you're saving $1,000 per year. Other expenses aren't so easy to get rid of. Everyone needs a place to live, electricity, food, basic medical care, and, in most places, gas. There are things you can do to reduce those costs, but they're always going to be there.
Of course, people go to some pretty extreme lengths to save money, like the guy who managed to eat for $1 a day for a hundred days,, but at some absolutely horrifying meals in the time of it (and also supplemented his fruit supply by eating fruit that squirrels discarded after a bite). It works for him, I guess, but what's the point? And if you truly value that latte on the way to work or grabbing a soda from the vending machine in the afternoon, then by all means, go for it. As much as I support the idea of saving for the future, it seems ridiculous to do so at the cost of any enjoyment of the present.
Still, I think that it's important to balance enjoying the present with planning for the future. No one wants to give up every single pleasure in their youth with the intention of enjoying it all when they retire, only to be hit by a truck as they're leaving work for the last time, but neither doesn't anyone want to never deny themselves in their youth only to find themselves with nothing in their old age. That's where I like at least some of the minimalist principles, like thinking long and hard about every purchase, even the small ones). I may not ever reach the point where I can get away with working three months a year, but every dollar I don't spend thoughtlessly today is a dollar that's going to be there later on if I really need it.
Besides, if I embrace minimalism, I can have all the Apple products I want and none of them count in my list of 100 possessions!
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