What is minimalism? And can minimalism make you rich? The latter is actually a pretty common question.
Firstly, minimalism is choosing to live with less in order to maximize things you value the most. Therefore, minimalism tends to be a bit different for each person as the things we value may be different.
There exists of spectrum of ranging from “extreme” to moderate forms of minimalism.
Secondly, what does it mean to be rich? How do you define wealthy?
A straight definition of wealth seems to be having an abundance of money, resources, and/or assets.
However, others have different definitions.
Some, like Robert Kiyosaki, define wealth as a person’s ability to survive X number of days forward without working (the straight definition does play an important role in this).
For others, to be wealthy is to be healthy and surrounded by the people you love. Thus, to be wealthy is to have what means the most to you.
But let’s face it, when most people think of being wealthy or rich, they think in terms of money.
Of Minimalism and Wealth
So, can minimalism make you rich?
The answer is: Yes, if you choose.
Minimalism by itself will not make you wealthy in terms of money. Only you can make yourself monetarily wealthy.
Like a helpful tool, minimalism can certainly help you in becoming rich.
However, if you are leading a minimalist lifestyle, you technically don’t need as much money to be happy or live life to the fullest to begin with.
At times, it seems minimalism and being wealthy contradict each other.
I believe this is largely because society has been conditioned to equate wealth with luxury.
To be rich means to have luxury cars, huge homes or mansions, designer clothes, private jets, luxurious yachts, fine dining, numerous expensive items and furniture, etc.
But none of that actually means someone is rich. Often times, it means the opposite.
Many who live the luxury lifestyle are actually broke. They have a negative net worth, huge mortgage payments, car loans, enormous credit card debt, and are just one paycheck away from financial disaster.
Now image a minimalist living in a small modest home, driving a used car, has only the furniture, clothes, or items he or she needs, no debt, and has several million dollars saved in investment accounts.
Who is really rich?
How Minimalism Can Make You Rich
1) Less Consumption, More Saving
Often people are victims of their own doing and that of a hyper-consumeristic society.
Consumerism without restrain leads to enormous debt. The average American household had an average of $5,221 in credit card debt in 2022 (nearly $850 billion in total US credit card debt).
From the moment we are born we are conditioned to believe that having more things leads to happiness. Big house, new iPhone’s, fancy cars, $200 Nike sneakers, etc. This of course, isn’t true and never was.
Minimalism is the antidote for hyper-consumerism.
When you don’t need a flat screen TV in every room, don’t need to live in a huge house or Mcmansion, don’t need to drive a BMW, and don’t need a piece of furniture in every corner, you have the best opportunity to accumulate wealth.
By adopting minimalism, you will have a lower cost of living, low or no credit card debt, and low consumer expenditures.
When you consume less, you spend less. And when you spend less, you can save more.
Then when you save more, you can invest more!
2) More Saving, More Investing
Imagine making $50,000 per year at your job. After taxes, you take home $39,000 ($3,250 per month) in yearly income.
However, as a minimalist your yearly spending amounts to just $18,000 per year ($1,500 per month).
Therefore, you are saving $21,000 per year in income.
If you worked for the next 20 years and saved that amount you would have $420,000 saved. If you worked 30 years, you would have $630,000 saved.
But what if you also invested that money in the stock market each year?
Since 1926, the average annual stock market return has been a little bit over 10%. So, we will use 10% as the benchmark.
Suppose you invested the $21,000 in the stock market each year for the next 20 years. Growing at an annual average return of 10%, you would have $1,323,053 built up!
Suppose the next 30 years. Growing at an annual average return of 10%, you would have $3,799,812 built up!
That is the power of compound interest at work!
Conclusion
Can minimalism make you rich? Yes, minimalism can be used to build incredible monetary wealth, if you choose.
I live a minimalist lifestyle and I save over 50% of my working income each month.
Furthermore, I invest the money I save into dividend growth stocks.
Over the past 5 years, I’ve built a six-figure portfolio that generates a yearly average of over $1,000 per month in dividend income!
That is passive income that I earn while I sleep. Passive income is the key to financial freedom!
This is what I am doing, but you may choose another path altogether.
If you are interested in beginning your own journey into dividend growth investing, personal finance, and financial freedom, check out my Getting Started page.
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So, what do you think of this post? Are you a minimalist? Also, do you believe minimalism can make you rich? Let me know in the comments below!
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