If you haven’t noticed, less is trending hard in all sorts of things. Design. Engineering. Fashion. It’s that elegant restraint that makes things better by not doing any more than is necessary. Less shows an intelligent ability to make the right choices, nothing more. Less has the ability to make difficult things look easy. When it’s done right, you want to say to yourself, “of course! why didn’t I think of that.” It appears obvious afterward, but experts always know, the elegant solutions are the hardest to find. Usually because they are hiding in plain sight, out in the open.
But did you ever consider how “less” is important to your personal finances?
More gets you less.
Really? But isn’t more...more? Having more things, even if you can afford them, quietly drags on your finances. Even if everything you have is paid for without credit cards, the way it should be, stuff adds cost. More clothes, shoes and snowboards? More closet. More things that go like cars, motorcycles and jet skis? More garage to park them in. More flat screens, latte machines, furniture? More house. Plus, the need to insure it all and upgrade each item as it ages. There is cost on top of cost going on here. It really taps into you income.
This seems obvious. Living the good life has a cost, right?
But is it really all that good? I mean, have you ever found yourself wanting to have finally saved enough to buy that certain “thing,” for your home or hobby. Right color. Really nice, new model that will end all need again? I mean, it’s perfect. Even your friends say so. And then a year later it’s just another tired version of “whatever” that you are putting up with until you can get the better one? It’s a trick question. That’s pretty much most people. It never really ends.
Having more means having less wealth. Sounds counterintuitive. Let me explain. Things, especially luxury consumables that come from retail stores, auto dealerships and travel agents depreciate. More things...depreciate more of your money. It’s like investing in stocks that only go down. Here is an example of how to think about consumer products: What if I told you I had a great investment opportunity. All the rich people are buying it. I have a new version every year. The return on investment is -40% upon purchase. That’s right! A guaranteed negative rate of return. Yes, it may lose even more value, and may not be redeemable at all after a certain time. Sounds ridiculous, but that’s what you invest in when you buy retail goods. You are plowing your money into depreciating assets. This is how people with big incomes can manage to actually be poor.
If you have big paychecks, and it all goes into payments on cars, homes, and lifestyle items—you will look and feel like you are doing well financially. But you may actually have a lower net worth than somebody that works at the post office and owns less than you. Lifestyle and consumer goods put a constant drain on your monthly budget, robbing you of accumulating true wealth. Stuff that goes up in value. Like money. Which is what wealth actually is.
Money is invisible, until it is spent. But once it is spent, it’s gone.
Cash. Investments. Real estate. Things that have positive worth don’t reflect on lifestyle by themselves. You can’t see somebody’s holdings. Some guy wearing a tee shirt, driving an old Jeep can have just as big an investment account as a guy driving a Lambo in Los Angeles. Only he could have even more because his lifestyle is so much less.
This is how less becomes more. Money doesn’t care about your taste in things.
Best of all, needing less allows for more happiness. When your needs are small, your ability to be satisfied becomes so much easier. I live in a nice neighborhood. Clean, safe. One of the better school districts in the area. But not too nice. I have neighbors that work for the cable company, post office. Maybe half are office types. It’s a very modest area. More domestic cars than imports. Know what I mean? If I saw a Range Rover on our street I would think they were lost. Based on my income, I could live in a much different part of town. But living where I do, below my means, allows me to lower my material expectations. I wouldn’t make a lot of expensive purchases on things I don’t really need because it wouldn’t fit in to my surroundings. Like that lost Range Rover driving around, I would look a bit ridiculous. My level of lifestyle stays nice and easily obtained. A 15 year old Cherokee fits right in. In fact, most of my material needs are easily paid for in cash. My lifestyle affords me happiness by being so easily attained. Better yet, if I had a financial setback, took a lower paying job, it wouldn’t outwardly affect how I live. I wouldn’t lose my cars or my house. Very little would change. Living a bigger lifestyle in a more expensive area of town, that would not be the case. I would feel the need to spend up to it. And all of it would be much more at risk if something were to happen.
Raising children in this environment has benefits as well. There is a healthier level of expectation from them as well. Holidays are not out of control with expensive wish lists. The peer pressure around what’s cool is so much less. They don’t want high end designer things because they don’t know what most of them are. And they certainly don’t expect them, because they aren’t around it. Spring Break isn’t going to Cancun. My kids won’t be driving new BMWs to high school because they would never even expect it. If we lived in a better area, that might not be the case. In some areas, all these things are practically required just to socially fit in. Kids or adults. Kind of crazy if it wasn’t fact.
All this business about less. Less drain on my money, okay. Less bad materialism, alright. I get it. But what’s the plus side? Is there anything I get more of?
This may be the best part of less. When all you need is less, you have more freedom too. If you were to pick up and move, how long would it take you? If you have an expensive house with little equity, it could take you quite awhile to sell your house at a price you could accept. And how big of a moving van will you need? The more you have, the more you have to deal with. The more things you have, the more headaches you have. Things and lifestyle weigh you down, but they also weigh you down spiritually and emotionally. When you need less, you are freer to commit to your convictions. Live the way you feel is right. You worry less about other people’s approval. Needing less, you can be more available to your community. Your family. You don’t need to make painful choices because your bills demand it. You can take more chances professionally. Explore options that would be out of the question with a bigger lifestyle. You can be a more honest, braver, creative version of yourself. By answering to less, you can are free to be more of you.
All you need is less to get started