Minimalism seems to be everywhere these days. From books to blogs, there is no shortage of resources and opinions on this popular movement. However, to many people the word still sounds barren, boring and extreme. Nobody wants to sign up for a program that bans having nice things!
Lucky for us, minimalism is not all austerity and bare walls. The key ideas behind this movement can actually help you build a better life in retirement.
Let’s begin by defining what minimalism actually is. According to Joshua Beck, a WSJ bestselling author of The More of Less, minimalism is about an intentional focus on what you value, combined with intentional removal of distractions. As you will see, this thinking can have a positive impact on anyone’s life – not just those who are young and single.
Here is how it can work for you.
1. Know what is important to you about retirement.
The media sells us an airbrushed idea of what successful retirement looks like. Close your eyes and you can see the commercial picturing gorgeous silver-haired couples playing on sailboats at sunset. If only you had a few million dollars and the right investment advisor, you could be there with them! Right?
Wrong. Sailboats are not a universal prescription for joy and fulfilment in retirement. So, begin by asking yourself: what is most important to you? Perhaps you want to travel to California every summer to see your grandchildren. Or maybe you want to buy an RV and visit every National Park there is. Focus on what is true for you, and let go of that fake commercial.
2. You need a budget.
Let’s be honest – money is a big part of what will create the control and the freedom to do what is most important to you. However, it’s possible that it takes less money than you imagine. This is where the ideas behind minimalism can help you!
Begin with creating a budget. If the idea of a budget sounds terrifying, use this as a sign that you will benefit tremendously from being scared and doing it anyway. You don’t need fancy computer programs or complex formulas. Pen and paper works just fine, although you can get as elaborate as you like.
Once you have a budget, track your expenses closely. I recommend doing this for at least 3 months, so that you can capture all regular bills and infrequent expenses. Do your best to detach from judgment! Instead of beating yourself up for that pumpkin spice latte from Starbucks, just write it down and move on.
After you have a few months of tracking under your belt, take an hour or two to see how you did. Here is a simple formula for planning a peaceful retirement.
If you are already spending less than you are making, great! If not, the next step will help you get there.
3. Challenge big expenses.
The most effective way to make your finances look better is not by cutting out life’s little luxuries, but by challenging your biggest expenses. Take a look at your monthly tracking sheets. Where does the bulk of your money go?
Whether your biggest drag is mortgage, health insurance or car payment, take note and push yourself to think of creative ways to make that expense smaller. I do not recommend going without health insurance, and eliminating all housing expenses may not be a reasonable goal either. What about paying off your mortgage quicker, selling your home and renting, or shopping around for a health insurance that gives you more value for the dollar?
As you look at your monthly expense flows, keep in mind that your goal is not to create forced austerity today so that you can enjoy retirement 10 years from now. It is about creating functional ways to have what you need and what matters to you, both now and later.
The fewer moving parts your plan and life have, the greater are the chances of things going right. Simple solutions are best, so whenever you feel overwhelmed by the finances go back to the problem you are trying to solve.
Here is an example. At the height of the Cold War and the space race, NASA ran into a problem. It could not get ballpoint pens to work in zero gravity. Hundreds of hours of research (and $1 million) resulted in the invention of the Fisher Space Pen – a high-tech solution of tungsten carbon with a pressurized ink cartridge that could write in any temperature, upside down and even in the water.
What did the Russians do? Forget about a million dollars and obscure materials. They just used a pencil. So, keep your eye on the actual problem, and build simple solutions.