Why I'm A Financial Minimalist: Keys To Building Wealth

Why I’m A Financial Minimalist: Keys To Building Wealth

I share my keys to building wealth in why having a financial minimalist mindset leads to a sustainable feeling of being wealthy and how you can also become wealthy, if you’re not already! 🙂

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As a modern society, it’s never been easier to have all the things we want in spite of rising wealth inequality. I cite a Warren Buffett quote about how it helps if you can be satisfied with an inner scorecard.

By living according to the values of my inner scorecard, I don’t feel compelled to keep up with the Joneses or Kardashians and I’m free to choose how I want to spend my money or allocate capital. By living below my means and delaying gratification just a little bit, I’m able to have full financial optionality later on in life to help the people and causes I care about the most. And still accomplish all the dreams I had for myself.

It doesn’t mean you can’t eat some of your cake right now, but you gotta decide how much you eat now or a little bit in the future. It doesn’t have to be all or nothing.

First, I’d like to understand what being wealthy is commonly defined as, and then we gotta define what being wealthy means to us. Some surveys show people perceive different amounts of money to define what it means to be wealthy. I don’t think these figures really matter that much because it’s not like you accumulate a certain amount of money and then you suddenly get invited to a “wealthy club.”

For me, being wealthy means I’m always in the black with my net worth. That I’m never negative, it’s important to me that I’m not in debt. The only scenario in which I’d be willing to take on some debt is if I got a mortgage for a real estate property like a house, and even then I’d save as much cash as I could to afford as much of a down payment so I have the smallest amount of debt possible.

I don’t enjoy being in debt. It’s a huge financial stressor. When I first got jobs out of college, I prioritized paying down my student loans and car loan. The day I was finally debt free, I felt this bliss of not having debt payments looming over me.

Having this freedom of not owing people a lot of money, I would hope many more people can have. There’s no feeling like this sense of freedom and having assets in the black.

I’d like us to challenge traditional yardsticks of wealth when people mention how much money they’re making. I think it’s super irrelevant for us to know what anyone’s given salary is, and if it’s six figures or others, it doesn’t matter because I think true net worth and rates of return on investments are way more important.

I cite an example from a Refinery 29 Money Diaries and what some people close to my age are up to, and whether I think they’re on track toward responsible financial decision-making or not. I think that saving up for retirement shouldn’t be thought of as a monthly expense but as something we call out and brag about instead of a salary figure or spending habits.

As an example, it would be amazing to say “I had a 20% return on my investments last year” since the stock market’s historical average rate of return is anywhere from 7-10%/year.

This changes the conversation and focus instead of people thinking it’s amazing to make over $100,000 a year, to how much of a percentage an individual is able to save of what they earned. Like saving 90% of their income per month instead of listing out all the expenses would really change how our society would feel about savings and investments.

Even though I only learned about FIRE (Financial Independence Retire Early) a few years ago, I realized in my early 20s I always adopted the tenets of this belief system and lifestyle and striven to live below my means. Warren Buffett and Charlie Munger also did this, they bought houses they could afford and happened to live there for the rest of their lives.

One of the ways in which I implement this lifestyle of FIRE is to pay myself first. Whenever I have income coming in, I put as much of that into vehicles that are either earning interest or being invested. Either way, it’s being put to work in a hopefully productive way to generate more cash in the future.

If I don’t have anything good to invest in right now, I am not afraid to hold cash. I know a lot of people say cash is trash, but to me it’s super important to have a war chest of enough cash that can serve as either an emergency fund or I can deploy into the right type of investment opportunity when it comes along.

There’s this principle in Buddhism where desire leads to suffering. All of us crave things to some extent, I’m no different. I still want things like having enough candy in my life. But I realized once I gathered all this candy, that suddenly I don’t desire it much anymore. As soon as we accumulate enough abundance, we actually stop desiring as much.

This mindset helps me save money because I’m collecting cash and put it to work, and I’m not just trying to consume it or spend it on meaningless stuff. I’m trying to make it be productive so it can lead to a better future for myself and my family and others. This is more important than the short term satisfaction of urges, but this doesn’t lead to long term happiness as much as having the financial security of that money saved up and properly invested does.

Another one of my keys to building wealth is minimizing my expenses and maximizing the value I get in anything I might purchase. When I go grocery shopping or buy other things, I am super mission oriented, and do research ahead of time. Even when I’m in the store, I evaluate the options and measure the best value I get based on the per unit prices. I don’t try to buy frivolous stuff, my life is better if I only buy the things I really need.

I’m also relentless about maximizing value where I recently splurged a little bit and bought orange skateboard wheels that will last me for the next decade and they brings me so much joy to cruise around in. This was $50 well spent in $30 for the wheels and $20 for the bearings, and it feels like an almost new skateboard with the same design I enjoy.

I’m human like everyone else and every now and then I fantasize about getting a Jeep Wrangler that has an orange coat of paint, but then I realize the hefty price tag of $43,000 is quite a lot. I reign myself back in and tell myself I can’t afford this thing in order to stay frugal and I think about how this $43K invested for 30 years at 10% per year becomes $750,000!

I’d be shortchanging my future self of 3/4 of a million dollars if I bought this Jeep. So for now I’m chilling out and vicariously admiring Jeep Wranglers that others own while I save and build up capital so maybe someday I’ll be able to afford that Wrangler and bring it on snowboarding and mountain biking trips.

Another resource that could be used to define wealth is time. A lot of people are on hamster wheels, working so hard to afford things that make them feel financially and time-wise trapped. They end up not being able to enjoy the things they worked so hard to afford because they don’t have time.

I try to minimize this by focusing my energies and efforts towards productive uses of my time like investing in myself by reading books and learning how I can be the best investor I can be. This will pay dividends in the form of me being a better person and investor eventually. I try not to invest as much of my time in being a consumer as much as being a learning machine, like Buffett and Munger are.

Paradoxically, embracing this financial minimalist lifestyle has led me to having an abundance of time and assets slowly building up that I believe leads to sustainable happiness. Don’t think that you’ll be happy when you’re wealthy, think that you’re happy and then you’ll be wealthy.

I look forward to making more investor friends! Add me on Instagram: michellemarki!