As a Certified Financial Planner, I read finance articles for fun. A rather nerdy and boring past time, I admit, but one that uncovers a multitude of recurring behaviors associated with our financial habits.
I’ve found that often times our financial shortcomings are blamed on income, or lack thereof. Yet, in general Americans are doing well in the income category.
Despite ranking 6th worldwide in terms of household wages (not too shabby), Americans only rank 26th when it comes to wealth! This comparison alone shows that Americans make enough money to be doing well (financially speaking), but are living beyond our means.
I’m not a huge fan of making generalizations such as, “Americans handle money poorly.” Our finances are as unique as we are as individuals…I get that. But, I do believe that a general improvement in all of our finances would not only benefit our own families, but benefit our communities and the world as a whole.
Here are a few rather blunt headlines from the past year or so that tell us we’ve got some work to do:
What’s The Problem?
I strongly believe the answer might be as simple as looking around you. If you are sitting in your home, look around you. What do you see?
My family started our minimalist journey about six months ago, and I’ll share with you exactly what I see. Keep in mind, we’ve already de-cluttered much of our home. This transparency shows we still have some work to do. 🙂
- A couch with decorative pillows (we actually move the pillows aside when we sit down…not very useful are they?)
- A taller table that you put behind a couch (what is that even for except to put “decorations” on and to fill up the drawers with junk?)
- A coffee table, end table, and dining room table (which doubles as our collection zone for school papers, mail, books, pictures, etc.)
- Our “reading” chair
- A wine cabinet with 6 wine glasses (and zero bottles of wine…not that useful)
- A basket by the fireplace with blankets in it (useful? I think not)
- Window decorations to cover the top portion of the blinds (also not very useful since I want as much natural light as possible)
- Three small metal pails with fake plants in them that look like grass blades
- 5 pairs of shoes by our front door
- 3 framed pictures my daughter painted when she was two (she’s now 11)
At least half of the listed items aren’t useful to us anymore, yet we continue to let them take up space and clutter our home.
Why do we hang on to such insignificance? Better yet, why do we purchase them in the first place?
Is it because the commercials, magazines, retail stores, and our own brains try to tell us otherwise? Is it because that’s what our friends, families, and neighbors do?
Get this. According to a recent Harris Poll study on behalf of NerdWallet, more than half of all Americans (54%) say financial management would be easier if they just had more money – even 41% of those making $100,000 or more each year say it would be easier with more money.
Let me get this straight. Our incomes rank 6th worldwide, yet we need more to make ends meet?
Minimalism Can Improve America’s Financial Woes
Look around you. If you’re sick and tired of living paycheck to paycheck, take inventory of everything you see when you walk in your house. And I mean everything (yes including inside all of those drawers)!
If you’re frustrated that you haven’t started that Roth IRA, look online at your bank account to determine where you’re prioritizing your resources.
If freedom from debt is a goal for your family and never feel like you’re getting closer to climbing out of the hole, look in your closet, pockets, purse, cupboards, garage, and driveway.
If the balances in your retirement accounts are lacking, look in your 2nd refrigerator, at your new flat-screen TV, and even in your storage unit.
It’s all there. All of your hard-earned money didn’t just fly out the window. It’s all right in front of you!
Did you really choose to prioritize another sweater, pair of shoes, and toilet seat cover over a rainy day fund for your family? Does Hulu, Netflix, your new iPhone, Costco, and Amazon Prime take precedence over making sure your family is on a firm financial foundation?
“You wouldn’t worry so much about what others think of you if you realized how seldom they do.”Eleanor Roosevelt
Deep down we know that materialism won’t make us happy or fulfill us long-term. The problem occurs when actions don’t line up with intentions.
The intention might be to start an emergency fund this month, but after a long day at the office eating out seems like the right thing to do. The intention might be to start a Roth IRA this year, but you found a steal of deal on the sale rack.
Yes, small choices add up over time. It’s really that simple.
How To Change
I’m not going to blame the millions of dollars spent on marketing campaigns or that we now carry thousands of advertisements in our pockets. Innovation and creativity aren’t to blame for our “gotta have it” mentality.
Blame the person you look at in the mirror for not doing better financially. It’s our own faults that we can’t tell ourselves “NO.” It’s our fault that our compulsory consumption overrides what we know and believe is better for our families.
It’s called personal responsibility.
The day you take full responsibility for your actions is the day everything will change for you.
If you think you need a bigger home or more space, you might just need to pull back the reigns on your compulsion and prescribe yourself an extra-strength dose of personal responsibility.
If you think the best way towards boosting your retirement success is a larger income, you might need to stop pointing the finger at your boss and evaluate your own actions.
The Bottom Line
Is it possible that the material possessions you’ve worked so hard and diligently to accumulate might be the biggest obstacle to the financial freedom of your family?
Is the pursuit of less materialism a more realistic approach to getting your family on a strong financial foundation?
I sure think so.
Please read more about the initial impact minimalism had on our family finances.