3 Powerful Lifestyle Changes to Improve Happiness, Health, and Wealth
Financial freedom is a journey that includes multiple components. It can be easy to focus too much on making more money. The problem is we are too susceptible to the hedonistic treadmill, which is the tendency to increase our spending on things we don’t need as our income increases. This is a problem because true wealth is not how much money you make but how much you have in assets compared to your expenses. This is referred to as your net worth.
In this modern era, advertising constantly surrounds us. We are exposed to marketing on television, while browsing the Internet, on billboards as we drive, and even on the clothes that people around us wear. It is impossible to escape and advertisers spend a lot of money researching the most effective ways to influence us to spend money on their products. We frequently fall prey to their tactics and spend money on things that we think we “need” because it will make us happier or sexier or simply because everyone else has it.
However, buying more stuff doesn’t make any of us truly happy. There may be a brief feeling of euphoria before we lose interest and move on to wanting a different thing that will supposedly improve our life. We spend money on fancier places to live, bigger houses, nicer cars, smartphones with more features, beauty products, entertainment, etc.
But once the excitement of that new thing passes, we realize that it is never enough. We always want more. We also find that spending more and acquiring more things brings with it more problems. More things to occupy our precious time, to worry about, or to keep clean.
So, how can we keep in control of our hedonistic treadmill when we are being constantly bombarded by advertisers trying to convince us that we “need” some new product or service? The key to keeping control of your spending as you become more successful is to develop habits and personal guidelines for yourself now. Habits are powerful and will help you resist outside influences.
Developing awareness of what you really need and what makes you happy will motivate you to limit spending and focus your resources where they need to go to meet your financial goals. In order to be most effective these habits and guidelines should be tailored specifically to you.
There are several lifestyle philosophies that can help you get started and provide inspiration for developing your personal system.
The lifestyle philosophy of minimalism is fairly simple but encompasses a wide variety of areas. Minimalist reduce the things they own to the bare essentials of what they need and what truly brings them happiness.
There are no hard and fast rules about what this means. Some minimalist live with owning less than 100 items while other minimalist just reduce the unnecessary things in their homes. Some learn to live without owning a car or a house. Others focus on minimizing time spent on work and things that make them stressed or unhappy.
While minimalism looks different for different people, there are a few central tenets:
1. Get rid of things that you do not need or use
2. Strive for an uncluttered, simple environment and life
3. Let go of your attachment to material things and doing too much
4. Invest in quality over quantity
Benefits of minimalism include spending less money, reducing stress, spending less time cleaning, maintaining, and buying stuff. Minimalists say that they are happier and more focused in their less cluttered life. They have more time and energy to spend on the things that are actually fulfilling such as spending time with loved ones.
In addition to reducing stuff, minimalists work on being less busy. With reduced spending they often find that they do not need to worry as much about money and gear their efforts towards working less and spending time doing work they enjoy.
To learn more about minimalism, check out:
Need help with decluttering? We highly recommend this amazing book:
Zero waste is a philosophy of reducing the amount of trash you produce and limiting your exposure to toxins. This lifestyle is geared towards reducing our harmful effect on the planet while improving our health and happiness. The catalyst of this movement and main guru is Bea Johnson. She outlines the 5 rules for living a zero waste lifestyle:
1. Refuse what you do not need
2. Reduce what you do need
3. Reuse what you consume
4. Recycle what you cannot Refuse, Reduce or Reuse
5. and Rot (compost) the rest.
She suggests following these in order. Being truly zero waste is not possible (even for Bea Johnson) but instead it is a goal to strive for.
Zero wasters practice first not buying things that they do not need. While they are not specifically against buying things that they want, they propose that bringing stuff into your home should be done thoughtfully rather than automatically. This includes accepting gifts as well as buying things.
Next, they advocate for simplifying and switching to reusable alternatives as much as possible. This typically involves replacing store bought products containing toxic and synthetic ingredients to all natural homemade products. The goal of this is to limit the use of harmful products to improve the health of the planet as well as our own physical health. Zero wasters often make their own cleaning products and eat whole foods rather than processed.
This lifestyle philosophy creates habits in which spending money is drastically reduced over time. Switching to reusable products often comes with a larger upfront cost. For example, switching to a reusable safety razor can cost $30-60, which is far more expensive than a disposable razor. However, this is a one time cost compared to buying disposable over a lifetime clearly demonstrates significant long-term cost savings. Bea Johnson calculated that her living expenses have reduced by 40% since going zero waste.
This philosophy tends to be more extreme and restrictive than the previous philosophies discussed above. Unlike zero waste and minimalism, it does typically have a set end goal. People who dedicate themselves to early retirement learn strategies to live frugally and retire before the typical age of 65.
Mr. Money Mustache retired at age 30 and is the leading guru on this topic. He advocates for living off of 50% or less of your income and using the rest to first pay off all debt and then put the rest in investment accounts.
The general steps to early retirement:
1. Reduce expenses
2. Get rid of all debt
3. Determine your freedom number
4. Save up enough money in investment accounts to meet the 4% rule
There are tons of blogs and books about how to reduce expenses. Some examples include buying a smaller house or switching to an apartment, getting rid of a car, learning to shop at thrift stores and using coupons. This may also mean getting additional sources of income through side jobs or creating an online business.
Once you have achieved a frugal lifestyle and paid off debt, you can determine the amount of money you need to live on. This is often referred to as your freedom number and it varies amongst individuals based on their needs. Mr. Money Mustache suggests this number can be determined by multiplying your annual spending by 25.
This allows you to follow the 4% rule, which is considered the safest amount of money you can withdraw from your investment account annually without depleting your account. Abiding by this rule means that your investments should earn an interest large enough to replace the amount you withdrew. This will provide you with enough money to live of off for the rest of your life without having to earn more income.
You may have noticed that these lifestyle philosophies share some commonalities such as resisting consumerism, reducing overall spending, and focusing on a goal that will increase happiness in the long term. They all involve varying levels of short-term sacrifices and adjust periods. However, practicing these lifestyle philosophies provides a structure for wealth building and maintaining good money habits.
It is important to remember that there are no hard and fast rules. Being overly strict about following these guidelines can be counterproductive if they are not sustainable or do not fit your values. Instead of following any one person’s rules too restrictively, learn from these philosophies and incorporate what works for you. Be patient and remember that these philosophies are a process not a product.