This unofficial holiday is celebrated every year on 12th July and pays homage to American philosopher Henry David Thoreau. An advocate of simple living, and born on this day in 1817, Thoreau was an abolitionist, a writer on nature and natural history (arguably one of the earliest environmentalist theorists), and part of the transcendentalist movement in the USA.
This holiday encourages people to embrace a pace of life and way of looking at the world that is unfettered by superfluous external influences. It encourages you to embrace simplicity. In terms of your finances, there are great benefits to taking a look at how to live and think more simply.
Buy only what you need
This sounds so simple, yet in a society where the average debt per person is running at around £8,000, it’s clearly not as simple as it seems.
The first step is to define the word ‘need’. What is need to you, and what exactly are you prepared to spend on each thing that you ‘need’. Weighing in here as the author, I have listed all my absolute expenses for each month. These are things that I need to spend money on.
- Mortgage payments
- Food shopping
- Heating and other bills
- Travel card
- Mobile phone
As you can see, I have added my mobile phone as a need. I live far away from my family and being able to communicate with them is vital for me. This is a personal choice however, and for you it may not be an essential.
All other spends such as clothes, shoes, dinners out, seeing live music; they all count as extras. Some months you may want to indulge and buy something that you want and don’t need (who’s to say you can’t?). However, by distilling the money you spend each month into needs and wants, you simplify the way you approach your finances and it becomes easier to say no costs that you once thought were utterly essential.
Stop ‘keeping up with the Joneses’
There never were any Joneses; they don’t exist. There’s no one to keep up with, plain and simple. Breaking this habit can be harder than you think though. Comparing yourself and your life, including your material wealth, is a well-documented phenomena, especially in the modern age of social media.
In fact, research of Swedish Facebook users found that, “when Facebook users compare their own lives with others’ seemingly more successful careers and happy relationships, they may feel that their own lives are less successful in comparison.”
Unpacking the psychology of social media use and its effects on individuals is obviously a lengthy and complex process. However, in terms of your finances, don’t allow seeing what others have make you feel like you too should have it. Maybe they earn more money than you, maybe they got in on sale, maybe they are just posing with it for social media and don’t actually own it. Whatever the reason that someone else has something that you don’t, it doesn’t follow that if you get that something too then you will be happy and fulfilled.
Putting yourself under financial stress, or even worse, getting yourself into debt, in order to buy material wealth that you don’t need simply because others have it is not a recipe for financial success. It comes back to the point above. Once you have assessed what you actually need to spend, then stick to it. Understand the difference between what is optional and what is essential and don’t let yourself be swayed by what other’s have. Simplify your life.
If it’s not there, don’t spend it
Another top tip for simple living and simplifying your finances. If you don’t earn it, then don’t spend it. If you routinely spend more than you earn you will find yourself in a vortex of debt, credit cards, and loans, that it very difficult to escape.
The key to simple finances is to only calculate what you can spend with the money you actually have. Don’t factor in what you could make on your investments, or what you should be earning in interest from your savings account, or any other hypothetical money that may be floating about. By doing this you will be able to make a budget that you can stick to, and put away savings that you can afford.
By saving little and often, such as you do with an Oval Wallet, you avoid the stresses of trying to go without or finding the money from other sources, and instead build up a solid amount of savings in a manner and at a pace that you can sustain.
The only money that counts is the money that’s really there.
I will leave you with a final thought on wealth and simplicity from Thoreau himself:
Wealth is the ability to fully experience life.
Henry David Thoreau