My Journey in Personal Finance and Minimalism

04/15/2010

Minimalism and personal finance have helped me re-evaluate my life in a different light, set more ambitious goals.

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When I first graduated from college/university almost 2 years ago, I had somewhat of a quarter-life crisis.  And even though it was scary for me, I knew that I wasn’t alone because my friends felt the same way.  We talked about it, and reassured one another that this must be a phase that all post grads faced.

For almost 5 years, the main (and maybe only) goal was to complete our degree. We go to classes, take notes, do assignments, study for tests, write exams – all to pass the courses as best as we can and move on into the “real” world.  We are evaluated and measured based on grades and any form of work experience we can get our undergraduate paws on to give us a step up from our colleagues to nab a great job.

Now that we are in the “real” world working at our “real” jobs – there is no longer just one main goal.

In fact, if we didn’t want to make further goals, we could probable cruise through the rest of our life.  Just following the crowds, with just enough effort to get by but maybe not excel.

But that’s not me.  I want to excel!  Most importantly, I wanted to excel at life.

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I want to be able to pursue my passions of traveling and tasting the world (they go hand in hand, no? 😉 ).

I want to be able to grow a garden, and cook yummy food from it.

I want to be able to enjoy the outdoors – whether it be taking a walk, canoeing or camping with my loved ones.

I want to be able to help my parents enjoy their retirement after spending so many years sacrificing to raise my sisters and I.

I don’t need to be rich, but I don’t want to have to worry about making ends meet, either.  I want financial freedom.

But how do I do this with only two (2) weeks of vacation a year?  My salary is modest, but I won’t be a millionaire anytime, soon.  And more importantly – it will be another 40 years before I retire?!  I have to wait 40 years before I can do what I want to do now?  Would I even still have energy to do all that I want to do right now?

So for a good few months after I started working full time, I contemplated this topic. What now?

I had some student loans I needed to pay off, and after about 6 months of work, I was able to get that settled (about $8,000).  Then, I was back at square one.   Now what?

I was also super surprised that most of my money went to paying off my loans and living expenses.  I did not live extravagantly or spend frivolously (or so I thought).

Similar to engineering school when we analyse data, we can only properly analyze something when we know all the inputs, outputs and variables.

In terms of my finances, I knew what I had coming in, but I had no idea what was going out.  I had a rough idea, but I didn’t have an exact figure – or even a really good ball park figure.

Now, I would never go out on a shopping spree, but I did go out with friends, cottaging for the summer, join sports leagues, occasional shopping, etc.  What I learned was that without knowing how much money is going out, I don’t know how much money I am working with.

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I could continue on this route of earning a salary and living day to day, but then what?

I felt so lost.  I felt that my next goal was retirement and that was still 40 years away.  I felt like I needed a reportcard to tell me how I was doing between now and retirement – but I didn’t know what it would be in th form of.

Of course, feeling lost doesn’t only present itself in one aspect of one’s life.  But my personal financial status was something that I could rein in and control.

I started out by tracking my expenses.  Every single one of them.  Yep.  $4 sandwiche from cafeteria – that went on as an expense item.  Even though this wasn’t a perfect method, I tried my best.  After  a few months, I realized that even though I wasn’t a “frivolous” spender, I needed to be completely aware of where my money was going.  Little things – such as $4 sandwiches or a new sweater – was adding up each month.

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After I tracked my spending for a few months, it was a lot easier to come up with reasonable budget that would allow me to spend money on the things I enjoy, and still save some for the rainy day.

It may sound weird, but this step was the first in me taking charge of my life. This was my “ah ha!” moment.  I felt like I was in control, instead of waiting for the credit card bill at the end of the month and crossing my fingers when I check my statement.  Don’t get me wrong, I’ve never had credit card debt, or spent more in a month than I could afford to pay – but I also didn’t know exactly what I was paying for.

When I started to save money, I opened up an ING account and started to separate my checking account and saving account.  Before, I only had everything go into the checking account.

I started to read about personal finance and investing.  I started contributing to my RRSP – both through ING and my company plan.  I learned the differences between different vehicles for saving – such as mutual funds, index funds, ETF’s, tax-free savings account, individual stocks, GIC’s, etc.  After getting through the initial jargon, I could ask myself how this product would help me – and determine if I wanted to incorporate that product in my finances.

After I had a pretty good grip on my finances, I started reading more about minimalism.  And I realized that these two topics go hand in hand. Similiarly to how I approached my finances, I realized that I can’t be truly happy with myself if I didn’t know what I had.  I’m talking about clutter in the bathroom, and my room.  Even though I didn’t have a lot of stuff, I realized that I didn’t even need all the stuff I had then.

I can’t begin to describe this exhilarating feeling of lightness when I cleaned out my bathroom for the first and second time (coming up in another post!).  There were clothes in my closet that I haven’t not worn in years – and yet they were there.

Why not give them away to someone could enjoy it?

Why have a bunch of mediocre clothes (that I may or may not have bought on a whim when it was on sale) when I could pare down to essentially just the stuff I love?  (Note: this did not mean go shopping for new clothes! 😛 )

I started asking more questions about the things that I used to by just because.  I questioned my toiletries – such as shampoo and cleansers.  I questioned my cleaning supplies – such as window cleaners and detergent.  I questioned unnecessary appliances – I haven’t had a toaster for 6 months, do I really need one now?  I questioned my food – how much salt or fat is in this, can I make it myself healthier and yummier?

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I don’t have the answers.  And as I answer more questions, more questions come to mind.   But that’s what so great about being on a journey. I get to find the answers for myself.  I get to choose how to live my life, rather than have society dictate what makes me happy.

Both personal finance and minimalism have helped to get me back on track.  It has helped me make some short term goals that will eventually help get me to my long term goal – of being able to enjoy my life and share it with the people around me.  They have helped me realize that now comes the FUN part – I get to set my own goals and set the rules of how I evaluate myself.

It’s funny because after I started to dig myself out of the “I-don’t-know-what-to-do-with-the-rest-of-my-life” hole, I started to feel more confident about other aspects of my life.  I started dating a really awesome guy (BF!) who also shares in my beliefs, and I started to really care more about the work I was doing.

In the meantime, I have become a more informed consumer.  I am more conscious of what I want to introduce and keep in my life.  This is definitely making my life more interesting and satisfying – in working towards my goal of using both minimalism and personal finance tools to change my life and reach financial freedom.

How about you?  What gives you a motivation to continue with every day?  What are your dreams and what vehicles do you use to get there?

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9 Responses to “My Journey in Personal Finance and Minimalism”

  1. Jersey Mom Says:

    First I want to say that for someone who is in her mid 20’s, you are doing extremely well! You are more mature than most in your age group. I have never been in debt (except for the mortgage). Instead of working to pay off debt, we use our income to save & invest. The earlier you begin, the more you will have, and the sooner you’ll become financially independent.


  2. What a beautiful post!

    I have two forms of motivation: short term and long term. In the short term, I want to own a house. This drives my day to day financial decisions and seeing that it is not only close at hand, but realistic helps me stay motivated. In the long-term, I want to be wealthy. Not just comfortable, but wealthy. I want to be able to send my parents on a honeymoon (finally), I want to donate to all the charities that have helped me get to where I am now, I want to start a non-for-profit that helps immigrant communities in my area. I want to essentially give back to various groups without having to worry about breaking the bank – for me, this is the clearest definition of wealth.


  3. @JerseyMom:
    Thanks 🙂 I think that it’s so important to be financially literate.

    @InvestingNewbie:
    Those are some great long term (and short term) goals! I really like the idea of giving back to the community – especially the immigrant community. There are so many obstacles that my parents faced when they came to Canada to start a new and better life.

  4. Kenny Says:

    My dream is to achieve financial freedom and do whatever I like, giving back to the community by doing more environmental work.

    Save the earth!

  5. fern Says:

    I guess i would have to say that financial freedom is also my goal, or put another way, early retirement, which for me, would be age 60. I’m 10 years away from that and I’m doing well, except that i’ve been out of work for 6 months. I’m making ends meet by paring down my already frugal lifestyle, but what is really frustrating about being jobless is that it’s put my plans to pay off my mortgage in 6 years on hold, and my early retirement will also be harder to come by.

    Like the first reader said, you sound very wise for someone so young! Good for you!

    For the record, I’ve been tracking my expenses….down to the penny….for over 15 years now. It’s an ingrained habit, and believe it or not, it’s something I really enjoy becus at the end of each month, and then again at the end of each year, there’s so much insight I gain from looking at my numbers and my spending, especially when compared to previous years. It tells me whether I’m on track, whether I’ve been successful in saving, etc.


  6. @Kenny:
    That’s a great dream!

    @Fern:
    I am helping my parents plan out their early retirement (at age 60), and it gives me a lot of insight into how my parents how lived a frugal lifestyle to reach this point. They have been tracking expenses for – I don’t know how long – but they can tell you exactly how much they spend on diapers in May, 1993.

    I am not at that level of tracking my expenses – in fact, I have slacked off the last few month. But I love analyzing how I spend my data (I like putting them in graphs and charts), and evaluating if I am spending my money in line with my vision and ultimately, my goals.

    I wish you all the best in saving for your early retirement and paying down that mortgage!

  7. eemusings Says:

    “I want to excel at life.”

    That’s such a great way of putting it.

    I want to be able to buy good food, to eat out, to go to concerts, to travel and to own my own home.

    You’re so right that once you leave school, you really can just coast for the rest of your life. (Well, you can coast right through school, too, if you’re so inclined.) And without goals, I can see how easy it would be just to let life take you wherever it may.


  8. Hmm thanks for sharing, atleast I found it as an intriguing read


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