How Minimalism and Prosperity Fit Together – Episode 606

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, we’re going to be talking about minimalism and how minimalism and prosperity go hand in hand. And minimalism has been a movement that is continuing to grow and grow. We’ve got tiny homes, we’ve got people that live nomads that live out of backpacks and et cetera, et cetera. So I don’t think most people think that prosperity and minimalism can be related. And I want to hear the argument if they can or cannot. It is a great question. And I would put it to our listeners. I’d be curious their perception on this because I absolutely love the idea of minimalism and I have a husband who is a gadget geek. So we have a home that has a lot of pieces and parts and everybody that knows Todd

[01:01] will laugh at the term pieces and parts because it is filled with black cords that go to computers and some such things. And I’m finally learning the difference between an HDMI cable and like a C whatever cable. But beyond that, they just all look like black cords to me. So it is a challenge implementing any type of minimalism. Yet I do strive for that to a certain degree. And I absolutely believe that it aligns with prosperity because what minimalism does in my mind is it forces you to pick what is valuable to you because nobody can judge how you implement minimalism. So for me, I implement it by trying to have as organized of a clothes closet as possible. Like stop buying so many clothes. You have plenty.

[02:03] And then also trying to have the public areas of our house picked up the best that I can. Again, this is very difficult with a project man. Nevertheless, one must be very grateful because he’s awesome with a honeydew list, right? So it is something nevertheless that because I have determined what my definition of minimalism is, then I can feel prosperous around everything else, number one. But number two, even the things that I choose to be minimalist about, right? So I think the gal’s name about the clean closets, Marie Kondo, she talks about having clothes in there only that you love. Well, that is a prosperous closet. If you can walk in there, feel good, see colors that resonate with you and be

[02:58] able to choose an item quickly and put it on and feel good about it, that is prosperous. Even if you’re, as so many guys are, into what are you wearing today? Black polo shirts every single day, right? Or Steve Jobs’ mock turtleneck or whatever it is. It’s joyful to you because you attached your definition of minimalism to your life and that absolutely is a prosperous step. Absolutely. We joke about the black polo shirt. I have probably five because I found and I go, okay, cool, I don’t have to make this decision anymore and then I found some other shirts and that makes life easy. So the question I have for you is where is minimalism in the financial realm? So we have obviously there’s savings tools, there are financial protection tools, there

[04:04] are other things like that. Where does minimalism and maybe we could be using the word intention, I don’t know what that would be, walk us through that. That’s a great question and it absolutely applies. So one of the biggest mistakes that I see people make is in the savings account arena or money market account arena whereby they have too many accounts and they’re chasing interest rates. So maybe it’s not that they have too many accounts at one time, but over the course of the year I met with somebody the other day and they had 11 different 1099s because they had moved their emergency fund literally almost every month seeking a higher interest rate. I know, insane. Think about the time, you know, even if it’s online and it’s 10 minutes or

[04:56] whatever, it’s usually not that simple. And so here they generated, you know, maybe $100 or something, more interest than they could have if they had just left it alone. That is not a good use of time or mental focus because the actual account may have only taken 10 minutes, but you know there was research in there to get it figured out which bank they were going to go to or brokerage house or what have you. So the space of having your emergency slash opportunity fund minimalized, meaning you pick one and you stick with it, is so super valuable. And then additionally, we’ve talked about using whole life insurance and the cash value that grows at mutual life insurance companies as that opportunity fund storage space for dollars that are going to be over and

[05:51] above the base. So, so helpful, so freeing, so usable your entire life. I mean, it’s called whole life for a reason. You purchase it and you utilize it your entire life. What financial product do we know of that you actually get to do that with other than whole life? Like there isn’t one. People’s 401Ks are moving all over the place these days. People typically move homes. I think the statistic is seven times in a lifetime. Plus you’re going to refinance one or two times in addition. So you’re looking at 10 different mortgages in your lifetime. Most people move their emergency fund every two or three years or sometimes like I said, 11 times in one year. And this is not helpful or productive.

[06:46] So attaching the ideas of minimalism to your personal finances lets you do my favorite word in the world, which is optimize. It lets you optimize your personal finances. And what optimize means is to make most efficient. A lot of people are seeking maximize. That means to get as big as possible. These are literally economic terms that can be applied to our own personal finances. And what we want is optimization. And this is what we do inside our pledge membership is help people make sure that all of their dollars are optimized. So let’s unpack the belief in the language of optimize and maximize because there is a prosperity way of looking at it. So at least for me, when I hear those two, when a person leans too far down the maximizing,

[07:49] they can often go to the point where they’re creating a win-lose situation. Doesn’t mean that’s always the case, but how is it that you view that? Where do you operate in that area? Well, I have seen so much money lost in investments. And it’s because people are seeking maximize. They want the biggest rate of return they can get. They want the largest account value that they can grow their wealth to. And all they focus on is getting up the mountain, right? The growing of the wealth, the building, the accumulation, like we talked about on a previous podcast, stacking it up for later. They don’t think about how to get down the mountain. And I don’t know about you, but, you know, a trip up to the top of Everest

[08:40] without a successful descent is not a successful trip. If you cannot get down the mountain with your money, meaning if you cannot get to the end of your life, having the dollars necessary from a cash flow standpoint to live your life and whatever you want to do as it relates to legacy. And we must remember that legacy is what you leave in them, not to them. But the fact is some people want to leave and will leave dollars to the next generation or to charities or what have you. But if you don’t have those two spaces optimized, then you will fall into loss. And you’ll be seeking a win. But this is what nobody ever talks about is the extreme amount of money that is lost because they were seeking maximum.

[09:35] Yeah, you know, what a good point of how much money has been lost because they tried to maximize everything. And then what is the mental loss that you’ve seen people go through when they’re trying to do that? What do those questions look like? What does that conversation look like? Unfortunately, it can be as bad as suicide. I mean, there are people that have committed suicide because they lost money trying to maximize. Now, thankfully, it’s not that extreme for most people. Nevertheless, I mean, can you imagine the conversation? Some of our listeners have probably had to have it. Hello, significant other spouse. I just found out that our 401k account is gone, lost, nothing. And it just is so sad and scary.

[10:21] And you can imagine the mental space that causes somebody to be in. It’s heartbreaking. And it’s all because of the seeking of a higher rate of return. We forget that the definition of risk is the propensity for loss. It’s not the opportunity to hit one out of the park. And that’s what everybody talks about, is the opportunity to hit one out of the park. But nobody talks about the loss that can sometimes occur from seeking that home run. Yeah. You know, two days ago, I saw one of those bathroom type of quotes. You know, there’s like quotes on the wall on a picture frame. And it said, happiness is somewhere in between not having enough and having too much. I thought, that’s pretty good. You know, it was one of those decent ones.

[11:14] And it makes me think about our conversation right now because we’re talking about minimalism. And you’ve got a husband that loves gadgets, but is not a pack rat house. But he has the gadgets so that he can fix the problems in front of him and work on things. And for you, you’re happier with less. And for the financial things, you’re optimizing for the things to reduces stress, reduces friction and optimizes the situation. You’re not maximizing. You’re not playing a game where you’re trying to beat someone else. You’re trying to optimize. So those pieces that you just mentioned, we’ve now been able to tie in minimalism with prosperity. Do you have any parting words of pulling that together for our audience so that it

[12:11] can help listeners to adopt more of that in their lives? Well, I really think that whole life insurance is a combination of minimalism and prosperity. And it is exactly what you stated in your quote. It is that middle ground between not having enough and having too much because cash flow issues don’t go away. They just get bigger zeros on them and having to deploy money. Like I have clients that called the other day, the gentleman’s getting a substantial bonus five and six times his annual income. And so he’s got decisions that he must make. And of course, the tax tales wagging the financial dog in a big way as he goes through his decision process. And it is not an easy time. He’s got to figure out how to deploy this money.

[13:05] And a lot of families could look at that. Oh my gosh, I would love to have that problem. Well, yeah, he is frustrated with that problem right now. And so this is the perfect space where at least at a base level, you have dollars dialed in that are optimized. And whole life just makes that crazily simple. And that is a definition of minimalism. Oh, I like that. All right, listeners, you need to set up some more minimalist type of financial instruments. Reach out. Hello at ProsperityThinkers.com. That is an email address special for the podcast. I guarantee the approach is not going to be complicated if it’s starting with a savings or if it’s starting of protection or whatever else. And you’ve helped figure out how to optimize that.

[14:01] So Kim, very helpful. I appreciate that. And we’ll be ready for another fun episode next week. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.