Topic: saving vs investing - minimalism vs frugality - page 3. (Read 392 times)

Good topic, and useful. All of the following is from personal experience It's very simple, here are 3 steps to achieve your goals
1. saving everything and everywhere is a bad way. The good way is balanced, reasonable consumption
2. Analyze your spending, choose those that are really "empty", convert them into investments. To do this, keep a record of income, expenses and cost items.
3. If the income is still "eaten up" and there is no opportunity to save/invest - look for an additional/new channel of income.

And remember - if by old age we do not provide ourselves a quality existence (savings + passive income) - no one will provide it for us!

I like how you cleared out the concept of minimalism and frugality. Many people think that in order to have some money for savings or investing, you have to literally deprive yourself of pleasure and other good things in life. You just have to keep things at the minimum and only spend on what you need to spend. I started doing this a couple of years back and my financial state is in a much better state now, able to afford a lot of things but choosing not to because I'm focused on building up my investments for my early retirement.

It might be different with individuals who are providing for their family, but eventually they will have the capacity to save at least a little of what they're taking home from their salaries and start from there.

savings infers the word to save(rescue).. so only think of savings as the rescue fund. not the wealth creation fund. then it allows you to then treat savings as the small pot of money for rescue, and when you have that rescue buffer to save you in dire times. you can then stop funding the rescue fund and start investing the income excess excess

as for starting a business. no one on low income should jump big. always start low, test the waters and grow with prosperity
EG
if you want to cook food and serve it. dont envision needing $200k to buy a restaurant. start small, test recipes, see if the local populous even demands what you have to offer.  offer food delivery from a "ghost kitchen"(your own home that links to uber eats for delivery only)
have a food stand at a country market or street market. gain a loyal customer base then expand using the profits

to many have the luxury maximalist mindset of wanting to open a 5 star restaurant as first foot into the industry

truly plan your money. the minimalist way first. do you really need a fully furnished $200k restaurant lease before you have even let anyone taste your food to test your recipes. or could you start small.. perfect your offering. then expand

While I agree that savings is a must, I don't think savings is only designed for the rainy days. Savings could actually be the necessary start for investment. To many people, investment is a luxury they cannot afford. But they can actually regularly save little by little until it gets significant enough to be invested on a small business or whatever.

Also, saving has become a short-term thing because we have a kind of money that is not worth keeping across time. The current monetary system makes long-term saving pointless. However, it could be possible with a different currency. Bitcoin, for example, might make saving even inter-generational.

I'm with you on the minimalist lifestyle.

in many economic topics of this forum i see many people have misconceptions..

saving vs investing
many quote how savings should be avoided and people should throw every penny into investing due to inflation.. where investing earns more
let me clarify

saving is not a long term thing. not a wealth creation thing.
saving is a temporary play to only save a small amount to literally SAVE people from incidents of rainy day, emergencies where they need quick access to money. to literally SAVE you from having to resort to selling investments at a loss or using debt in an emergency.
you are not suppose to put all wealth into savings,

the gameplay is simple.
if you income is say 2000units of any currency(denomination is not important its just a demo)
and say
housing was 800 (40%)
groceries was 400 (20%)
bills was 300(15%)
leaves you with 500(25%) of excess

for 3 months save the 500 to get a rainy day savings pot to cover a month of bills and essentials
then after that put 500 into investing. knowing if your salary doesnt arrive on time or you lose a job and takes you a month to find ANY other job/start getting social security(unemployment). you dont then need to extract investments or use credit cards/debt. because the savings will save you

as for the inflation concern. a 4% inflation devalue of 1500 is only 60. by which any time over the year you can add in 60 to top up savings to equate to next years rate of bills
EG
5 a month of the 500 excess goes to savings to keep savings at a rate adjacent to rising bills cost. so you can still invest 495 until you get a salary pay rise that the counters the depletion
so the fears and misquotes of people suggesting not to save at all and throw everything into investment are not as well guided as they seemed
saving will save you from investing badly and save you from panicking in dire times to not need to sell investments at a loss,
in short savings will save you

minimalism vs frugality
alot of people think to save/invest requires being super frugal, live under a rock like a hermit and never spend. this is not the case
instead develop a minimalist lifestyle.
decide what actually important to your life. what things serve a purpose/function, gives lasting memories.. and spend wisely.
do you need all the clutter of dozens of branded shoes, clothing, household luxuries/decorations.
or can you find the minimalist unbranded options that serve a regular function to only need a couple items

develop it further. do you really need the lavish new luxury car, or just a minimal model that gets you from A to B
do you really need to pay premium transport, carry 5 luggage bags charging extra at airport, containing every item of clothing and gadget your house had. and then sitting in first class on a plane... or can you just put a weeks worth of underwear and shirts/pants into one bag and sit in economy.

frugality of hermit crab living can be a short term aid. but at somepoint going super frugal fails itself because living on "survival" mode too long is a mental break that cant last. the stress of surviving and not living will become its own downfall which usually ends up with people splurging in excess to get that feel good feeling to regain sanity.
so instead be wise about your spending. note wasteful. make purposeful decisions on things that make your life have good long term feelings/memories. and cut out on the wasteful stuff you usually dont care about a week after purchase