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8 Steps in Which Minimalism Can Advance You to Financial Freedom

Author: Lital Shimoni
Financial freedom does not depend on how much we earn but on how we manage our money. It is necessary to understand what our true desires are, to use market forces wisely and to let our money work for us – the change is completely in our hands.

Financial freedom does not depend on how much we earn but on how we manage our money. It is necessary to understand our true desires, use market forces wisely, and let our money work for us—the change is completely in our hands.

For several years now, we’ve stopped talking about our dreams—after all, who has time to dream?
When it comes to money, I rarely talk about it, I admit.
Every month, I find myself in a real battle for survival, working myself to exhaustion, yet for some unclear reason, I’m still living from one overdraft to the next.
Yes, most of the time, I bury these feelings, but eventually, at the same time each month, there’s the same old credit breakdown.

Let’s talk about economic freedom for a moment.
It’s a concept often linked to the promise of early retirement at 30. But before you start imagining yourself lying on a beach in Koh Phi Phi, let me clarify—this article isn’t about retiring early. In my opinion, early retirement is neither a solution nor a sufficient goal (hint: you’d be surprised how quickly you’d tire of lying on a beach all day). Instead, we’ll talk about financial freedom in terms of living debt-free, getting the most out of our money, reducing our dependence on it, and making it work for us rather than the other way around.

According to data from the Central Bureau of Statistics in 2019, 42% of households in Israel are in overdraft for at least one month a year. This is often due to a reluctance among family members to address financial issues, as such discussions make them feel uncomfortable. As a result, they postpone dealing with finances, which leads to a lack of control over expenses and disrupts their peace of mind.

What is economic freedom?

Financial freedom means choosing a more relaxed daily life. It’s about staying calm when you’re called into an unexpected conversation in your boss’s office, deciding who to work with (or avoid), giving your child an extra class, extending maternity leave, enjoying a romantic dinner once a week, or even deciding to fly to Paris next weekend.
Economic freedom means different things to different people. To summarize: it’s the ability to make decisions without being entirely controlled by money.

Economic minimalism

Financial independence has two sides—the income side and the expenses side. While many articles focus on increasing income, I’ve chosen to focus on expenses, a side that many of us tend to overlook.
Economic minimalism encourages us to rethink and deeply understand our needs and desires so we can maximize the potential of the money we already have.
After adopting a minimalist approach in my life, I achieved true financial freedom through a few simple steps. You don’t need to be a numbers expert to start implementing these steps. Here’s a brief explanation of some of them:

1. Eliminate debt

Debt is not a good thing—period. That’s why eliminating it should be your first priority (excluding mortgage or leverage-based debt for now). Living with debt creates constant stress, keeps us financially and mentally stuck, and, worse, causes us to sink deeper into financial trouble due to compound interest. Debt prevents us from taking risks, making sound decisions, fulfilling our dreams, and living freely.

2. Spend less than you earn

Do you live within your means? Many studies show that as our income rises, our spending tends to rise too. In the past, whenever my salary increased or I saved a little extra money, my first thought was, “How can I spend this?” I’d immediately upgrade my car, house, or phone.
Remember, the best way to give yourself a raise is to spend less. If you truly want to achieve financial freedom, the secret is to maintain your standard of living even when your wages increase.
How much should you save? The ideal goal is to save 15–20% of your income.

3. Re-examine your desires

You may ask, “Why stop ourselves? If our wages are rising, why not upgrade our house or car?” The answer is that there’s no need to withhold everything from yourself, but it’s worth re-examining your desires.
In today’s culture of abundance, it’s easy to believe that houses, cars, and other objects will bring us happiness. But in reality, we often lose sight of what truly matters and spend money on things that don’t bring real value. Before every expense, ask yourself: Do I really need this? Does this product give me value or real pleasure? You’ll find that your expenses shrink dramatically.

4. Write down your expenses

An effective way to gain control over your spending, trivial as it may sound, is to record your expenses. Write down every single expense you incur, from small purchases like coffee to larger ones like rent or car payments. Divide your expenses into categories like food, clothing, and housing.
The very act of recording and monitoring gives you a sense of control. At the end of the month, you’ll have to reflect on your spending, which will naturally make you think twice before spending more. 

5. Dive in

When we start recording expenses, many of us suddenly realize that we’ve had no idea how much we’ve been spending on food, fuel, or other categories. Worse, some people discover they’ve been making double payments to companies or services they rarely use.
Gather as much data as possible about your spending and check if you’re paying for services you don’t need. Review each expense category and ask whether it gives you real value. If it does, try calling the service provider to negotiate a lower price—you’d be surprised how much money you can save with a simple phone call.

6. Create an emergency fund (T-H-S-C-W)

Who is the richest? The answer is: the one who saves before it’s needed.
After eliminating debt and starting to save consistently, it’s a good idea to open an emergency fund. This fund should contain an amount equivalent to about six months of your monthly expenses. Why? Because life happens, and you need to be prepared. Avoid touching this money; instead, secure it in a fund that’s not easily accessible.

7. Get to know the power of interest rates

“Compound interest is the eighth wonder of the world,” Einstein said. “Whoever understands it will profit; whoever doesn’t will pay it.”
Unlike debt, where compound interest works against you, here you can use it to your advantage. Money left idle in your checking account erodes over time due to inflation. If there’s anything I’d tell my 20-year-old self, it’s this: start investing! Even if you save only $200 a month, let your money work for you.

8. Don’t give up on your passions

After cutting back and re-evaluating, it’s equally important not to deprive yourself of the things that bring you joy. Financial management doesn’t mean sacrificing everything in the present. Instead, live consciously, set healthy priorities, and silence the background noise.

The writer is Lital Shimoni Slivka—economist, consumer researcher, and owner of the blog “Other Consumption,” which creates discourse and awareness around minimalism and consumerism. Feel free to follow her Instagram channel and join ongoing discussions in her Facebook group.

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