Have you ever wanted to stroll while the other rats in the race pass you by? We live in a world consumed with consumption, but many people are learning that pleasure through shopping is a losing proposition and that there is more to life than the latest gadget or the largest SUV. These people have decided to simplify, or “downshift”, their lives – choosing to work less and live more.
According to a November 2004 poll conducted U.S. News & World Report, within the past five years, 48% of Americans downshifted their lives in one of the following ways: cut back their hours at work, declined a promotion of failed to seek one, lowered expectations for what they needed out of life, reduced their work commitments or moved to a community with a less hectic way of life. If voluntary simplicity sounds good to you, do it! Just don’t do it today. Before making such a major lifestyle change, you will need to carefully consider your source of income and your expenses. Read on as we show you how. (If you’re not ready to go all the way just yet, check out Rejuvenate Your Life And Career With A Sabbatical.)
What Does It Mean to Simplify?
This concept is often traced back to author and philosopher Henry David Thoreau and his retreat to Walden Pond. The writer lived on the shores of Walden Pond for two years in the mid-1800s, isolating himself from the bustle of society in order to gain greater perspective on life. His exile gave Thoreau insight into the value of nature, solitude and contemplation and allowed him to distance himself from the consumerism and materialism that had already begun to dominate American life.
In modern life, the move to simplicity is often fueled by a general lack of fulfillment with the daily grind. Working to pay bills simply isn’t much fun. Spending all of your time either trying to earn money or worrying about money is both physically and emotionally draining. By downshifting, you spend less time working and more time enjoying your life. It’s the ultimate work-life balance decision.
Only the most self-centered among us would rank owning a luxury car ahead of spending time with our children, yet many people unconsciously make that choice, working long hours to pay for their cars and spending little time with their families. The same goes for fancy clothes and expensive homes. Trading the trappings of wealth for less stress, more rose-smelling time and the opportunity to live more and work less is the whole point of simplifying. It’s the things that money can’t buy, such as less stress and time with friends and family, that motivate these downshifters to give up conspicuous consumption. (To learn how consumption is crippling household finances, see Stop Keeping Up With The Joneses – They’re Broke.)
First, Get Your House In Order
If you don’t already have a good grip on your finances, you’ll want to put some serious effort into figuring out where your money goes. Once you realize where your expenses lie, your goal will be to minimize them. The whole point of living simply is that the need to earn less money enables you to spend less time at work. (For a head start, check out The Beauty Of Budgeting.)
Let’s look at some of the easiest places to make cuts:
- Housing Costs – One of the most obvious ways to save a significant amount of money is to literally get your house in order. Living in a less expensive place is an easy way to simplify your life and save money. You’ll save money on utilities and heating, and less space means less junk is needed to fill the space.(To learn how to make the shift, read Downsize Your Home To Downsize Expensesand McMansion: A Closer Look At The Big House Trend.)
- Transportation Costs – Transportation is another big expense category. Car payments, car insurance, gasoline, repairs and maintenance all cost money. To minimize transportation expenses, downshifters don’t drive fancy cars. If they own a car at all, it’s a solid, reliable, affordable model. (For more on picking the right car for your budget, see Hybrids: Financial Friends Or Foes? and Wheels Of A Future Fortune.)
- Luxury Items – While houses and cars are notable big expenses, the smaller costs of everyday living are important too. Downshifters don’t spend money frivolously. Clothing and furniture should be chosen for comfort and durability, not style. Impulse buys are to be avoided. Money is spent carefully, as many downshifters are seeking a less materialistic lifestyle. Health and peace of mind take precedence over the things money can buy. Exotic vacations twice a year are traded in exchange for additional free time all year long.
- Interest Payments – Credit cards should usually be tucked in a drawer and purchases made with cash. Money spent on credit card interest is money wasted, so purchases should only made when they can be paid for on the spot. If you are responsible enough to always pay the balance on time, then a credit card may still be an option – after all the card company is essentially giving you an interest-free loan – but if you feel temptation may force you to spend more than you can afford to pay off all at once, then it is wise to forgo credit cards all together. (For additional information on the cost of credit, read Understanding Credit Card Interest.)
Financially speaking, downshifting is similar to retirement. Downshifters and retirees both work with a smaller, relatively fixed income. Therefore, the preparation for both is similar.
Downshifting doesn’t mean that you don’t need to save for the future. Part of the planning process prior to downshifting should include determining how much money you will need to save in order to meet your retirement goals. The amount that you need to save each month during your working years should be factored into your calculations when determining how much money you need to earn when downshifting. If you can meet your goals with part-time work or a less stressful, less time-consuming job, you have accomplished your mission. Any cutbacks in spending should come from the other categories in your pre-downshifting budget. (To get started in this endeavor, see Determining Your Post-Work Income, A Pre-Retirement Checkup and Can You Retire In Five Years?)
The Downside To Downshifting
Preparing to downshift is similar to preparing for retirement, just on a smaller scale. This means that many of the psychological hurdles that come with retirement are also present when you downshift. These include:
- Loss of Prestige – Think carefully about the decision and make sure you are mentally prepared to go from well-respected senior manager with a big staff and a corner office to part-time worker or individual contributor with no staff. Many people have their identities tied to what they do for a living, and the transition to a less prestigious job can therefore be extremely stressful.
- Loss of Friends – While you may be willing to live with less, not everybody else will follow your example. If you make the move, you are never going to keep up with the Joneses. Friends and family may not understand the choices you will make. You need to be comfortable with the overall scenario before you choose to live with less. (For more on the psychological hurdles of downsizers face, check out Journey Through The 6 Stages Of Retirement.)
Ready To Slow Down?
Downshifting is all around us. From new mothers deciding against returning to full-time work, mid-level mangers stepping back to individual contributor roles and senior executives stepping off of the rat race treadmill, people from all walks of life and income brackets are willing to trade bigger paychecks for lower levels of stress.
So take a look at your lifestyle, reevaluate your spending and step off the treadmill. Get out of the rat race, and stop spending majority of your life at work. The rest of you life is still ahead of you. Enjoy it!