Lessons From My Year Living As a Minimalist

I've nearly crossed a significant finish line: A full year of not shopping. I took up a minimalist challenge in January, 2017 to prove I can be a conscious consumer. It meant no purchases of clothing, shoes, handbags or other accessories. Besides the positive change in my cash flow, the challenge also presented some interesting insights into my behaviour that I've applied to my investing practice. Here's how minimalism has changed me and my portfolio:

Reclaimed Time

First, I can't believe the amount of time I wasted browsing for clothes online while watching Netflix. Now, I'm reading again, knitting, and making use of my time in ways that are productive for me. This caused me to look at how I can reclaim time in other areas of my life. With investing, it was budgeting and managing cash flow. I was spending unnecessary time manually checking in and making transactions.

I realized that if I'm committed to the budget I've set for myself, then I can save time with the convenience of auto-contributions to my investing accounts. Now I can refocus that time on portfolio research — even if it's just an hour a month.

Refocused Priorities

When I reviewed what I had been buying previously, I found I wasn't buying things because of their craftsmanship. Minimalism encouraged me to consider whether I truly needed — or would use — the five pairs of trendy jeans I hadn't worn in four months! Turns out three pairs will do. Similarly, I pared down my portfolio and focused on quality.

I've refocused on ensuring that a percentage of my portfolio is focused on ethical investing — something that's important to me — and my evaluation of investments includes considering their commitment to social responsibility. I went back to the drawing board, comparing similar investments to ensure they meet my investing criteria. There were a number of investments I was holding onto simply because I "liked" them, a bias I've learned is known as the endowment effect, when you overvalue something you already own.

Managed Emotions

I can't deny that I still get itchy to shop. But I do notice these cravings hit when I'm hurt, angry, lonely or just bored. I let my emotions convince my mind that I "needed" some item. So I've also looked at where I let emotion get the better of me with investing decisions.

Loss aversion and fear can take over when I'm considering making a change to my portfolio. My upset over a loss feels far greater than any happiness I've experienced over a gain, so I end up doing nothing. The trick for me to manage my fear is a two-step process. First, I arm myself with as many details as possible about the opportunity. If the facts are lining up more in the "yes" column, but my emotions are pulling towards "no," I line up more information. I rely on examples of when I've overcome doubt, bounced back from adversity, or learned from taking a risk. Often this thinking exercise helps me to take action.

When the calendar turns to 2018, I can't say I'll continue to go completely without. (I do have some holey socks that need replacing!) But I will continue to embrace the lessons I've learned for both for the health of my closet and my portfolio.