Financial Minimalism – The Necessity Test

The Necessity Test


Minimalism refers to the process of disregarding non-essential items from your life, while holding onto items that serve a genuine, life-enriching purpose. For example, wall art might look nice in your house but does it serve a functional purpose other than being aesthetically pleasing? Compare this to say, your fridge which you need to store and preserve food and you have a very basic understanding of a minimalist mindset. It’s about removing things that are non-essential to your everyday life and holding onto the items that add to your quality of life by providing an essential service.

Financial Minimalism serves a similar purpose, yet rather than getting to a state where you have hundreds of useless items lying around your house, financial minimalism serves to prevent the unnecessary purchase of these items. A good example is when I left the house I grew up in, a home that held hundreds of items that I hadn’t used in years but still clung onto out of nostalgia. I left this home to move into an unfurnished apartment on the other side of the country. All I had was 1 suitcase of belongings and I quickly came to the realisation that a lot of the items I used to cherish, held no meaning. Whereas items that I had taken for granted such as a bowls, cutlery, beds, a decent chair etc., were things that I desperately needed to be able to achieve simple tasks such as eating, sleeping and working. The simplest way you can adapt a financial minimalist mindset is to apply the Necessity Test.

The Necessity Test refers to an objective question that you ask yourself in the form of: “Is this item necessary for me to achieve a task that I hold important?”. In order for the item to past the test, it needs to either be essential for you to achieve a certain task that you deem important or it has to aid your ability to complete said task. Lets say you are an avid hiker on weekends and enjoy walking long trails in the wilderness. In this instance a thing that serves a necessary function is shoes. Now financial minimalism doesn’t just mean you spend the least amount possible on items, it means that you redirect your money towards items that serve an essential purpose. If you plan to walk 30km a day on rocky terrain, the $10 runners you grab at Kmart wont suffice. You’ll end up spending more money on physiotherapist and doctor appointments for all the leg injuries you receive. Compare this to a good $200 pair of shoes that give you good tread, proper ankle support, are durable, water proof etc., and you can see the difference. If your goal is to walk 30km a day, shoes are necessary to achieve that task and good shoes will increase your ability to do it more efficiently, meaning it pasts the necessity test.

By spending less money on frivolous items that serve no purpose, you can free up money to buy things that enhance your quality of life, items that can boost your productivity and help you live life in a way that you deem fit. So the next time you’re faced with the question of “Should I buy this?”, simply ask yourself:

  1. Is this item necessary for achieving an essential task?
  2. Will it increase my quality of life by helping me achieve something I want?

2 Comments on “Financial Minimalism – The Necessity Test

  1. Great advice! Before buying, we also ask, is this something we only need short-term and can borrow or hire cheaper, or is it something we can buy second-hand and therefore save money too.

    • Great suggestion, it reminded me of my friend who borrowed a suit for a wedding because he didn’t want to spend $500 on an item that he would only wear once. It can be hard to see the long term picture sometimes, but it’s definitely a valuable ability to master.

      Thanks for your input!

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