For many years on the Random Roger blog we have talked about simplifying all facets of life including of course financial simplicity. “Financial simplicity” has implications both in financial planning as well portfolio construction.

The financial planning implication considers that a simpler lifestyle will in most instances be a less expensive lifestyle and of course a less expensive lifestyle becomes much easier to plan for. For purposes of this post we’ll assume Social Security will be able to pay out as people hope for; how much needs to be saved for a $3000/month lifestyle (including Social Security) compared to a $10,000/monthly lifestyle? Instead of worrying about a 4% withdrawal rate, it can be possible to combine Social Security with a 2% withdrawal rate.

One way to simplify is with a smaller house or more specifically a Tiny House. Tiny Houses are essentially little houses on wheels (along the lines of an Airstream) that are very cheap due not only to their size but also because they are not covered by building codes. Being trailer-sized they tend to be 100-200 square feet but many of them can accommodate an upstairs sleeping loft which obviously increases the square footage a little.

By some estimates, Tiny Houses cost 1/10th of what an averaged regular sized house costs. The economics of this combined with the Great Recession’s impact on the social fabric has created a Tiny House movement that also includes life simplicity, self-sufficiency (growing some or all of your own food) and social consciousness.

Also included on the list is financial simplicity. This of course includes living below ones means, not incurring excessive debt and simplified investing (for people who choose not to make a full time vocation out of their portfolio).

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