Financial Independence and Permaculture

As Sarah and I have continued to work toward financial independence, one of the principles we’ve really come to value is that long-lasting reliable stuff is preferable to less reliable stuff. Reliability is a pretty big virtue for us. If we’re going to buy something, we’d rather buy it for life.

It’s not hard to see that kind of philosophy pop up in other aspects of our life. Since we’ve moved into our current home, we’ve planted several trees in our yard. A healthy portion of our garden is made up of perennial plants that simply come back every spring on their own.

As I was describing this to a friend of mine, he rubbed his chin and said, “It sounds like you guys are starting to dip your toes into permaculture.”

Permaculture is simply a fancy term that means finding things in life, particularly in nature and in agriculture, that are sustainable and self-sufficient. It means doing things like I mentioned above – planting trees to provide permanent shade and permanent fruit, or planting perennials that grow back every year with little necessary active care.

My favorite definition is a much simpler one, one that I heard from another friend: permaculture is the opposite of disposable culture.

It turns out that there are a lot of examples of how permaculture, financial independence, and self-sustainability have significant overlap. Here are four specific examples of permaculture that can reduce the expenses of your backyard and garden over time while also, eventually, reducing the constant labor involved by encouraging a natural state.

Shade trees If you plant a shade tree in your yard that provides shade for you when you’re outside and also provides shade for your house, you’ve introduced a permanent addition to your yard that can significantly reduce seasonal energy use in your home.

Perennial hands-off gardens If you have a garden, fill it with perennial plants that require little active tending, such as asparagus and herbs. These plants will grow naturally each year on their own with little intervention from you aside from the harvesting. Not only does this mean low-effort fresh food, it also means extremely low cost fresh food.

Plant stacking Instead of having just an open garden, consider stacking perennial plants together. Have small perennial plants growing under larger bushes and shrubs, and have those appear under the canopy of larger trees. This not only naturally protects the soil, but makes the space in your backyard more efficient.

Natural landscaping Let parts of your yard return to their natural state. This cuts down on the expense of watering and maintaining a lawn, but also cuts down on the effort involved, too.

However, where financial independence and permaculture really overlap is on the conceptual level. As I was researching this piece, I came across, which is a website that discusses a number of fundamental principles of permaculture. Almost all of them apply really well to personal finance as well. Let’s take a look.

Principle 1: Observe and Interact

From the site:

By taking the time to engage with nature we can design solutions that suit our particular situation.

How can we see this principle in personal finance? Here are three potential ways.

Track your spending: The simple step of keeping a pocket notebook – or a good spending tracking app like Mint or You Need a Budget – can really enlighten you to how often you spend money on small forgotten things – and even on bigger things. Not only does tracking your spending for a month provide you with a powerful set of data to review about your real personal finance habits, the simple act of recording those expenses can be eye-opening, too.

Make a budget: Once you have a month or two of personal spending data, use that data to create a real, accurate picture of how you spend each month. Break that spending data into groups that make sense for you – entertainment, housing, food, hobbies, household supplies, and so on – and then total up your spending in each of those groups for a whole month. (Even better, use three months and average them.) That’s the basis for your real budget. Put a slightly challenging cap on the flexible areas – food, entertainment, hobbies – and try to stick to it during that month. You’ll find that you have real money left over without cutting out anything that really matters to you.

Make better conscious decisions about spending, saving, and investing: When you’re in the moment and about to spend some of your hard-earned cash, pause for a moment and ask yourself if that purchase makes sense and whether you could get the same item or experience elsewhere for less money – or whether you need it at all. Do the same thing for your savings and investment choices – ask yourself regularly if they make sense and, more importantly, that you understand them fully.

Principle 2: Catch and Store Energy

From the site:

By developing systems that collect resources when they are abundant, we can use them in times of need.

How can we see this principle in personal finance? Here are three potential ways.

Build an emergency fund: The moment when things are going well is the best time to put aside a little bit of cash for those moments when things aren’t going well. Some time in the future, you’re guaranteed to have a crisis that you’re not financially prepared for, so do what you can now to make sure that you’re ready later. Ask your bank to start putting aside a small amount from your checking to your savings automatically each week, then tap it when a real crisis comes.

Start a side gig to earn more money: Avoid relying on just one source for all of your income. Look for some way – any way – to start building another method of earning money, whether it’s recording YouTube videos or writing e-books or mowing lawns or taking on freelance work or even working at a second job. That way, if your first job fails, you have at least some other form of income.

Maximize your professional opportunities: Take advantage of every opportunity you can to bolster your career. If your employer pays for conference or convention attendance, jump on board. If your boss asks for a show of hands to volunteer for leadership or public speaking, stick your hand up. If your employer pays for schooling – or even if they don’t – maximize your education. The better your resume, the easier it will be to move on to the next job when the time comes.

Principle 3: Obtain a Yield

From the site:

Ensure that you are getting truly useful rewards as part of the work that you are doing.

How can we see this principle in personal finance? Here are three potential ways.

Invest for retirement: If you’re not putting away money for retirement, you’re making a huge financial mistake. There is literally no better moment than right now to start saving for retirement, because the more years you have between you and retirement, the more tine there is for your money to grow. If your organization has a 401(k) or 403(b) and offers matching funds, take advantage of every single dime of it.

Invest for your other goals, too: You should be investing for every major goal and major expense you see coming up in your life. If the timeframe is short – a few years or less – that investing should take place in something with very little risk, like a savings account. If it’s a long term goal – ten years or more – invest that money in real estate or the stock market.

Use frugal tactics that result in a drop in your bills: If you can make a simple move at home that will permanently reduce one of your bills, you should make that move every time. Simple steps, like switching from incandescent to LED light bulbs or air sealing your home, can permanently reduce your energy bill, so those are things you should be doing in your home if you haven’t already.

Principle 4: Apply Self-Regulation and Accept Feedback

From the site:

We need to discourage inappropriate activity to ensure that systems can continue to function well.

How can we see this principle in personal finance? Here are three potential ways.

Track your spending changes over time in the form of your net worth: You might be a master budgeter or you might see yourself as a master investor, but is it really adding up to anything over time? In my eyes, the best way to make sure you’re making constant progress is to regularly calculate your net worth and then see if it is growing over time by comparing your net worth today to where it was at a year ago. Is that rate of change growing as well?

Trust that data, even when it shows you a negative picture: Sometimes when you look at the numbers, you’ll see that you’re not doing as well as you think you are. It’s easy to just shrug off the numbers. Don’t. Trust them. The numbers are giving you an unbiased look at what you’re actually doing. Value that angle, as it’s an early warning sign that you need to make some changes.

Address your mistakes head on and look for new ways to improve your situation: When you see a problem, don’t look for reasons why it’s not really a problem. Instead, ask yourself how you can fix it and actively look for solutions. At the same time, never stop learning more about personal finance and thinking of smarter ways to spend less and save more.

Principle 5: Use and Value Renewable Resources and Services

From the site:

Make the best use of nature’s abundance to reduce our consumptive behaviour and dependence on non-renewable resources.

How can we see this principle in personal finance? Here are three potential ways.

Buy secondhand things: Many household needs, from clothes to cooking utensils, can be well-served by buying secondhand items. Before you go off and buy a new item that could easily work as a secondhand item, do some shopping at your local secondhand stores. Not only will you save money, you’ll ensure that those items don’t go to waste.

Invest in things that will constantly produce value for you: Long-lasting energy efficient LED light bulbs will see a reduction in your energy bill and no replacement costs for years to come. A well-positioned shade tree in your yard, once grown to sufficient size, will trim your energy bills by providing summer shade and reducing the work done by your air conditioning.

Invest in yourself: Investing in yourself is always a good choice because it’s something that no one else can ever take away. Invest in a solid education. Invest the time and energy needed to keep your mind and body in good shape. Invest in certifications needed for your career path.

Principle 6: Produce No Waste

From the site:

By valuing and making use of all the resources that are available to us, nothing goes to waste.

How can we see this principle in personal finance? Here are three potential ways.

Minimize the trash you throw away: Rather than simply throwing things away, look for better approaches. Are there options that involve buying less packaging? Is there someone who might use this item you’re throwing away? Selling it or giving it away to someone who might use it is better than throwing it away.

Start composting: If you find yourself with extra vegetable scraps, throw them in a small compost bin. When you fill it up and rotate it regularly, it becomes rich compost, which is wonderful for gardens. Some people will even buy mature compost.

Buy reliable things: In other words, buy items that you’re rarely going to have to throw away because they’re no longer working. Do your homework and choose to spend your money on items that will last for a long time or else on secondhand items that have already lived a long life.

Principle 7: Design from Patterns to Details

From the site:

By stepping back, we can observe patterns in nature and society. These can form the backbone of our designs, with the details filled in as we go.

How can we see this principle in personal finance? Here are three potential ways.

Figure out your long-term goals: What are you working for? What are your big dreams in life? Where would you really like your life to be in five years? How about ten years? Spend some time seriously thinking about your true long term goals in as much detail as possible.

Break down those long-term goals into actionable steps you can do each day: Obviously, you’re not going to be able to reach your long term goals tomorrow or even next year. It’s because they seem so distant that people often skip out on working toward them. The solution is to break down those goals into little things that you can take action on today. What’s the first step toward that big goal? Can you do that today?

Take action on those steps: Once you’ve identified the next actionable step on your goal, do it! Don’t just think about it. Take that action now, not later, then move on to the next step and take action on that step. If you keep doing that, you’ll walk right toward your goals.

Principle 8: Integrate Rather Than Segregate

From the site:

By putting the right things in the right place, relationships develop between them and they support each other.

How can we see this principle in personal finance? Here are three potential ways.

Look for every opportunity to “kill two birds with one stone”: Whenever you have a chance to make a single purchase that takes care of two needs or achieve a single task that takes care of two things that need done, take advantage of it. Be efficient with your money and time and energy. For example, rather than going to the grocery store three times in a week, spend a bit of time planning ahead and make a list so you only have to go once.

Have a smart to-do list: One of the biggest advantages of online to-do list managers (like Todoist and Remember the Milk, my two favorites) is that you can add contexts to your tasks. For example, when I have a task on my list that needs to be done in town, I’ll add an “@town” tag to that item. That way, the next time I’m in town, I can easily pull up a list of just the items that say “@town” on them and take care of them all at once.

Focus on buying multipurpose items instead of unitaskers: My favorite example of this is with kitchen knives. You can achieve almost anything you want to do in a home kitchen with just three knives – a chef’s knife, a paring knife, and a bread knife. All of the other knives one might own are almost entirely overkill. Rather than buying a bunch of items to do similar tasks, buy just one that can do all the tasks; rather than buying complicated items, look for simpler ones.

Principle 9: Use Small and Slow Solutions

From the site:

Small and slow systems are easier to maintain than big ones, making better use of local resources and produce more sustainable outcomes.

How can we see this principle in personal finance? Here are three potential ways.

Increase your investments a little at a time: Don’t start off by investing half your income – it’ll never work out. Instead, start off by contributing just a little to your 401(k) and increase it little by little until you find the right level for you. Over time, you can keep increasing your investments as needed.

Make room for those increases with little efficiency improvements: As you find new avenues of smart frugality in your life, you’ll find yourself effortlessly saving more and more money. It’s pretty easy – and pretty smart – to channel that additional savings into your investments. Let frugality fuel your investing!

Focus on long-term value rather than the short term: This isn’t just about investments, but all of your purchases. For example, you might have some sticker shock at the price of an LED light bulb compared to an incandescent, but if you look at the total cost of that bulb (including replacement costs and energy costs), LED bulbs win by a mile. Always look at that long term value above the immediate sticker price.

Principle 10: Use and Value Diversity

From the site:

Diversity reduces vulnerability to a variety of threats and takes advantage of the unique nature of the environment in which it resides.

How can we see this principle in personal finance? Here are three potential ways.

Try lots and lots of different frugal tactics: Yes, some will seem silly. Yes, some won’t work well for you. That doesn’t mean you shouldn’t try them and that you shouldn’t keep looking for new ones. I still try new tactics all the time and I still sometimes find strategies and products that end up saving me money and often work better than my old way of doing things.

Try lots and lots of free and cheap hobbies and activities in your area: The same advice applies again. Try lots of things and see what works, and don’t always just follow your first reaction, either. Try everything that’s free or cheap that’s available in your community or in your imagination. You might just find something unexpected that really resonates with you, in which case you’ve just found a fulfilling way to spend your time without racking up expenses.

Keep the ones that click; discard the ones that don’t: This is the key to every single money-saving strategy out there. They are not all going to work with you. Some will simply not be enjoyable. Others will be more work than they’re worth. Still others will frustrate you for some reason. Just because one strategy doesn’t click with you doesn’t mean that frugality is pointless. It just means that one tip didn’t click with you. Try more.

Principle 11: Use Edges and Value the Marginal

From the site:

The interface between things is where the most interesting events take place. These are often the most valuable, diverse and productive elements in the system.

How can we see this principle in personal finance? Here are three potential ways.

Don’t skip over “small” frugality tips: Some strategies might seem very, very small, in that they don’t save very much money. The thing is, even if that’s true, such tips can still be useful if they just directly replace some other similar routine in your life (like buying a generic item instead of a name brand) or you repeat it often so that the savings add up (like using a bit less toothpaste when you brush your teeth). The “small” tips can be surprisingly big over time.

Save your pennies and nickels, especially found ones: I live in a nickel deposit state, which means that aluminum cans and plastic bottles can be turned in for a nickel refund. If I’m walking along and see a can or a bottle, I’ll almost always pick it up and toss it into our bin in the garage. It’s a nickel, after all. Those nickels add up over time to a lot of money. Whenever you see little opportunities to pick up and save a penny or a nickel, do it.

Look for ways to shave just a cent or two off of things you do regularly: If you can save two cents a gallon by using a different gas station, that can add up to a lot of dollars over the course of the year. If you can start using a different grocery store that saves you a nickel per item on average, you’ll end up saving a ton over the course of the year. There is a lot of value in repeating a little tip over and over.

Principle 12: Creatively Use and Respond to Change

From the site:

We can have a positive impact on inevitable change by carefully observing, and then intervening at the right time.

How can we see this principle in personal finance? Here are three potential ways.

When something new arises, give serious thought to whether it can provide real value for you: It’s easy to jump on the hype train when it comes to the hot new thing. Don’t fall for it. Ask yourself whether this item would add substantial benefit to your life without requiring you to significantly shift your behavior (as almost every product that requires you to shift your behavior winds up gathering dust). If you can’t make a strong case without any hesitation, then you shouldn’t buy the product right now. Save your purchases for things that meet that standard.

Have a wide and varied social network: The larger and more varied your social network, the wider the variety of ideas and perspectives that will reach your eyes and ears. This can only benefit you as it gives you lots of different angles on the challenges of your life – and having such a social network is free.

Don’t be afraid to tap that network when your situation changes – or when their situation does: When someone in your social network goes through a life change or needs a helping hand, offer your assistance without hesitation, especially if it doesn’t require major effort from you (but, often, even when it does). If you do this without the expectation of something in return, you’ll find a lot of helping hands reaching out for you when the time comes. Consider it a social emergency fund built out of paying it forward.

Final Thoughts

Personal finance and permaculture have a lot of philosophical elements in common. Both are about careful use and management of resources. Both are about building self-sustaining situations. Both involve investing time, effort, and money up front that will pay dividends down the road.

It is always a beautiful and valuable thing when philosophies from different areas of life turn out to have a lot of principles in common. It is that kind of synergy that makes a life of constant learning ever more valuable. Sometimes, you can learn more than you expect.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.