The simple lifestyle of the Amish involves more than just their limited use of modern technology. By taking a simple approach to business and finance, the culture has produced stunningly successful businesses and very healthy personal finances. In this article, we'll explore the Amish culture and take a look at some financial lessons that you can apply.
Who Are the Amish?
The Amish are a group of traditionalist Christian church fellowships that form a part of the Mennonite church. After beginning in Switzerland around 1700, the culture migrated to the United States in the early 18th century. There are now an estimated 250,000 Amish in the U.S. alone. They live primarily in Ohio, Pennsylvania and Indiana.
The culture is best known for its simple living, plain clothing and lack of modern technology, including the use of electricity from grid sources. Families tend to be larger than average with members only able to marry other members of the Amish community.
Despite the lack of modern technology, the Amish make money in a variety of different occupations, including produce farming, at-home shops, market stands, woodworking, factories, and common services like accounting or taxidermy. Most of the funds from these activities are invested in real estate rather than stocks or bonds.
Personal Finance Tips
From designer label clothing to the latest smartphones, most American consumers are always looking for the "next best thing" while being bombarded by advertisements from every angle. The Amish live a very different lifestyle that encourages simplicity, sharing and community, which also happen to be the cornerstones of effective personal finance.
Here are some specific tips that can be applied to everyday life:
Simple solutions to common problems are often cheaper and more effective than complex ones. For instance, buying a new riding lawnmower may make life easier right now, but there is likely a higher cost of ownership in the long run compared to a traditional push mower.
Using family or communities to help out can help reduce costs for large and small projects. For instance, asking neighbors to help lay bricks for a new patio is far less expensive than hiring contractors to do the same thing. Joining a local running club can be far cheaper than buying a gym membership.
Reduce, reuse and recycle are three terms that aren't used enough in modern society. From handing down clothing to using an old laptop as an Internet TV box, there are many different ways to maximize what we have in order to avoid buying new products.
Do It Yourself
DIY projects can help save money and build new skills. For instance, many simple home repairs can easily be accomplished by reading an article online or watching a YouTube video. Cooking meals at home can save hundreds of dollars each month in unnecessary spending at restaurants and cafes.
Avoid Taking on Debt
Debt may be an effective tool for leveraging your money, but debt can quickly become a costly trap. By avoiding debt, the Amish avoid these traps and the consequences that result from them.
Amish Tips for Businesses
The Small Business Administration (SBA) estimates that only half of businesses survive after their first five years, while only a quarter stay in business for more than 15 years. On the other hand, Amish businesses have a five-year success rate approaching 95%, according to a 2009 study by Elizabethtown College sociology professor Donald Kraybill.
Why Are Amish Businesses More Successful?
Erik Wesner's book "Success Made Simple: An Inside Look at Why Amish Businesses Thrive" provides some good insight:
Do What You Know
Amish business owners tend to focus on things they know well, while making conservative, slow, deliberate and mindful decisions.
The Amish culture is also known for its discipline and responsibility, which are attributes that many businesses lack.
The Bottom Line
The Amish may live a simplistic lifestyle, but they offer great advice to modern societies when it comes to business and finance.