Small Moves You Can Make That Will Add Up to Big Financial Changes

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency, and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

Sometimes making financial improvements in your life can seem overwhelming and leave you with a sense of “Where do I start?”  This can happen in situations such as if you’re dealing with a huge debt load, if your life is far too busy, if you’ve never been educated on money management or for a myriad of other reasons.

But the good news about financial changes is that they don’t have to be big to make a big impact on your money situation. Often it is the small changes that add up to big results. Here are seven small changes you can make in your life that will add up to a big improvement in your overall financial health.

 

Choose to Save a Percentage of All of Your Income

I look back on the day we started saving a percentage of all of our income as one of THE best financial moves we made. We had never been savers, and so financial emergencies such as a home or car repair would really hit us hard. When we started saving money we were deep in consumer debt, so we committed to putting away just 1% of our take-home pay.

We didn’t feel as if it would add up to much, but it did, and over time we were able to raise it up to 2%, then 3%, etc. We now have a few thousand in an emergency savings fund and sleep much better at night knowing that we’ve got cash to cover emergencies and won’t have to resort to racking up credit card balances again.

 

Contribute to Your 401(k) at Least Up to Your Employer’s Match

The great thing about employer 401(k) matches is that it is FREE money. In other words, if you are taking advantage of your employer’s 401(k) match program, you automatically gain a 100% return on all matched funds. This will not only help your retirement fund grow faster but will also act as a cushion from any market downfalls – at your employer’s expense.

Don’t leave money on the table by shunning the free 401(k) match funds your employer offers. Sign up today and take it as a bonus for your hard work.  

 

Read One Personal Finance Book

The one money book that changed my life the most is The Millionaire Next Door. Growing up poor, I always assumed that millionaires had big, fancy houses, nice cars, and designer clothes. To me, being a millionaire came with certain expectations about one’s appearance, and so I equated having “stuff” with being rich.

The Millionaire Next Door set me straight and showed me the real path to millionaire status. If you want to make a big difference in your finances, do something different and read one of the many powerful personal finance books out on the market today.

 

Set One Financial Goal

Making your financial situation better doesn’t have to entail turning your life upside-down and living like a hermit until you accomplish your financial goals. Instead, set just one financial goal and make a plan to achieve that goal.

For instance, when we decided to cut entertainment expenses (our main one was eating out) down to $75 a month, we saved $200 a month compared to our prior entertainment spending. And it really wasn’t as difficult as we thought it would be. As a bonus, now that we’re eating out so much less, our restaurant excursions are much more appreciated.

Your goal could be anything from setting up an automated savings plan to foregoing the daily trip to the coffee shop to cutting eating out by fifty percent. The goal is to do something – even if it’s just one thing – to improve your financial situation.

 

Pay an Extra $50 on Your Mortgage Each Month

Most people easily waste $50 a month and even more. What if you took that $50 a month that you waste on drive-thru trips and daily lattes, and put it toward your mortgage, applying it as an additional principal payment each month? If you had a home with a $250k purchase price, a $200k mortgage and a 3.83% interest rate on a thirty-year loan, paying an extra $50 a month would mean you’d pay off your mortgage almost three years early. Total savings: over $33,000.

 

Track Your Spending

Tracking our spending was life changing for us in terms of our financial health. It turned out we were spending quite a bit more in areas such as groceries and entertainment than we thought we were. We track our spending using a simple Excel spreadsheet to this day to make sure we are keeping discretionary spending at reasonable levels and to have an at-a-glance view of our financial situation. Total savings compared to our non-tracking years: over $500 a month.

 

Cancel One Membership

How many memberships do you have that are eating away at your ability to have extra money for reaching financial independence or other financial goals? Cable TV, gym memberships, magazine subscriptions and stuff-of-the-month clubs can add up to big dents in your financial health. Choose to cancel just one of those unnecessary memberships, and put the money toward debt payoff, save it for your next car purchase or invest it in a mutual or retirement fund.

Revamping your financial life doesn’t have to mean living under a rock. Instead, choose one financial change and use the money to meet an important monetary goal. I’d be willing to bet you’ll find the habit contagious.

How about you all?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/dpwk/3334261848/sizes/l

Comments

  1. 50 bucks on the mortgage is something that almost anyone can do with a wee bit of sacrifice but it makes a huge difference. 600 a year actually matters.

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