Big changes aren’t always noticeable. Often, they’re more gradual; the sum of numerous little changes that amount to sweeping, earth-shattering shifts. Take any civic battle, for instance: Though to some it may seem like gay marriage, desegregation and women’s suffrage were sudden acts, they were actually achievements at the heels of prolonged campaigns that knew just as many downfalls as wins. In the end, however, only the outcome mattered.
The same principle applies to economics, both on the macro and on the micro level. While universal health care seems like a non-possibility in today’s climate, things can change with enough chipping away at the old norms – which is why you should never rest, regardless of where you are on the economic spectrum. Similarly, we find that incremental changes to personal habits have the power to transform one’s finances in the long run.
Little by little
In order to benefit from incremental economics, you first need to adopt the mindset that any positive change is worth the effort. Once that’s been established, you can open your eyes to the possibilities of small changes you can make today. Be mindful, however, that they may not pay off tomorrow, or the next day… But soon enough.
- Automate your savings: We can’t stress this enough. No matter how responsible you are, don’t trust yourself to pull the trigger on the monthly transfer to savings. Every month is different, and poses challenges that may make you avoid saving money to feel less ‘suffocated’. Remember, however, that saving money is about freedom – sign up for Auto-Saving and avoid having to make the choice to save every single month, so that you have a choice when it really matters, and you need to dip into those savings.
- Add an extra debt payment per quarter: If you have student loans, a mortgage or other outstanding loans, you’re likely already enrolled in a comprehensive and regular repayment plan (that you’re hopefully following without issue). To cut down on repayment time and interest, challenge yourself by adding one extra loan payment per quarter. If that’s too ambitious, even one extra payment per year can help you be done with it much sooner.
- Shop around to reduce your bills: From time to time, but no less than once a year, you should be contacting your various service providers to inquire about better deals available. What this does is it keeps you from falling into the dreaded second year of service trap, when rates go up and perks suddenly disappear. You’d be amazed how low you can keep your cell phone, car insurance, internet and cable bills if you’re diligent about asking for new quotes frequently.
- Max out your retirement savings: Even if you’re not lucky enough to have an employer-matched 401K plan, you should still be saving for your retirement. Better yet, you should find out what the ceiling contribution is, and match it if at all possible. This will pay off in the form of compound interest – the magical calculation that turns 30 years’ worth of contribution from hundreds of thousands of dollars to potentially over a million. Did we mention you should start early?
- Take on a side gig: We’re living in a gig economy, and everyone’s got a side hustle. Don’t get left behind, find something you can devote a few hours a week to and make bank. Whether you use it as spending money or (preferably) set it aside, is up to you. Either way, you’ll be increasing your income and expanding your horizons!
- Save spare change: Have you ever heard of a cussing jar? It’s when a family decides to ‘punish’ members for using curse words, by putting money into a jar that’s then used to do something that benefits everyone. This works to correct behavior over time, and you can adopt it even if you’re not one to curse much. Have a jar at home and at work that you put your spare change, or make it interesting by connecting it to a habit you want to wean yourself off of, like smoking. If your bad habit costs you in the short term, imagine what’s to gain by kicking it in the long term.
- Take stock and nix impulse buying: How many times have you left the store with a shiny, new item, only to come home and realize you have one (or four) items that look pretty much identical to it? Avoid this by taking frequent stock of your belongings and editing frequently. If you go through your wardrobe once a month to determine what you can give away, you’ll find patterns in the things you’re not using time and again, driving the point in your mind of which purchases to avoid. Not to mention, you’ll have a much better idea of whether you need something or not, when confronted with that old itch.
- Commit to never paying full price: This may seem counter-intuitive, but we certainly don’t mean actively looking for things on sale just to buy them. What we mean is that you should still carefully consider which things you want and need to buy, but that you limit yourself to buying them only once they’ve been discounted. This is a lesson in self-restraint that’ll save you quite a bit in the long run, with hardly any sacrifice.
- Track your spending: If you’re not one to check your account every single day, you’ll be glad to know that services like Change can track your spending and aggregate it to find patterns and identify opportunities for you to save. However you approach it, don’t leave your checking account unattended – that’s a recipe for ballooning overdraft, out-of-control spending and overlooked unnecessary fees.
- Invest in a money-saving luxury: Seems like an oxymoron, doesn’t it? It doesn’t have to be. If you know you’re spending money every other day on take-out coffee, you’re better off investing in a one-time purchase of a home brewer. You’ll be able to kick your habit into high gear, and have that baby pay for itself in no-time.
More than future-you bargained for
Don’t overestimate future-you; they’re no more responsible than present-you and they probably don’t earn that much more. By taking small measures to improve your financial footing today, you’ll hardly be depriving yourself, and you’ll be doing future-you a huge favor. We have a feeling they’d do the same for you.