I recently read this post over at Dream Beyond Debt and it really resonated with something I’ve been thinking a lot about recently. So, since it’s the opening weekend of NFL football, I thought I’d write a post about it.
Personal finance, like football, is a game of inches.
Small achievements can really make a big difference. You never know when making a small adjustment will lead to progress, which in turn leads to more progress. Going with the football analogy, have you ever seen a running back pick up a few inches which gives their team a first down, and then the next play is a 50 yard touchdown pass? That touchdown never would have happened without the few inches picked up on the previous play.
As an anecdote, this idea is exactly how I quit smoking cigarettes nine years ago. I started cutting back to a pack a day (yes, I was smoking too much), then it was 15 cigarettes a day (there are 20 in a pack), then 10, then 5, then only after meals. After about three months I was only smoking when I was drinking. And believe me when I tell you that it was damn hard to stop that.
What ended up getting me to quit was exercise. I started working out. After working so hard in the gym, I didn’t want to “undo” all my good work by smoking.
The point of this little story is you never know what small positive change is going to permanently affect your life for the better. I didn’t start exercising because I thought it would help me quit smoking. That was just a happy side effect. And when I got lazy about six months later and stopped working out, I didn’t start smoking again.
In personal finance, maybe you decide to shop around for new car insurance, which saves you $30 a month. After a couple months, feeling good about that step, you decide to downgrade your internet/cable package which saves you another $80 a month. At the end of the year, maybe you’ve saved $1000.
Not wanting your effort to go to waste, you look around and realize that with $1000 you can open an IRA at Vanguard, investing in one of their target date retirement funds.
Well, now that the account is open you decide you want to try to contribute regularly to it. You start with the $110/month you saved on insurance and cable, but quickly up it to $200/month after seeing the numbers start climbing.
Now you’re really building some momentum so you decide that next year you’re going to max out the IRA by making a couple more changes to your lifestyle. Maybe you pick up a side hustle, or maybe you go out to eat a little bit less. Either way, that account balance is growing and you’re feeling better and better about your ability to manage your finances.
With your new-found confidence you decide to go talk to your HR representative to see what’s up with the retirement plans at your job. You find out that you’ve been missing a 6% employer match on your 401(k) and decide to immediately start contributing 6% of your salary so that you get that free money from work.
You’ve gone from nothing to maxing out an IRA and contributing 12% of your annual salary (6% + 6% match) to a 401(k). And all this happened because you decided to shop around for a better insurance rate.
You might think this story sounds far-fetched, but it isn’t. This is actually how many people go about getting their financial house in order, myself included. You start making small changes and, encouraged by your progress, you keep making more progress.
People don’t just wake up suddenly knowing how to manage their money. They gain a few inches, then gain a few more, and suddenly they are marching down the field picking up yards in chunks.
Mrs. Dragon likes to do Jillian Michaels workout videos and this week I heard Jillian say something that caught my ear,
“Transformation is not a future event. It is a present day activity. That’s why you must bring everything that you have in every moment. And it doesn’t have to be perfect. It’s not about perfect. It’s about effort. Bring that effort every single day. That’s how transformation happens. That’s how change occurs.”
In other words, just take steps in the right direction. Don’t worry about figuring everything out at once. Recognize that it’s a game of inches.