When someone thinks (or writes) about personal finance, there’s a big temptation to focus on the big stuff instead of the small stuff. When you write about big things like buying a car, you can immediately point to how one action can save you thousands. When you write about buying a house, you can point right to tens of thousands of dollars in savings because of a better decision.
Here’s the catch: how often do you buy a house? How often do you buy a car?
Those big opportunities don’t come along that regularly. I have been the primary driver on three cars in my entire life. My wife has the same count. We have purchased one home in our entire life.
Without a doubt, knowing how to maximize the value of those purchases was very useful. Making a smart decision in each case saved us thousands, without question.
On the other hand, we go to the grocery store once a week or so. If I can figure out how to save $10 on each grocery store visit, that’s $520 a year. That’s $3,120 every six years.
In other words, shaving $10 off of a typical visit to the grocery store matters more than saving $3,000 off of a single car purchase that I make every six years.
When it comes to your finances, the small stuff matters more for two reasons.
First, there are more opportunities in your life to practice the small stuff. We spend money dozens of times a month – at the grocery store, online, on our bills, and on little incidental things. Each of those is an opportunity to spend less and seek out a greater “bang for the buck.”
If you look around your life, you almost can’t help but find ways to spend a little less money. You have to be willfully avoiding any thought about all of the times in which you’re spending money in order to not see it. Every time you spend is an opportunity.
Second, those opportunities tend to repeat quite often. As I said above, I buy a car once every several years, but I go to the grocery store once a week. I’ll buy two or maybe three primary residences in my life, but I pay my energy bill every single month.
You can break those many opportunities down into sets of activities that you repeat. You pay an energy bill every single month. You visit the grocery store every week. You commute every single weekday. You eat a meal three times every single day. You flip a light switch in your home dozens of times a day.
If you can figure out how to take each of those activities that you repeat so often and find a way to effectively trim just a little bit from each one, you’re going to end up saving a ton of money thanks to the repetition.
Let’s say, for example, that you flip a light switch 25 times a day and you figure out some way through lightbulb replacement to essentially save a cent during each of those normal light switch flips. That’s a quarter a day.
Let’s say, also for example, that you know how to save $500 on a car purchase every seven years.
Both are good knowledge to have, but that tiny bit that saves you just a cent every time you flip a light switch? It’ll save you more. $638.75, to be exact.
The small stuff adds up because of the repetition. Figure out a better way with the small stuff and that savings just keeps piling up and piling up thanks to your everyday routine.