Big Changes, Small Changes, and Disruption

One of the more interesting differences of opinion amongst personal finance books and websites is whether or not it makes sense to focus on making a few big changes or a lot of small changes.

Let’s say you make 10 small changes to your life that each save you $1 a day. Over the course of a month, that’s $300 — $1 times 10 things times 30 days in a month.

On the other hand, let’s say you make 3 big changes to your life that each save you $100 a month. Over the course of a month, that’s also $300 — $100 times 3.

Obviously, both approaches are going to save money, but which one is the better approach?

Some will argue for the smaller number of big changes. You’re far better off making a few really high impact changes, goes that argument and this enables you to live your day to day life. The argument here is that it’s not the $5 coffee that’s damaging you, but the $100 cable bill.

Others will point to the small changes because of the repetition factor. They don’t see the individual $5 coffee as a problem, but the $5 coffee repeated five times a week and four weeks a month that turns into $100 a month. If you can eliminate that $5 coffee, great, but even turning it into a $2 expense saves you $60 a month.

What’s my take on this? I don’t think either side is strictly right. Rather, I think the best approach is what I call the “low hanging fruit” approach.

Basically, the best financial changes you can make in your life are the ones that cause the least disruption and negative impact on how you want to live. If you make changes that are disruptive to your way of life in a negative way, you’re going to find that there’s a high likelihood that you’ll resent those changes and there will be a backlash. At the very least, those changes likely won’t be sustainable.

The less continual effort you have to make to maintain a change, the more likely it is that it will stick. The more rules you have to follow, the less likely it is to stick. The more often you have to deny your natural impulses and instincts, the more likely you are to resent it and give up.

Successful financial change is not about who has the most willpower. It’s about who can find the changes in their life that they can easily adjust to and stick to.

I think this approach becomes clear when I point to some of my favorite financial strategies.

First of all, I always encourage people to automate as much of their savings as they can. Sign up for retirement and have retirement savings automatically deducted. Have your bank automatically transfer $50 a week into savings for you. Pay a lot of your bills automatically.

This serves a couple of purposes. One, it makes the act of actually saving money as easy and non-disruptive as possible. There’s no effort in doing the savings once the transfer is in place. Two, it makes other spending cuts easier because it just directly reduces the pool of money left for nonessential spending. You still have a pool of money left, but it’s just a bit smaller than before. You get to decide where that money goes, so you’ll unconsciously cut the things that matter the least to you.

Another example of this is buying store brand versions of your normal purchases. It’s a really easy switch to flip – you just buy the same stuff you always do but grab the store brand instead. If there’s an issue with one or two specific store brand items, you can always buy the name brand for that specific one. It’s also pretty transparent — once you’re home, everything is basically the same in terms of usage. The only change is that your grocery store bill is 10% or so lower than before.

What about something like dropping cable? If you have a large array of programs you watch faithfully that are really only available on cable, dropping the service will be a challenge. If you only watch a few shows and watch other shows on services like Netflix that you may keep, it’s less challenging. For me, during the last year or two that we had cable, I watched virtually nothing on it. I watched Game of Thrones and that was pretty much it. So, for me, canceling it was extremely low impact. For others in our house, the impact might have been a little higher – there were a few shows that others watched — but it wasn’t a big crisis. It was a low effort change.

What about the $5 daily latte? For some, that morning coffee is a really big part of their routine and removing it would be a big impact. For others… they could switch to getting coffee at work with little problem, or maybe they could make it at home. It’s going to be a big change for some and a minor change for others.

What if you’re unsure? That’s what a trial run is for. I find 30-day challenges perfect for this. Try going without cable for 30 days — don’t cancel the bill, just try to not watch anything on cable for that long. Try making coffee at home or drinking the stuff at work for 30 days.

Was the change really hard and unpleasant? Then that’s not something that you should drop — it’s a “big effort” change for you and likely to result in a lot of negative feelings and pushback. You might find, on the other hand, that the change was easy. In that case, go for it! More money in your pocket is going to have a bigger impact on your life.

Here’s the deal: human beings almost always operate on habits and the path of least resistance. If a change doesn’t disrupt your habits and routines and doesn’t add a lot of resistance to your life, then it’s a good change, particularly if it saves you money. It doesn’t really matter whether that change is big or small – if it’s a net financial positive without a whole lot of negative disruption in your life, it’s worth doing it.

So, for me, the answer to the question is to change one $100 a month thing like canceling cable, change a couple $20 a week things like switching to store brands, and change a few $5 a day things like my own personal morning coffee routine — all of the ones that don’t amount to a big life impact for me — and that adds up to my $300 a month in savings.

A financial change is a good one if it results in less spending without a lot of additional effort or negative consequences in my life. Of course, it’s great if there’s a big financial impact, but small ones are fine too as long as they’re not disruptive or cause a lot of additional effort.

Don’t look at financial changes through a lens of $1 or $100, look at them through a lens of actual impact on your life. If a change would cause you to have a lot of additional effort on your plate, or reduce the quality of life in a real tangible way, skip it, especially if the change doesn’t produce a huge financial incentive in return. However, if the life impact and required changes are pretty minimal in terms of effort and your life enjoyment, that’s a change to strongly consider.

Good luck!

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