How to Use an Impact-Effort Matrix For Your Finances

One of the most useful mental models I use for keeping my finances healthy is the impact and effort matrix. I use it all the time, almost unconsciously, to make decisions about my use of my time, money and energy. To an extent, we all do it naturally, but I’ve found that investing some effort into honing your impact and effort matrix pays off tremendously. It’s one of the biggest wins you can make with your finances and with your life.

How to use an impact-effort matrix for your finances

First, step up the matrix

Never created an impact-effort matrix before? Here’s how you start one:

  1. Take a piece of paper, or your favorite digital drawing platform, and draw a horizontal and vertical line across the page that intersect in the center.
  2. Label the horizontal line “Low Effort” on the left and “High Effort” on the right of the page.
  3. Next, label the vertical line “High Impact” at the top and “Low Impact” at the bottom. Now you have a matrix.
  4. Label the top-left quadrant “Quick Wins.”
  5. Label the top-right quadrant “Transformative.”
  6. Label the bottom-left quadrant “Momentum.”
  7. Lastly, label the bottom-right quadrant “Derailers.”

Define each of the quadrants specific to your financial situation

What’s a quick win for you? Is it making $100 delivering food on Uber Eats or Doordash for a couple of hours? Maybe for you, a high-impact, low-effort action is simply moving $100 from your checking into a Roth IRA every week where it will grow until you retire. These quick wins should take very little effort for you, but also set you up toward a goal that is extremely important to you. It could be something as small as setting up a recurring transfer to your savings account, opening a Roth IRA or doing quick tasks that nets you money you could use later.

[ Read: 30 Legitimate Ways to Get Money Fast ]

Next, define transformative actions for yourself. These are high-impact, high-effort actions that require some sort of change in habit or shift in routine. Think about things that you could do to bring in more income for yourself like starting a business or diving into the world of active stock trading. This high-impact, high-effort actions will mean that you have to do something different every day to achieve the goal. Start planning for them as soon as possible.

Now define momentum-building tasks. Momentum-building tasks are low-effort and low-impact, but that’s OK. Let’s say that you agree to design a logo for a YouTube channel for $10 and it takes you 10 minutes. That’s low-impact and low-effort. Another example is you watch your neighbor’s cat every now and then for $50. It’s pretty easy, but it doesn’t get you much to begin with — but the more you do these tasks, the more you’re able to contribute to transformative tasks and goals.

Then it’s time to define derailing actions. These are things that require way too much time for little to no impact to your finances. To borrow from an earlier example, let’s say you want to learn to design YouTube channel logos, but you need to learn Photoshop, Illustrator and other design software to do so. Starting at square one, do you think it’s worth it to learn all those software programs just to make $10? It may not be worth it. Derailers are tasks and actions that require just too much work and effort on your part to make it happen, so avoid them at all costs and direct your focus and energy elsewhere.

Start listing actions and items in each of the quadrants

Remember that everything you do takes time and at least a little energy, and there’s only so much of those things to go around. You can measure effort in a number of ways, but here we’re really going to focus on time and energy. Start listing items and actions in their corresponding quadrant.

For example, if you have one activity where you can spend 10 minutes and a little energy to save $20, it would go in the “Momentum” box as a low-effort, low-impact action that may later build up into better habits and long-term goals. Let’s say you have another activity where you can spend two days and a lot of energy to save $20 — that would go into “Derailers,” as it’s taking away time, effort and energy from other tasks for a small reward.

It’s important to start identifying the financial moves you can make to keep yourself out of the “Derailers” box. It doesn’t make much sense to spend two days to get $20 if you could instead spend two days working on something else in the “Transformative” section that would lead to higher income, more in your savings or set you up for financial success.

Create strategies to stay away from derailers

Derailers are just that — derailers. They keep your focus and energy away from things that would better serve your financial needs and goals. Sometimes, we have to do them — your paperwork and important documents need organizing even though it does nothing except clear your desk and take hours of your day. Or perhaps what you thought would be a quick win with low effort turns out to take a lot more effort than you originally thought. It’s easy to get sucked into these tasks without realizing them, but it’s important to analyze the tasks via your impact-effort matrix to determine the actions that will bring you the most success from your efforts. Ask yourself if the task you’re about to do will truly be low-effort and high-impact or if it’s the opposite.

Create strategies to work on transformative projects

Transformative financial projects will be high-effort and high-impact. Some good examples are revamping your personal finance situation, living frugally and aggressively saving for a down payment or retirement. Tasks like this will require a lot of effort on your part — you have to think carefully about where every dollar is going and live well below your means in order to reach your goals. However, the end result is incredibly impactful — you have a healthy retirement, you have 20% saved up for a house or you’re able to pay off all of your debts. These are tasks that you have to plan for and work toward effectively, but the effort pays off handsomely.

[ Read: Best Lenders for Low- and No-Down-Payment Mortgages ]

Too long, didn’t read?

Using an impact-effort matrix is great for gaining a better sense of the value that each dollar you spend or invest is actually giving you. As humans, we tend to fall into routines and rely on instinct and gut feeling without realizing that some of the money (and time and effort) we spend isn’t giving us a whole lot of value. These simple tools can help you make sure you’re getting a lot more value out of every dollar you spend — and the idea of effort versus impact can have a great impact on other areas of your life, too.

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Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

Reviewed by

  • Courtney Mihocik
    Courtney Mihocik
    Loans Editor

    Courtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to,, and elsewhere.