Rat Race Off Ramp

In my last post, I discussed the three books that had the most impact on me from 2020.  One of those books, Atomic Habits, had a story in it that described how the British cycling team used marginal gains in every possible way to get better and eventually become a dominant team in international cycling.  Marginal gains are small improvements that may seem insignificant if done alone, but when marginal gains are combined, their effects can become significant.  Applying marginal gains isn’t limited to national cycling teams.  How could you apply marginal gains to make changes in your life? 

New Year New You?

Every year millions of people make New Year’s resolutions.  We are three weeks into 2021.  Did you make any resolutions?  How are your resolutions going?  Some of the most popular resolutions every year include improvements in exercise, diet, and money.  These are great resolutions to have, but the results of following through with these resolutions take time.  None of those resolutions have instantaneous results.  Improving your health and fitness takes time.  Improving your personal finances takes time.  These are great goals to start at any time, but even better goals and habits to develop and keep for a lifetime.  Let’s dig into improving personal finances as a New Year’s resolution, and see how marginal gains can be applied in the world of personal finance.

What are marginal gains in personal finance?

1. Less
   1. Buy one less Starbucks coffee
   2. Spend one less time eating out
   3. Buy one less new _____ (insert your favorite splurge here – clothes, shoes, decoration, sporting goods, etc.)
   4. Watch one less TV show or movie and use that time organizing your personal finances
2. More
   1. One percent more of your income towards savings
   2. One percent more of your income contributed to retirement
   3. One more (extra) payment towards debt (credit card, auto loans, student loans, mortgage, etc.)
3. New to You
   1. Start setting financial goals
   2. Start keeping track of your finances
   3. Track your spending
   4. Start paying down debt
   5. Start an emergency fund
   6. Start saving for retirement
   7. Stop spending more than you earn

You certainly don’t need to start doing everything listed, and you probably shouldn’t do everything at once.  Start small and work from there.  Small consistent gains in your personal finances can result in incredibly positive changes for your finances in the long term.  Use these marginal gains to help you create good personal financial habits. What marginal gains will you make?

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