Those who know me, know I cycle to work each and every day.
I absolutely love being on my bike, even in the gruelling Dubai summers.
If you're a sportsman like myself, you undoubtedly understands the concept of 'marginal gains'.
The aggregation of marginal gains – a 1% margin of improvement in everything you do – is obviously going to have some beneficial effect.
- If you eat 1% less sugar and salt;
- Exercise for 1% longer and 1% harder;
- Drink 1% less alcohol and 1% more water;
- You will eventually see benefits in terms of your physical wellbeing
The same is true in terms of your financial wellbeing…
Altering your personal financial habits, by a small margin on a regular and consistent basis, will deliver discernible improvements.
5 marginal gains for financial success
1. Do an annual review of the subscriptions you’ve signed up to
I’m guilty of signing up to free offers that become paid subscriptions, and then forgetting to cancel them.
Do you do the same?
Once a year, an audit and a cull of these small subscription services, that imperceptibly disappear from your account or credit card, could add up to some significant savings.
2. Pay yourself first
After taxes, insurances and bills, does your monthly wage look decidedly depleted?
That’s why many people fail to save for their future…
It’s a common psychological barrier, and one you can overcome by paying yourself first.
Commit a percentage of your salary to investments every month - and then pay your bills.
Certified Financial Planner™ Nancy Butler says:
“You should be saving for your financial goals first, then paying your bills, and then consider spending money you have left over."
3. Create your own rules
Apparently, some of us are born to spend.
But behavioural economists say that adopting your own rules of thumb for spending can help you develop better money habits.
For example, I’m a gadget freak – but I limit my spend, and I limit the number of gadgets I buy per year.
This saves me money, and probably my marriage.
4. Live like the millionaire next door
“If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend…”
“Wealth is more often the result of a lifestyle of hard-work, perseverance, planning, and, most of all, self-discipline.”
He also reveals the number one common denominator among those who successfully build wealth…
They live well below their means.
If you start to do the same, and invest the rest, you’ll become wealthier.
5. Track your spending
One of the ways Andrew Hallam became a millionaire on a teacher’s salary was by tracking every penny he spent, and I can assure you, he still does it to this day.
He uses a free app – you can use a spreadsheet or a pen and paper if you prefer…
But I guarantee, if you have to face up to the reality of your spending every day, superfluous and impulse purchases will be harder to make.
The result of this marginal gain? More money for you to invest.
In personal finance terms, it comes down to making the most of what you’ve got.
Marginal money gains made today will make a positive change to your future financial security.