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Why small spending choices matter

Some bloggers argue that if we just focus on the big expenses, our finances will be fine. That's not true.

By Karen Datko Jan 28, 2010 4:15PM

This post comes from Trent Hamm at partner blog The Simple Dollar.


“Little things make the difference. Everyone is well prepared in the big things, but only the winners perfect the little things.” -- Bear Bryant


One idea often put out there by personal-finance writers is the concept that we have to take care of the big things first. If we just take care of the five biggest financial holes in our lives, we’ll be fine, because those five big ones are doozies.


Paying off a credit card, for example, can save us $200 a month. Renting a smaller apartment can save us $300 a month. Doing five things of that size will make a huge difference in our monthly expenses.


On paper, I completely agree with this idea. Without a doubt, if you’re able to shave $500 a month from your monthly spending due to two or three big acts, it likely will make a big difference in your financial bottom line.


At least it will at first.


The big problem with the “five big steps” idea is that once you’ve done those steps, you’re still the same person you were before. You haven’t established new spending patterns. You haven’t figured out new ways to live your day-to-day life.


In other words, you’re still living above your means. Those five big things didn’t change you. They just gave you more breathing room than you had before.


What do you think will happen if a person magically finds his or her credit card paid off after carrying a balance for years? Suddenly, there's breathing room to “live” -- and to them, that means living above and beyond their financial means.


Yes, living in a smaller home makes a big financial difference to your bottom line, but it’s just one isolated choice. You chose to move elsewhere. Aside from that, you’re living the same life you were before -- a life beyond your means.

Trust me, I’ve been there. I know all about it.


On the other hand, the little things, done over and over, create a pattern in your life. Stopping and thinking about it every time you make any spending decision forces you to rethink your behaviors.

The choice to move is one large choice, made in isolation. Once it’s made, you move on. The choice to make your own coffee instead of stopping at Starbucks is a small choice made every single day. Once it’s made, you essentially face the same choice again tomorrow morning.


Gaining the power to make that big choice is a success, but it’s a fleeting one. It doesn’t make you face your day-to-day choices. It doesn’t make you alter your spending behaviors.


Gaining the power over those small choices is the true success. It means you’ve taken control of your behaviors. It means that you’re able to see how the little things you do right now affect the big picture later on. It means that your happiness in life isn’t based on the next little burst of pleasure.


It means you’re a winner.


Related reading at The Simple Dollar:



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