235 | 3 Small Changes for Big Results with Your Money

What if improving your finances doesn’t always have to take big changes?

Yes, the big changes make the most difference, but there are small things you can do that will also make a big impact.

In this episode, let’s talk about 3 small changes you can make that will improve your finances today.

• • the common misconception that financial improvement requires big changes
  • why small changes lead to results
  • 3 small changes you can make to improve your finances

You’re listening to Personal Finance for Lawyers. I’m Rho Thomas, and as a busy wife, mom, and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords. By the way, if you’re a lawyer who’s struggling with debt, you’re probably making at least one of five common mistakes. Grab my free guide on how to correct those mistakes and finally get out of debt for good. Head on over to rhothomas.com/guide. That’s G-U-I-D-E.

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today, we are talking about the power of small changes in your finances. Often, we think that if we’re going to improve our finances, it has to be this huge thing. I have to completely overhaul all of this, and I got to stop doing that forever, and I have to give up this other thing. And the truth is, we can get significant results from small changes. Yes, doing bigger things helps, but we can also get results from smaller things. There are a few reasons. First, the small changes aren’t so different from what we’re already doing to where we keep putting them off or avoiding them, or things like that. You’re actually willing to make the small changes, and because you make the changes, you get the results. Second, those small changes can build on themselves. So once you start the small change, then you’re like, well, maybe I can do this next step too. And then you do that, and it’s like, well, I’m already doing this. Like, what if I do that too? And it can snowball like that. Third a lot of times, doing something slightly different can make a big impact, even if that different thing is relatively small. So I want to share with you a few examples of small things you can do to make big improvements in your finances. I’ve got three things that I’m going to share, and I hope that they are helpful for you. Number one, move the money for your goals out of your checking account as soon as you get paid. So money that you want to save money that you want to make an extra debt payment with money that you want to have for some other goal, move it to your savings account when you get paid. Like have you ever told yourself that you’re going to save more? And then you go through the month and you’re spending, spending, spending, and then the next thing you know is the end of the month, and there’s nothing left to save. By moving that money out of your account on the front end, you make sure it’s protected. So if things don’t go as planned with your spending. Maybe you get off track, or you go a little over in some categories, at least you know that the money for your goals is already taken care of. Another thing that you can do along the same lines, and maybe we can call this number 1.5 is you can set up automatic transfers to your savings account, or you can split your direct deposit so some of it goes straight into your savings account. And the thing with this, and why I make it 1.5 instead of giving it its own number, is you still want to make sure that you set a goal for your savings and that you’re checking in on it, because it’s really easy to just set it and forget it, and then you’ve got all this money piling up in savings well above what you need, and it would better be used for something else. So that is something that you can try, but if you do that, you want to make sure that you are keeping an eye on it, and that you have a goal for your savings, and you’re not just letting money pile up there. All right. Number two, open a high yield savings account. I will never forget when I saved my first $1,000 in my account. I was with SunTrust at the time, which is a predecessor to truest, but they paid me literally one penny in interest like have you ever noticed how low the interest rate is on savings accounts at brick and mortar banks? It’s ridiculously low, like, I think the last I saw the highest was something like 0.15% so not even half a percent, not even 1% and compare that with around 4% that high yield savings accounts are currently paying. Now the interest rates on high yield accounts does fluctuate. It goes up and down. So back when I first opened one the interest rates were around 1% but that’s still infinitely better than the 0.15% or the interest rate that’s more common at brick and mortar banks is 0.01% so switch on over to a high yield savings account, because your money can earn more and you’re not doing anything different. And finally, number three, delete your credit cards out of online shopping sites. So businesses think that they are so slick, and they save your payment info, and they want you to think that it’s for your convenience, but really it’s to reduce the friction at the point of sale. So friction is anything that stands between you and making the purchase. So when you have to go get your card, when you type in your payment info to buy, all of that gives your mind a few seconds to catch up to what’s happening, and it interrupts the impulse that’s great for you, because if you give yourself a little pause before you buy, you might realize that you don’t actually want this thing as much as you thought you did. One tip that I give my clients, so this is a bonus one, but I tell them to put the stuff they want in their cart, especially with Amazon. Amazon is a big one. I tell them to put the stuff in their cart, but have a set day that they actually buy the stuff. So if, let’s say that the set day is Saturday. If I see something on Tuesday that I want, I put it in the cart, but then I wait until Saturday to buy it. And sometimes they come back to the cart days later and they’re so confused why they even put some of the stuff in there in the first place. So both of those tips will help to cut down on how much you spend on impulse purchases, which means you keep more of your money for yourself. The main point with this episode is that being better with your money doesn’t have to be this giant overhaul, this huge thing that you have to do. Sometimes there are just some small changes that you can make that make a big difference. And listen, if you want to get out of debt, there are a few changes you can make to make that process smoother. So be sure to grab a copy of my free guide at Rho thomas.com/guide. All right, that is it for this week’s episode. Please share this episode with a friend or two who could use these tips. Sharing is the best way to spread this information so more lawyers can get on top of their finances and experience the freedom that comes along with that. As always, I appreciate your support. As we close out, friend, I pray that you take the information you learn here, apply it in your life and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to regain control of your time, build wealth and live the life of freedom and choice you deserve. Talk to you later.