All the Small Things
Before I get started on my post today, I just want to say a quick few words about FinCon, the financial blogger’s conference, especially since I am writing this from my hotel room in New Orleans. I arrived for FinCon Camp on Tuesday afternoon and pretty much did not stop moving other than to sleep until Sunday afternoon. I plan to process the experience and interactions this week and share my top ten lessons learned while at FinCon this Friday, but at first thought, I found the week to be a surprising and energizing experience.
I met so many blogging friends that I have only known online, and when we saw each other, it was like reuniting with an old friend, the conversation was easy, fun and engaging. I met new blogging friends and realized that now my Bloglovin feed is going to have to get longer than it is already; and I met sponsor contacts who are really fun and supportive of our community. The conference is truly a unique experience and for anyone who is serious about their blog, growing their blog, and can hustle your way to the event, I highly recommend it.
Now onto my message of the week
There is some debate in the personal finance community, but certainly in the larger community about the “latte factor,” and whether or not it is relevant. The argument against the latte factor is that people should focus more on the large items if they want to maintain overall financial health because that is where you can really throw your finances out of whack; and to this argument I would respond that financial decisions should not be an either/or process. Everyone needs to focus on large and small financial decisions equally.
I was one of those people who didn’t focus on the small things. I didn’t think about an extra $3 here or $5 there, and I realize now that I not only wasted $1,000s of dollars over the years, but I also missed the opportunity to create healthy financial habits. From my personal experience and what I witness with clients, people who focus on the small things rarely seem to slip and make mistakes with the big things.
When you focus on the small things, you are making a habit of examining your money choices; and when you examine your money choices consistently, you don’t shut off your filter just because the price tag is larger than what you are used to.
My Client Who Focuses on the Small Things
I have a client who hates to spend money. She is the ultimate frugal and financially fit person that I know. Despite the fact that she has more money than she knows what to do with, she watches every last penny that she spends. Recently, we discussed the fact that she needed to purchase a new or next to new car and she was visibly annoyed and uncomfortable with the conversation. Even though she easily could pay cash for the car, she didn’t want to part with her money.
Finally, she made a connection through a friend and realized she could get a good deal on a used car, so she called me to ask my opinion first and make a plan for how we would move money around to fund the purchase. Even though she knew she had the money, she needed a car and we already discussed the purchase for two hours previously, she still struggled with the choice. She went to the dealership last week; however, and returned empty handed. She thinks that she can wait and try to find an even better deal.
Focusing on the small things builds good habits
This client focuses on the small things all the time, but as you can see, she applies the same rigor to her large purchases as well, and I see this all the time with clients like her, almost to the point where they are paralyzed to make buying decisions. Her continual focus on small purchases has created a positive financial habit that permeates all financial decisions.
There is plenty of evidence, and I have written about it before, of not spending money on the small things; however, what is missed in the conversation is that this practice creates habits and those habits infiltrate our other decision making processes which will save us more money down the road. My frugal client started her car buying decision thinking about getting something for $15,000, she held out and was offered something for $10,000; and I imagine that we she ultimately pulls the trigger on the car, she will pay $8,000. Her focus on the small $5 decisions, is going to lead her to save $1,000s on this next decision.
Image Source: FreeDigitalPhotos.Net Amenic181