Very small steps lead to very big money victories down the road

Very few among us will ever sell off our business to Google for a billion dollars. In lieu of striking it rich in the lottery or through the hard work poured into entrepreneurship, we need to instead try to focus on both the day-to-day and the money victories enjoyed over the long term.

Trying to picture the $50 you contributed to your company’s 401(k) program turning into a million dollars in retirement, however, is no easy task.

Start by asking the right money questions

Your friendly neighborhood ninja blogger had an especially tough time with this: The dual concepts of delayed gratification and compound interest.

After graduating from undergrad, I spent time trotting all over the globe. I taught English in South Korea, backpacked a few continents, worked as a “Fun Ambassador” on Saipan, and taught yoga in India.

Needless to say, I was living (and working as well!) for the moment. I was only trying to make enough money to save up for a plane ticket to a new travel destination.

It was great — better than great — but I wasn’t saving a dime for my future self. When my then-girlfriend (now wife) and I finally wanted to settle down after we met in Saipan, we didn’t have a clue as to where to start.

We had no money and very little idea as to what to actually do with any money once it started coming in.

So we started by asking each other a number of questions.

First, talk it out!

Well, first things first, we sat down and talked about literally everything we could think of. There were very big questions with simple answers:

  • Did we want to get married? Yes
  • Did we want to have children? Yes
  • Did we want to own a home? Yes

There were tougher financial questions we didn’t really understand:

  • What was our net worth? No idea
  • How would we pay off our loans? No idea
  • How would we save for a house, kids? No idea
  • What did we want our old-age to look like? No idea

At first, not understanding anything financially gave us quite a bit of collective anxiety. Once we took a deep breath — and had our job situations here in the States figured out — things became easier. We started to track the dollars coming into our accounts via direct deposit, as well as the dollars going out via our credit cards. Without even really realizing it, we were budgeting, and paying down our credit card debt.

All of that was great, but we still had a mountain of loans staring us in the face. We still didn’t have any money to put towards a home down payment, and we wanted to be able to comfortably afford to have kids.

Staying motivated wasn’t easy. We didn’t really have any sort of understanding as to the finer points of personal finance.

But we were building towards the life we wanted … slowly.

Next, lean on your support system and stay the course!

Those years weren’t easy. There were quite a few arguments over the budget and even more hand-wringing over investment decisions.

Not to mention Googling. There was a lot of Googling. As a quick aside, I do sincerely hope this website (and the many excellent ones all over the blogosphere!) are doing a great job of helping YOU stay motivated to reach your financial goals!

The point is, we kept pushing every day.

A little bit every day.

I was lucky. I had a wife that I could talk these things out with. We were both making money, so our large expenses (such as housing) were essentially cut in half.

She is much more technically savvy and organized than I am. When it came to budgeting — seriously budgeting — she dove headlong into Personal Capital and now we can easily see where every single dollar goes each month.

Not everyone has someone they can lean on so closely. Sharing joint accounts, completely mixing our finances and talking about it every week and every month is what has worked for us.

It’s a long journey, but it’s one that is made in small steps — together.

Some ideas to build your personal finance community

Do you have a support system in place? Lean on it!

  • Parents, obviously, have been there and done that.
    • I’m not saying that you should hit them up for money, but ask them how they requested raises at work, for example. Ask them how they invest their nest egg, if they are.
  • Start a money challenge with a friend.
    • Talking about income with friends is generally a bad idea, but a money challenge can be fun! See who can save an extra $500 in the next month, for example.
  • Join a group that will inherently help you save money.
    • If you join a mountain biking group, for example, you won’t need a gym membership, and maybe you’ll be motivated to bike to work as well. That will save on gas, obviously, but also automotive wear-and-tear.

Visualize and attack!

What did you when you were taking your first steps towards getting on the right financial path?

What types of mistakes were made?

I, for one, had taken out a car loan on 6.9% interest. I couldn’t afford the car in the first place, let alone paying so much in interest. Getting that liability off the books was a HUGE relief.

What types of questions have you asked yourself regarding your finances?

Do you have any idea how much you’re worth? Do you even know how much you’re spending every month?

Maybe you have a rough idea, and maybe you track every penny. Maybe you don’t even have a clue.

Take the time to visualize not only your day-to-day expenses, but also to see where you want to be years down the road. Do you want to be sitting in a cramped apartment, kicking yourself for wasting money on high-interest credit card debt?

I didn’t think so.

So take the time. Take those small steps today — right now, even.

They will lead to big money victories down the road.


Check out the ongoing, full retirement ladder here:

Step 0: Create a budget that helps you get wealthy

Step 1: Why building an emergency fund is so important for your nest egg

Step 1.5: What type of account is best for your emergency fund?

Step 2: Contribute to your 401(k) up to the company match

Step 2.5: How should I pick the best 401(k) investments for me?

Step 3: Pay off all high-interest debt as aggressively as possible

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