Lending Club Blog

Work On One Change at a Time

Continuing with our look at financial systems, the next step, after you have clarified and identified where your money is going, is to find the area that needs the most work. This does not have to be an area where you are losing money or getting in debt, but an area that you can see will improve if you work on it. You want to choose an area that you can change pretty quickly, so that you can build momentum and then work on your bigger goals in your financial life.

For example, once I started keeping track of my expenses, I saw that in my financial system I was spending over $200 per month on coffee and pastries. I always thought that I might be spending a little bit too much in this area, but keeping track of the exact amount put a number to this hunch. It was now a fact. And I had to do something.

Then I analyzed the entire process that I went through in the morning that led to me spending this kind of money. I realized that the main driver for me going to Starbucks, or one of the alternatives, was that I was running short on time. By starting my day earlier, I would not have the same time pressure and could make my coffee at home or at the office.

Although I didn’t fully eliminate the coffee expense, I freed up about $100 per month, which is now going towards investing for my future.

You should do the same. Look at any area of your financial system and see where you can make small changes that can end up making a big difference. Don’t put ten or twenty things on your list and try to change them all at once, as it will be too big of a change to handle at once. Take one item from your list and analyze the entire process that you go through before and after making this purchase. Then consider putting part of this newfound money you’ve generated into some P2P loans on Lending Club.

Changing one item at a time will build up your confidence and the momentum to keep on changing other things. Eventually, you will have your personal financial system optimized and capable of carrying you towards your financial goals.

You do have written financial goals, right?

Wednesday, March 5th, 2008 at 11:57 am

Comments (1)

  1. David:

    I can appreciate this; I’m doing the same thing. I’m trying to
    reduce expenses for an expected future mortgage payment, because I
    simply spend too much to afford it currently. I noticed that I
    naturally spend cash at $50/week. Combined with other cuts, I need
    to reduce it to $30/week, but that’ll only happen if I make my
    lunch on workdays. That’s the one change I’m focusing on first, and
    the most difficult. I can do it, but I have to wake up at *least*
    50 minutes before work to make my lunch, so that’s what I’m
    focusing on: if I’m up by 8:10, I’ll save $20/week = $80/month.

    March 13th, 2008 at 2:26 pm


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