Over the past decade, the price of my home insurance has slowly increased. It was never enough to motivate me to look for a new company. I thought this was the typical increase in the price of a product over time due to inflation and such.
But then, a few weeks ago, I received my home insurance bill for the coming year: the price had increased by $5,000.
I also had car insurance with this company, and they increased it by $1,000.
This prompted me to find a new insurance provider.
So I took the time last week to shop for new owners and car insurance. I thought it would take me all day to find new insurance and that my efforts could save me a thousand dollars.
I got a new insurance company with better coverage in about two hours.
And I reduced my insurance costs by $7,000.
Two hours of listening to my laptop and talking on the phone made me $7,000 richer. Talk about a fantastic return on investment!
My experience saving big on insurance reminded me of a key idea I learned from AoM podcast guest Ramit Sethi, author of I will teach you to be rich.
One of Ramit’s personal finance mantras is to focus on the “big wins” when it comes to money. According to Ramit, too many people focus on the details of personal finances. They try to ruin themselves to achieve prosperity. They spend most of their bandwidth trying to shave a few dollars off their budget.
“I have to give up my daily latte!”
“I’ll drive 20 minutes across town to save $0.20 per gallon on gas.”
“I shouldn’t splurge on an appetizer.”
Although there is virtue in practicing frugality, and every penny saved helps, when saving money is taken to the extreme, it becomes stingy. And it’s just not that effective: focusing on small ways to save money can eat up a lot of bandwidth without significantly moving your finances forward.
Although it’s okay to look for these “small wins,” people can get so caught up in their thinking that they overlook the opportunity to achieve financial “big wins.”
What are the big financial gains?
These are actions with a high return on investment: earning or saving thousands of dollars without much effort.
Save $7,000 a year on insurance with two hours of work? Definitely a big financial victory.
Are you negotiating a $20,000 raise? Great victory.
Are you starting an automatic investment plan that can generate tens of thousands of dollars in accrued interest? Great victory.
Ramit told me during our interview, “Instead of asking $3 questions, I want people to ask $3,000 or $30,000 questions.” »
So start thinking about a $3,000 question you should ask and where you can score a big win with your finances.
For more information on building your personal wealth, listen to our interview with Ramit Sethi:
#big #financial #gains
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