Over the past decade, my homeowner’s insurance has slowly increased in price. It was never enough to motivate me to look for a new company. I figured it was your typical price increase that you see in a product over time due to inflation and whatnot.
But then, a few weeks ago, I got my homeowner’s insurance bill for the coming year: the price had gone up $5,000.
$5,000!
I also had my vehicle insurance with this company, and they raised it by $1,000.
That lit a fire under me to find a new insurance provider.
So I took some time last week to shop around for new homeowners and car insurance. I figured it would take me all day to find new insurance and that my effort might save me a thousand dollars.
I had a new insurance company with better coverage in about two hours.
And I reduced my insurance costs by $7,000.
Two hours of tapping at my laptop and talking on the phone made me $7,000 richer. Talk about a fantastic ROI!
My experience with saving big on insurance reminded me of a key idea that I took away 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 minutiae of personal finance. They try to nickel and dime themselves to prosperity. They spend most of their bandwidth trying to shave a few dollars off their budget.
“Got to give up my daily latte!”
“Going to drive 20 minutes across town to save $.20 a gallon on gas.”
“I shouldn’t splurge on getting an appetizer.”
While there’s virtue in practicing frugality, and every bit saved does help, when penny-pinching is taken to an extreme, it becomes miserly. And it just isn’t that effective: concentrating on small ways to save money can take up a lot of bandwidth without significantly moving your finances forward.
While it’s fine to pursue these “little wins,” people can get so caught up in thinking about them that they overlook the opportunity to score financial “big wins.”
What are financial big wins?
They’re high-ROI moves: making or saving thousands of dollars without much effort.
Saving $7,000 a year on insurance with two hours of work? Definitely a financial big win.
Negotiating a $20,000 raise? Big win.
Starting an automatic investment plan that can result in tens of thousands of dollars in accrued interest? Big win.
Ramit told me in our interview: “Instead of asking $3 questions, I want people asking $3,000 or $30,000 questions.”
So start thinking about a $3,000 question you should be asking and where you can score a big win with your finances.
For more insights on building your personal wealth, listen to our interview with Ramit Sethi:
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