Little changes make a big difference over time.
It is only natural to be a little shaken up by big negative events. The financial crisis of the last couple of years has erased trillions of dollars in value from investor's accounts, resulted in millions of job losses and left the world with more uncertainty than most of us are comfortable with. When faced with traumatic events it is not uncommon for the fight or flight instincts to kick in and for you to respond with dramatic adjustments in an effort to either counter or shield yourself from the dangers presented.
Panic moves however are rarely the best course of action.
I encourage my clients to think like Lance Armstrong and his team did during their seven year Tour de France winning streak. Make small adjustments and analyze how they will add up to big wins over time. Watch this clip below from The Discovery Channel's "The Science of Lance Armstrong" or add the full feature to your Netflix queue.
Sure Lance is one of the greatest athletes the world has ever known but remember he had to survive cancer before he went on to win those seven tour titles. No one would have blamed him if he retired from cycling after his victory over cancer but instead he chose to continue to pursue his goals. In order to win, Lance and his team didn't look for a single magic bullet but rather looked to small improvements in as many areas as they could.
Over the course of the 2,000 mile race, during which Lance would spend some 90 hours on his bike, the gap between first place and the rest of the field usually comes down to only a minute or two. Gaining a mere second per stage on his rivals would be a huge improvement. So, as you see from the clip they went to work on riding position, aerodynamic, frame weight, and even the shape of screws to gain every second they could. In the end all those little changes added up to pay huge dividends.
Take the same approach with your financial life.
Look at all facets of your financial life, all of your goals, all of the variables within your control and see what making small adjusts does to improve your chances for success. What if you saved 1% more than you are now? What would happen if you pushed out your planned retirement age by 1 year? What if you adjusted your planned spending to a staggered approach instead of a straight line assumption?
If you are in your 30s, 40s, or 50s, you are likely looking at an investment plan that spans some 30 to 50 years. Imagine how little changes will add up over that amount of time.
What small changes have you made so far? How are they adding up? I would love to hear your story.