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Getting Wealthy One Small Step at a Time

July 2012

Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

The publication of the second edition of the Small Steps to Health and Wealth™ workbook is a good time to revisit the basic premise of this program. Small daily behavior changes in health and personal finance practices can have a major positive impact on the quality of people’s lives. So what’s stopping you from becoming healthy and wealthy? What are the major obstacles that keep getting in your way? For many people, it’s one or more of the following items: denial, environmental influences, fear, lack of specific goals, negative thought patterns, not knowing where to get started, and other people (e.g., family and friends).

Once you identify your obstacles to positive behavior change, make plans to overcome them. For example, request information about your company retirement savings plan and set a specific savings goal (e.g., invest $100 per month in 401(k) plan). Not sure where to begin? Consider these strategies for improving your finances from the Small Steps to Health and Wealth´âö workbook.

  • Track household spending for a month or two by writing down the amount spent and the expense category (e.g., gas for car). Use this information to develop a spending plan (budget) that includes savings for financial goals. Increase income and/or make reductions in discretionary expenses (e.g., food, clothing, entertainment), as needed, so that income = expenses + savings.
  • Place two dollars a day, plus pocket change, in a can or jar. At the end of a month, you’ll have about $80 to $100 accumulated. Save this money in a bank account or, better still, if you have credit card debt, add it to the minimum payment due on a credit card. One of the best “investments” people can make is to use their savings to pay off outstanding credit card bills with double-digit interest rates.
  • Set up “automated routines” for investing. For example, have money directly debited each month from your bank account to purchase shares in a stock index fund or stock from companies with a dividend reinvestment plan (DRIP). You won’t miss what you don’t have. Anytime you get a raise, put some or all of the extra money into savings or investments or use it to reduce debt.
  • Participate in a work-related retirement savings plan (e.g., 401(k) or 403(b) plan). If you’re not currently enrolled, sign up and start saving. If you’re currently saving something, save at least 1% more of your pay. Try to save at least the amount required to earn the maximum savings match from your employer (e.g., 6% of pay). This is “free money” that, unfortunately, many workers pass up the opportunity to earn. A 50-cent on-the-dollar match is like earning an automatic 50% investment return.
  • Complete the Ballpark Estimate retirement planning worksheet developed by the American Savings Education Council (see to get a rough estimate of what you need to save each year to fund your retirement. Try several scenarios until you get to an affordable savings figure. Then adjust household income and expenses to “find” the required dollar amount and start saving.

Small consistent action steps can lead to financial success. Save what you can right now (e.g., 2% of your salary) and, when you are able to save more (e.g. 3% or 4%), just do it. No step is too small to get started and you can never be too early or too late. Every small step taken to improve your health or finances is better than doing nothing. Even small amounts of savings- just $10 a week- can have a powerful effect over time.

Compound interest and employer matching will add to what you personally can save. Compound interest helps build wealth because interest is paid on previously earned interest as well as the original deposit or investment. Never underestimate its awesome power. Mathematical genius Albert Einstein is reported to have called compound interest “the 8th wonder of the world” because he was so impressed with the concept.