Key takeaways

  1. When it comes to financial goals, starting with big changes can make them difficult to achieve
  2. By making small incremental changes you are more likely to stick to your plan and meet your goals 
  3. Your plan can be as simple as making a 1% change, whether it’s contributing to your 401k, saving more money, paying off debt or anything else you want to focus on

Most people think that financial success means you have to go big — a high salary, large contributions to your retirement fund, life-changing plans. The challenge with thinking big is that it can make financial goals seem almost impossible to achieve. It’s easy to become discouraged and give up.

In fact, the key to reaching your financial goals is to forget about thinking big and start with small, incremental changes. It can be as simple as making a 1% change. That’s the whole idea of the 1% Pledge.

Instead of being overwhelmed by goals that seem almost insurmountable, the 1% Pledge breaks down those goals into a series of manageable steps that are much more likely to become habits. Start by putting 1% of your paycheck into savings or your 401(k) and then build from there. 

Studies show that small actions can lead to big results and new habits. And goals take about two months to become habits, so don’t get discouraged if it takes awhile for your changes to feel permanent. The key is to get started and you will soon see how you can achieve your financial goals.

Getting started

The 1% Pledge leverages small changes that gradually lead to major changes and achievements. It begins with deciding which areas of your financial life you want to change, such as saving for retirement. 

Let’s say you started a new job and your employer automatically enrolls you in a 401(k) plan with a default contribution of 3%. You start at $50k a year, your annual raises are 5%, and your investments average a 7% return.

If you never change your 3% retirement contribution, at the end of 30 years you’ll have approximately $114,000.

If you increase your contribution by one percentage point each year until you’re contributing 15%, at the end of 30 years you’ll have over $517,000 in your 401(k). And that’s before including any employer match.

The 1% Pledge will mean over $400,000 more when you retire!

You’ll barely notice the difference each year when you bump your contribution by one percentage point. But you’ll definitely be happy about the additional $400,000+.

The power of the 1% pledge

The same small, incremental changes that can help you enjoy a secure retirement can work for your entire financial life. Add a few bucks beyond the minimum payment when paying off credit card debt or student loans and that can knock months, or possibly years, off the time it takes you to pay off your debt. Add a little more to your mortgage payment every month and you’ll pay it off in less time as well as build equity in your home faster.

The 1% Pledge doesn’t just apply to your finances; you can also use it in other areas of your life. Gradually increase the amount of time you spend out on a run by 1% every session, and pretty soon you’ll be logging some serious time building your strength and endurance. Jog 1% longer every time you go for a run and before you know it the miles will start adding up.

The 1% Pledge may seem too small to make a difference, but it’s a powerful idea that will make it much easier for you to succeed.

Get started by scheduling a free introductory call with a CFP® Professional at Facet to help you establish your financial priorities and get you going on the 1% Pledge.