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Just as a journey of a thousand miles begins with a single step, the path to your first million dollars can begin with a few small amounts of money.
Although you may be worried that your money decisions won’t even be on the radar of someone like Warren Buffett, these small choices can have a big impact on whether or not you can become wealthy in your own right.
GOBankingRates turned to financial experts to learn about small, yet smart, money steps that could make a million-dollar difference in your financial future.
1. Develop good saving habits
To D’Andre Clayton, co-founder of Clayton Financial SolutionsOne of the best things you can do to build long-term wealth is one of the simplest things: Learn how to save money wisely.
“Contrary to popular belief, your ability to save is the number one indicator of good discipline, which is essential to being successful long-term,” he said. “Having security and not being overly dependent on returns creates room for good investing habits. Saving is about control.”
The way Clayton sees it, learning how to save money teaches you respect for money. This recognition empowers you to be smart about your cash flow and be more strategic with your spending choices.
“If you can’t tell me where your last two paychecks went, chances are you’re not building wealth; you’re recycling income,” he said.
2. Make automation your best friend
Even though you have lots of friends in your life, Clayton would like you to make room for one more thing — the automation of your personal finances. He calls automation “your best friend” in wealth creation, whether you’re investing or paying off debt for a good cause.
“This helps you see how much money is left for your lifestyle, not just what you earn,” he said. “Automation eliminates the biggest point of failure in financial planning – human error. Because of emotion, we make the worst mistakes with money at the worst times.”
Automation makes key financial processes almost foolproof. You don’t have to worry about missing payments or forgetting to invest. The system works for you.
3. Prioritize paying off high-interest debt
Paying off debt may not be the most attractive use of your money, but it’s one of the most important things you can do to keep yourself financially secure and free up more money to build wealth over time.
For Christy Bachmeyer, EVP, Director of Consumer Banking Management and Sales frost bankFocusing on high-interest debt like credit cards and personal loans is a small but powerful step because these types of debt cost you much more interest than other types of debt.
“Aim to pay more than the minimum required payment if you’re able to,” he said. “Paying off this loan quickly can help you avoid paying hundreds to thousands of dollars in interest in the long run.”
4. Teach good financial habits in the family
The difference between enjoying a sudden financial boon and building generational wealth often comes down to teaching all family members how to manage money – especially teens.
If you’ve been avoiding conversations about finances out of worry that it will be awkward, remember that you’re parenting in the digital age. You can use digital tools and apps like Cash App’s “Family” feature To make it more interactive and engaging for your kids to engage and learn about money.
With these types of apps, teens can get practical experience managing money — from saving to spending to receiving direct deposits — all with parental supervision. This is a practical way to quickly normalize conversations about money, so money-building becomes a shared family value, not just something that parents manage behind the scenes.
5. Close spending leaks
You can have the biggest, most impressive looking ship at sea, but if it has hidden leaks, it will sink. A similar principle works with your finances, according to Dan Sudit, partner at crew advisor.
“A few dollars here and a few dollars there add up,” he said. “An $8 cup of coffee or an online food delivery service because you decided not to do the meal prep adds up fast. These are subscriptions you don’t even realize you’re paying for – ones you don’t need or won’t take the time to review for better rates.”
You know what you need to do: It’s time to make an inventory of your regular expenses to see if they’re really necessary. Or, as Sudit says, “Stop the frivolous spending (and) start saving intentionally.”
bottom line
Small financial decisions can add up to big ones over time. By creating smart habits now, from saving consistently to cutting unnecessary expenses, you can dramatically improve your chances of reaching long-term wealth and financial security.