When you make small changes that benefit your goals to achieve financial freedom, you will quickly learn that there are many other areas in your spending that you can change without causing pain in your life.


I’ve read several articles recently that reference the futility of quitting your daily latte and pocketing the $5 per day to become a millionaire. I agree that you cannot realistically achieve that level of personal wealth with a small $5 per day savings habit. However, the simple act of saving a small sum builds a foundation for a habit that can compound over time and eventually make your financial dreams come true.

On my daily walk, I finished listening to James Clear’s book, Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones. This book received rave reviews from influencers I respect, including Ali Abdaal. When I watched his review of the book, I knew that I had to read or listen to the book. James Clear lays out habits and their impacts, good and bad, on our lives in a way that simply makes sense. There are so many great quotes from the book, but this one resonates with me, in reference to building a savings habit with a small $5 per day action –

“Habits are the compound interest of self-improvement” — James Clear

You will need to make significant contributions to savings to reach the million-dollar threshold of wealth, and a journey to wealth doesn’t start with a giant leap. Instead, like so many other habits, the savings journey begins with small steps.

If you want your savings habit to stick, you should not make this first step painful. If you simply cannot live without a $5 latte every day, find something else that is not providing joy in your life to trim out and apply to savings. When you inflict pain through savings, you create a barrier that will demotivate you from cultivating the habit.

Look around at your life and where you spend money. There are so many possibilities to reduce spending without impacting the quality of your life. So many opportunities to help you build a lifelong habit of savings that will transform you into the financial success you long to be.

An example to demonstrate the compounding effect of small contributions

I am using the 2021 estimated median US household income of $79,990 from the U. S. Department of Housing and Urban Development for the annual income in this example.

My goal was to reduce spending and redirect to our financial goals without impacting our quality of life.

Small Savings Steps

  • Reduce coffee shop spending by $100/month, $1,200/year, 1.5% of annual income. We didn’t cut out all coffee shop spending but reduced our visits.
  • Cancel SiriusXM, saving $12/month, $144/year, 0.18% of annual income. I already donate to my local NPR station, which plays the indie music I love and provides streaming.
  • Cancel Audible, saving $14/month, $168/year, 0.21% of annual income. I discovered that I could borrow great audiobooks from my library for FREE. I used my library to borrow Atomic Habits.
  • Consolidate streaming subscriptions, saving $20/month, $240/year, 0.30% of annual income. We decided to carry only one video streaming subscription at a time. If we have a must-see show on Netflix, we activate that subscription and then swap out for HBO Max, Hulu, or whatever + service has programing we want to watch. The key is that we only have one active subscription at a time.
  • Renegotiate broadband bill, saving $20/month, $240/year, 0.30% of annual income. This one was super simple. I made a phone call and asked for a better price. We have the same service and pay less.
  • Change gym membership, saving $30/month, $360/year, 0.45% of annual income. Fitness is vital to me, and I refuse to skimp in this area. I shopped around and found the same workout value for less. No compromises, just less money out of my pocket.
  • Cancel YouTube Premium, saving $20/month, $240/year, 0.30% of annual income. Ok, this was one that I thought would hurt. I love to watch YouTube. It turns out that I watch less YouTube than before and do more productive things, like creating a daily writing habit.
  • Swap cell phone providers, saving $150/month, $1,800/year, 2.25% of annual income. I moved my family of three from Verizon to Visible. I wrote about the experience here. The bottom line is that we have the exact same cell signal without a bunch of fluff for much less.

None of these actions were moves that individually made a significant impact on my financial goals. Each of these actions provided small opportunities and inflicted little to no pain in my life. Combined, these small steps result in savings of $366/month, $4,392/year, 5.49% of annual income. This represents 73% of the Roth IRA contribution limit in 2022 ($6,000). Not too shabby for some small savings steps.

Little Change Lead to Big Results

Here’s the great news. When you make small changes that benefit your goals to achieve financial freedom, you will quickly learn that there are many other areas in your spending that you can change without causing pain in your life. We tend to spend frivolously. Simply evaluating your spending habits and cutting out expenses in areas that do not bring value to your life becomes second nature.

Sure, saving $5 a day won’t make you a millionaire. Importantly, saving $5 a day will create a habit of savings that can compound and help you achieve your dreams much faster than you ever dreamed.