Big Wins, Small Wins, and the Payoff-to-Energy Ratio



What matters more for your net worth, big wins or (lots of) small wins?


Big wins are those singular decisions or actions we can take that have a large impact on our net worth. They can even be the reason that we have a positive net worth at all!


Big wins can come on the income side of the net worth equation for sure, like consistently negotiating raises and changing jobs for better opportunities. They can come through investing by consistently and aggressively saving from a young age, or making a smart/fortunate real estate purchase. There are some big-picture ways to spend less money as well, such as by committing to buying good-value used cars for a lifetime.


I think of small wins as being more on a day-to-day level, necessitating actions and decisions that individually have a small impact on net worth (though over time, if habituated, maybe a large one). Examples could be spending less on electricity costs by hang-drying laundry or eliminating vampire power sources. Food spending is another kind of typically small win if you meal plan, batch-cook, or coupon.


I admit that I have mostly been preoccupied with small wins since I graduated from college. However, all my frugal efforts have really been in service of the big win of saving at least 10% of my gross income toward retirement (up to 18% at the end of grad school, now down to 15%). It’s just that that big win of saving consistently for retirement didn’t take much time or emotional energy. It’s an autodraft that once I set it up I forgot about until I consider raising my percentage saved.


I haven’t had many opportunities for true big wins such as negotiating a salary or buying real estate (that is, given the grad school situation – certainly that involved opportunity cost), and it remains to be seen if we’ll make a pattern of buying used cars as we’ve only each bought one so far. Yet I have found another way of thinking about what actions to prioritize that will have a positive effect on my net worth, even without opportunities for big wins – the energy-to-payoff ratio.


In this conception, I’m less concerned with the absolute impact a decision or action will have on net worth – that is, it might be big or small – but more so with how much impact it has relative to the amount of emotional energy or time it took.


I think most big wins inherently have a high payoff-to-energy ratio – negotiating for a raise is a perfect example. The negotiation itself takes a couple hours, perhaps yearly. Looking for a new job, if you need to switch to increase your pay or further your career, would perhaps take tens of hours. But in either case, the impact on your net worth can be truly enormous.


The small wins I used as examples above probably have a low payoff-to-energy ratio. I know meal planning takes me a few hours per week and doesn’t seem to be reducing our grocery spending at all, or maybe there is only a small impact. Couponing is another good example of a time-intensive activity that has a variable impact on net worth.


But there are also some actions that might be on the smaller side in terms of the impact on your net worth on a monthly basis, but take only a one-time decision. Once you add up that monthly difference for the length of time that the one decision applies for, the impact becomes large. I explained five ways we reduced our spending with one-time decisions that were simple (though not necessarily easy). Those decisions helped us spend $6,000 per year less than we would have, and most of them last for multiple years!


Two areas in our finances that I’m eyeing as potential high payoff-to-energy wins are my student loans and Kyle possibly getting a roommate. Getting a win in those areas will require sacrifice, but basically only a one-time decision that will pay off in the range of thousands of dollars. One win that I wish we had taken when we had the chance is to install a programmable thermostat. Changing the temperature a couple times per day manually feels more like a small win to me, but having it automatically set to do so I think becomes a low-energy, worthwhile win. Now that I’m home all day, we keep the temperature fixed unless we’re out of town, so I think that ship has sailed.


Of course we should all be cognizant of the big wins we can achieve, when the opportunities arise. And there’s nothing wrong with adding up small wins as well, if you have the time and you aren’t ignoring the potential for big wins. But I think wins that have high payoff to energy ratios also deserve special consideration because they are so easy and lasting. There are also probably more of them to be had than the true big wins. Regular fixed expenses are a great place to look for high payoff to energy wins.


Do you seek out big wins, small wins, or high payoff-to-energy wins? What is an example of a high payoff-to-energy win that you have had?


Written by

Filed under: choices, income, investing · Tags: , , ,

22 Responses to "Big Wins, Small Wins, and the Payoff-to-Energy Ratio"

  1. I got an apartment to be near from work. This is what I consider a big win because I save money and time. My small win is I normally bring packed lunch everyday. Having done these two, it really adds so much savings to my emergency fund, I am happy with the results. 😀
    Jayson @ Monster Piggy Bank recently posted..Measuring Expenses as a Percentage of Your Income

    1. Emily says:

      ITA about living in close proximity to work being a big win or high payoff-to-energy win – it’s on the list I linked to. Bringing lunch every day is another small win, but I think a worthwhile one for sure! I’m glad to know that you have translated your not-spending into true saving.

  2. Oh gosh, I don’t know. I thought about this and concluded that I just really like wins. 🙂
    Cecilia@thesingledollar recently posted..OK, maybe I’m going to have to become the world’s least professional self-hosted blogger

    1. Emily says:

      Haha, fair enough!

  3. When you don’t make much money, you need to have both big and small wins. When you make a lot of money, you really only need the big wins. When small wins become habits (like taking into account leftovers in menu planning so you don’t waste food), they no longer take much energy, like you say, so why not.
    nicoleandmaggie recently posted..What did we get people this year?

    1. E 2 says:

      Agreed! Depends where you start from.

      As a grad student I’ve mostly focused on small, because that’s what has been in reach – my efforts to win big grants were not very successful! Some greater effort (extra teaching), some inherently fun (I love meal planning!), some low effort (spending less on alcohol & dining out). But to dig myself out of the “now I need to pay for childcare if I want to work” hole, I really need to get a big win – a much higher salary – and that will be high effort in this market.

      1. I would argue that as a student you were already doing the “big wins” in terms of savings, out of necessity. You can’t cut back on what you’re already not doing.

        Salary, of course, is on the income side of the equation and has infinite potential upside, though there’s a lot of luck involved.
        nicoleandmaggie recently posted..Ask the Grumpies: Questions about leaving academia

      2. Emily says:

        I think that unsuccessfully applying for grants deserves some kind of consolation prize status – at least you were opening a door to that kind of money coming in instead of ignoring the potential.

        After reading Getting to 50/50 and Lean In, I believe that your family can be a great motivation for women to go for the great jobs and negotiate a high salary, and I hope that holds true for you (and me!).

    2. Emily says:

      Yes, I think the small wins that never become habits are like the ‘forced frugality’ that we talked about last week. I definitely want to get to the point where we only have to concern ourselves with big wins, but I think it’s a ways off. 🙂

  4. Money Beagle says:

    I think everybody needs a mix of big and small wins. The big wins are the ones that mean major accomplishments and life changing events, but you need the small wins along the way to keep you motivated and happy.
    Money Beagle recently posted..Use Gift Cards As Currency For Holiday Shopping

    1. Emily says:

      That’s interesting that you find the small wins motivating… I think I find the big wins more so! My example in the post is true in that way – I am frugal to enable investing.

  5. SP says:

    I focus mostly on big wins and smaller habits that don’t take much effort. Big wins: career choices, negotiating on a car purchase, negotiating salary, staying a one car family.

    1. Emily says:

      Makes sense to me! I was thinking of your post on negotiating you new salary when I wrote about big wins.

  6. Mrs. PoP says:

    I’m with NIcole and Maggie to grab the big wins where you can, and habitualize small wins into your life so that they don’t feel like they are costing any energy to execute. Because there aren’t that many big wins, it’s fairly important to keep the small ones largely intact to avoid eating away at any gains made from the big ones.
    Mrs. PoP recently posted..Our Latest Insurance Dance

    1. Emily says:

      I was thinking about the ‘budgeting is a waste of time’ attitude for people who are in a place where they only need to focus on big wins. In that case, I think the idea would be that as long as you cap your overall living expenses somewhere reasonable, it doesn’t matter exactly how you accomplish that number. Maybe in that case you would still have small wins, but the big win would just be sticking to the ceiling.

  7. I think the big wins are key to growing your net worth. Housing and transportation costs can make or break a budget.

    We focus a lot on the little wins now too because there’s more wiggle room. The little wins do add up and make a difference.

    But I don’t think they could compensate for us living in a mansion driving a new sports car…
    Emily @ Simple Cheap Mom recently posted..Planning and a Promotion

    1. Emily says:

      ITA about housing and transportation being opportunities for big wins. Two of the suggestions in the post I linked to were high payoff-to-energy wins in those areas. As you said, small wins can make a difference, but only if you’re already getting big wins.

  8. With limited income, most of my wins feel small, but I imagine them piling up and helping each other, so that one day, they will actually be one big win.

    We used to buy coffee out almost daily. It wound up being about $4 a day. We recently started not going out to get coffee, and instead buying it from the store. Now, the average cost per POT of coffee is less than a dollar. Small win!

    1. Emily says:

      Coffee is a small win on a daily scale but a big one on a monthly scale! Great job!

  9. […] but it’s really not necessary to get the bulk of the work done. (This is quite related to the energy-to-payoff ratio that I discussed […]

  10. […] frugality realm, I’m such a big fan of reducing large fixed expenses (or anything with a high payoff-to-energy ratio) – it takes more doing up front, but the payoff over the longer term is […]

  11. […] When students start practicing frugality, they usually first turn to areas such as their food spending (a variable expense). However, the most effective and least onerous area of your budget in which to practice frugality is your large, fixed expenses. When you make a frugal choice in your large, fixed expenses, you lock in a rate that works well for your overall budget, meaning that there is less need to frugalize your remaining variable expenses, which require more willpower. […]

Leave a Reply


CommentLuv badge