The Power of Small Financial Changes: How the 1% Rule Can Transform Your Wealth
When it comes to building wealth, many people assume it takes massive changes, like doubling your income or landing a big investment win. But in reality, small, consistent changes in your financial habits can compound into life-changing results over time. It's not about being perfect, it’s about getting slightly better. Just 1% better, day by day.
This idea is often referred to as the 1% rule: if you can improve a part of your financial life by just 1% on a regular basis, the long-term impact can be enormous thanks to the power of compounding.
Why Small Changes Matter
Imagine improving your financial decisions by just 1% every month. That might seem insignificant at first, but over time, those tiny improvements stack up. Much like compound interest in your savings account, small wins build momentum. Eventually, they lead to big results without the need for drastic, unsustainable changes.
Let’s explore five practical ways to implement small changes that compound over time:
1. Increase Pension Contributions by 1%
Most people set a pension contribution rate and forget about it. But increasing your monthly contributions by just 1% of your salary can have a significant long-term effect on your retirement pot. Not only are you saving more, but you're also likely benefiting from employer contributions and tax relief, making that 1% worth even more.
2. Reduce Unnecessary Subscriptions
That unused streaming service or gym membership might only cost £10–£15 a month but cancelling even one or two forgotten subscriptions can free up hundreds of pounds a year. Redirect that money to your savings or investments, and over time it can grow substantially.
3. Round Up and Save the Change
Many banking apps now allow you to round up your purchases to the nearest pound and automatically save the difference. Buy a coffee for £2.40? 60p gets saved without you even noticing. These micro-savings add up quickly, especially if you automate them.
4. Schedule Quarterly Financial Reviews
Rather than letting your finances drift, booking in quarterly check-ins with your adviser can keep your plan on track. Even minor adjustments, like rebalancing a portfolio, updating goals, or tweaking savings rates, can compound into major benefits over the long term. These reviews help ensure you’re not just earning more but keeping more and making it work harder.
5. Increase Investments by £10–£20 a Month
Even a small increase to your regular investment contributions, say £10 more per month, can result in thousands of pounds over the long term, thanks to compound returns. For example, investing an extra £20 a month over 20 years at a 6% return could grow to over £9,000.
The 1% Mindset
At its core, the 1% rule is about mindset. You don’t need to overhaul your life overnight. Just aim to make small, manageable improvements consistently. That’s where lasting financial change really happens.
At Universal Finance, we help clients make smart, sustainable decisions that support long-term wealth-building. If you’re ready to explore how the power of small changes can work for you, we’re here to help.
Start small. Think long. Let compounding do the rest.
Ready to take your next 1% step? Speak to one of our advisers today using the button below.
