Modern life is busy, and we are often time-poor during our working and family lives. We’ve all used the phrase: “There aren’t enough hours in the day”.

This is one reason why so-called “life hacks” – small changes that can make a big difference to your life – are so popular.

More recently, these hacks have had a brand overhaul. You might have read or watched reports about “micro-efficiencies”.

Keep reading to learn what micro-efficiencies are, what they might look like in your day-to-day life, and how, through the concept of marginal gains, they could help you build wealth too.

Micro-efficiencies can give you time to do the things you love

Small wins can be simple but also incredibly powerful when compounded over time.

As a busy professional, you might opt to brush your teeth in the shower rather than afterwards. You’ve effectively clawed back an additional two minutes a day, which could amount to more than 12 hours over the course of a year.

Find another way to save two minutes a day, and you’ll grant yourself an extra full day each year.

If you start your day with two cups of tea or coffee, you could boil the kettle once and pour both drinks at the same time, or buy slip-ons instead of wasting time tying and retying shoelaces. Either could easily save you two minutes.

What would you do with your extra day? From hobbies to travel and spending time with loved ones, the list of possibilities is endless.

Micro-efficiencies are akin to “marginal gains” that could help you achieve your financial goals 

Micro-efficiencies can also make a big difference when it comes to your finances. In this context, these small changes are often known as marginal gains.

Here are three.

1. Upping your workplace pension contribution by 1%

Your pension is a long-term investment. That means small changes have a long time to take effect, and their benefits can compound over time.

Compounding means earning growth on growth, allowing wealth to increase exponentially.

If you are contributing to a workplace pension via auto-enrolment, you might be paying the current minimum of 8% (composed of 5% from you and 3% from your employer).

Over the decades of your investment, a 1% increase could make a huge difference. You might also find that your employer will match any increase you make, so consider having this conversation now.

If you currently contribute £200 a month, a 1% increase would cost you £4, around the price of an average Starbucks coffee.

2. Checking in with your provider’s charges and shopping around

While you’re building your career and investing a portion of your hard-earned money into your future pension, you’ll want to know that your money is working hard for you.

In the same way that increased contributions can compound positively over time, pension charges can compound too, eating into your fund.

Your pension scheme might levy charges like annual management fees, and for older plans, especially, these charges can be significant. There are charges to transfer a pension fund, too, but shopping around for a provider with low charges could mean you recoup any initial transfer charge over time.

Of course, transferring won’t be right for everyone, and very strict rules apply when you want to transfer a defined benefit (DB) scheme.

It’s important to remember, though, that you don’t need to stick with your current provider, either during the accumulation phase or once you retire. Shopping around for a better deal could be hugely beneficial over the long term.

3. Small tweaks can form powerful habits and be easier to stick to than wholesale changes

Brushing your teeth in the shower to save two minutes a day might seem pointless, but we’ve already seen how much of a difference it can make over the course of a year.

Small tweaks to your lifestyle or financial habits can bring about big changes, and they all add up. Rather than cutting out restaurant meals and takeaways altogether, or paying a lump sum into your pension, remember that it’s okay to start small.

You might begin by having one less takeaway coffee or meal out a week, or by cancelling one unused subscription service. Channel this money into your pension by increasing your contribution by just 1%.

Small changes are generally less impactful, which makes them more palatable, and this is how lifelong habits form. Marginal gains need time for their power to become apparent, so be prepared to be patient too.

Get in touch

Marginal gains can build up over time and make a significant difference to your progress towards milestone life goals. If you need help incorporating them into your plans, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.