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Last week I talked about how creating a money routine can make a massive difference in your financial health. Just like a morning routine leads you to increased productivity, a money routine leads you to more wealth and more goals reached.
A money routine is simply a plan for how you direct your money, every time you get paid.
Your money routine will be different from my money routine, and mine will be different than the next person, but I do believe the same 3 things should be at the top of everyone's money routine.
One of those is to Set Money Aside for Your Future. In other words, save and/or invest money.
Tip of the Week.
Set money aside for your future starting now, and take advantage of compound interest.
Compound Interest is the biggest factor in building wealth, but most people don't give themselves the time needed for compound interest to do its magic.
If you don't know what compound interest is, it's when the interest you earn on a balance in a savings or investment account is reinvested, earning you more interest. And the longer you allow your savings to compound, the greater and greater it will grow.
Here's a wonderful example of how compound interest works:
If you were to start with a penny and double your money every day, it would take 20 days for you to earn $5,242.88, and yet it would only take you 10 more days to turn that $5,242.88 into $5.4 million.
Saving and investing works the same.
Here's a realistic example for you, today:
You put $400 a month into an investment earning 6% annually. Your investment account value at age 70 is:
- If you start at age 50 (20 year time period): $182,658.31
- If you start at age 40 (30 years): $392,102.59
- If you start at age 30 (40 years): $767,185.39
- If you start at age 20 (50 years): $1,438,901.56
Now you may not have 50 years to save, but my point is the more time you give your money to grow, the larger your increase.
Start Setting Money Aside for your future today and take advantage of compound interest.
Make it one of your top 3 Money Routine steps, and be prepared for a good and long life.
Who knows, maybe your $400 a month will turn into $1 Million.
