Power at your fingertips.

The power of wealth building is available to anyone. It has been written about numerous times and even been advertised on the covers of magazines. But like many good ideas, it is commonly ignored be the masses.

What I am referring to is the POWER of COMPOUNDING.

This power can make anyone a millionaire by the time of retirement. But the secret is starting now—not later.

For instance, saving $2000 a year from age 20 until age 30 could mean a nest egg of thousands of dollars by retirement. Conversely, if you start saving $2000 a year at age 31 and contribute until age 65, your balance will be less than the first example. This is assuming the same average interest rate in each case.
There are multiple sites on the internet to compute compounding scenarios. Bankrate.com is only one of them.

But it is not the purpose of the article to talk numbers. My purpose is to help you get started toward wealth building since the only thing keeping you from profiting from compounding is between your ears. And you must have wealth building firmly as a mental goal before anything will happen.

I submit that anyone with positive income can take advantage of compounding power. My definition of positive income is the amount of money remaining after you pay all mandatory bills. These bills include utilities, rent/mortgage, court related debt, etc. We all pay many other bills on a monthly basis but most are related to decisions between want and need.

But, too often we create unnecessary expenses that in turn become “mandatory”. Huge car payments, smoking or related habits, spontaneous purchases (cash or credit card), and other spending habits become wealth robbing decisions. We choose to ignore the future and live in the present. You choose how to spend your money, however limited it may be. Your choices determine whether compounding is working for you or against.

Compounding power is in your favor in a savings account and against when you have debt. The same
compounding powers are at work except for the fact that one builds wealth and the other destroys. The more money you choose to pay for financing charges, late fees and over limit fees and maybe even legal fees related to collection of debt destroys your ability to build wealth.

I have helped persons on welfare start a savings account and watched it grow. I said earlier that the difference is between your ears. In each case, there was an overriding goal that helped them succeed. Thus I know anyone can utilize the POWER toward a better future.

So it is now up to you to decide one of two things. First, do I take steps, starting today, to build wealth for my future? Second, if you are already saving, do you learn more increasing the effects of compounding on existing savings.

The author is a counselor for Financial Solutions of SW Washington. If you have questions about this article or have ideas for future topics, please contact him @ 575-9395.