Date: February 23rd, 2018 8:00 AM
Imagine for a moment that you and a sibling just had a very close family member pass away. In this person’s will they named you both as primary beneficiaries of their vast estate; however, unlike a simple will, you are given two options to chose from:
• Option 1: You can choose to have $3,000,000 right now, no questions asked
• Option 2: You can take $0.01 and let it sit for up to 31 days. For every day that you allow that $0.01 to sit, it will double.
Your sibling immediately takes the $3,000,000 and begins to celebrate their new found wealth. You decide to take the $0.01 and let it sit, thinking that it will grow into a nice little nest egg for you.
Ten days later you see your sibling. You discuss how things are going. They tell you they have just bought a new home in the wealthy gated neighborhood on the hill. Of course to match the home, they purchased a gorgeous $100,000 car. They ask you how your choice of $0.01 is shaping up. You check, and your heart sinks as you see that you have a grand total of $5.12!
Another 10 days goes by and you both check in on each other. Their $3,000,000 is now down to around $1,500,000, but they are so excited with all the things they have been able to pay cash for (homes, cars, clothes, accessories, etc…). You check on your amount and again your hear sinks as you notice that you only have $5,242.88 (a far cry from the $3,000,000 you could have had 20 days earlier.
You’re beginning to regret your decision to not take the $3,000,000. Then, something magical happens. On day 28 you break into the $1,000,000’s ($1,342,177.28). Two day’s later you pass your sibling’s $3,000,000 by reaching $5,368,709.12, and on the final day you accumulate over 3 times what your sibling got for a grand total of $10,737,418.24!
This is what compounding looks like. As we go through life, our small daily actions don’t appear to mean a lot on the surface, but repeated over and over and they create who you will become. If I sit on my couch every night eating potato chips and watching TV to “relax”, several years from now I’m going to look down and notice a grossly out of shape individual with no self control.
If, on the other hand, I discipline myself to read good books, set daily goals and set a good nutritional meal plan for myself, years from now I will find myself leaps and bounds a head of where my current “peers” are.
BN Focus – If you don’t know where you want to be in 5 years, then you’re already there. Remember, becoming debt-free and ultimately financially free is a marathon, not a sprint. Plan out your BN Focus 5 year plan