Thursday, May 31, 2007

The Power of Saving

Let's recap before I begin with today's topic.

To start your wealth creation journey, it is important that you begin it with an end in mind. With your dream or desire translated into financial goals, your direction becomes clear and your actions become obvious. Click on "begin with an end in mind" if you need help in formulating your financial goal.

Once your goal is set, the next step would be to manage your spending. It is obvious that income you earn either goes to spending or saving. In your wealth creation journey, it is critical that most of your income goes into the saving bucket. Click on spend below your means and more managing spending tips to read more about how to manage your spending..

Believe it or not, Saving can do wonders to your wealth creation journey. Why? This is because it is a cash generating asset and its potential can be huge if you make it work for you.

At this point, I would like to introduce to you two concepts - the power of time and the power of compounding.

Here is one thought from the Richest Man in Babylon

Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed, the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.

Basically, he is talking about the power of time. If you save a little for a long period of time, it will grow and grow and grow and you will be able to grow your wealth tremendously.

He also talked about the power of compounding, where over a long period of time your money will actually feed on itself, earning you additional dollars which ultimately grow into a sizable amount.

So what is the lesson learned? Start early, start now. Save/invest as much as you can and keep doing this over a long period of time and you will accumulate a substantial retirement fund in no time.

Stay tuned. I will illustrate the two concepts with figures when I come back. I am sure it will be an eye opener to you. But do not be shocked, ok?

See you!. Visit my website too if you have some time.


Biby Cletus said...

Cool blog, i just randomly surfed in, but it sure was worth my time, will be back

Deep Regards from the other side of the Moon

Biby Cletus

Chew Pheng said...

Thank you Biby. I glad you like it.