Having your money working for you.... It’s not how much money you make, it’s what you do with it that counts.

Sun, 19 Oct 2008 22:58:00 GMT

Over the weekend, we held our MAGNET Money training event on the Gold Coast. The students were great, they asked a lot of questions and showed high levels of enthusiasm and a willingness to learn.

What surprised me most was our feedback at the end of the day when we asked them what they enjoyed the most. The majority of students said while they loved the MAGNET Money System, they also loved our Compounding example. This is where I take a $20 note and talk about having your money working for you versus you working for it.

First of all, I calculate putting $20 away each week for 50 weeks of the year into a money box. This equates to $1,000 at the end of the year. I then mention that if they have been putting a $20 note away each week for a year, they would have formed a habit and therefore would be likely to continue doing it each year for the next 50 years. This amounts to $50,000.

I then took this figure and showed them what it would become if they had their money working for them, if it makes a compound return (where the interest is reinvested) at 5% per year, like what they may get by putting it in the bank.

I then calculated it at 10% compounding per year, a return that they may get from investments that grow like shares and property. This is purely an exercise to illustrate how much harder money works for us compared to us working for it. This is the secret to becoming wealthy.

When I showed them the figure of approximately $1,170,000 at the end of 50 years with a compound 10% return, the students were shocked! They are now more motivated than ever to start saving. Wouldn’t you be?!

Using simple calculations such as these is a great way to illustrate to people the importance of starting early and having your money working for you. Most people think that the more money they make, the better off they will be. This is only true if they make their money work for them and compounding the secret to making your money work for you.

So, the lesson here is: It’s not how much money you make, it what you do with it that counts! Anyone who saves and invests $20 per week throughout their working life can become a millionaire – the question is how quickly do you want to?

If you would like to know anything about the power of compounding, drop me an email at info@moneytoolkits.com

Nicole Clemow

Money Toolkits Blog

Having your money working for you.... It’s not how much money you make, it’s what you do with it that counts.