Compound Interest

There’s a great thing that you might be unaware of and that is compound interest. Compound interest is a powerful thing. The way it works is that when you save money you earn interest on the principal and the interest. Let’s define principal. Principal means the money you put (save) into an investment instrument, savings account, money market account, etc.
Compound Interest

There’s a great thing that you might be unaware of and that is compound interest. Compound interest is a powerful thing. The way it works is that when you save money you earn interest on the principal and the interest. Let’s define principal. Principal means the money you put (save) into an investment instrument, savings account, money market account, etc.

The first month you save money, you’ll earn interest on your initial investment. This is referred to as a return on investment (ROI). The next month, you earn interest on your original investment and on the interest that you earned last month. Every single month, you interest on all the money you’ve saved and on all the interest the financial institution pays you. You’re earning interest on the interest!

However, compound interest will not work unless we develop one thing. We must develop discipline. You need to discipline yourself to save. We are not naturally prone to save. Therefore, we need to train ourselves to save. The Bible talks about discipline.

Hebrews 12:11 – “No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it.”

It’s certainly not pleasant to do something like exercising or saving, but in time it will produce the desired results. If you train yourself to save money, then when you need it, the money will be there. As they say in the military and in law enforcement, “On your six.” That means it’s got your back. It’s there and it’s ready to cover you. This as your O-line (Emergency Fund) it is ready to protect you from emergencies.

RH

RH

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About Me

Hi, I’m Rosie. A Jesus Freak, wife, mother, and a Certified Financial Coach. 

This site is dedicated to you, our reader. Within the site you will find tools that will help you achieve financial freedom, so that someday you will become debt-free and be a generous giver.

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