Wealth is not something that is created in a day, it takes time and discipline and often sacrifice. You need to be willing to change certain ways of thinking and some habits in order to accumulate wealth and then be able to retain and build your wealth.
Part of building and sustaining wealth is having an understanding and appreciation for the power of incremental changes and the compounding effect thereon. If you improve just 1% on the previous day and you do that for a whole year, 365 days, you don’t only improve 3.65 times, you improve 37.78 times – that is the power of compounding.
Now I’m sure we have all heard about compounding in terms of money, but what about the non-financial aspects that play a big role in your finances and building your wealth? Let’s focus on those for a few minutes while keeping in mind the principle of incremental gains.
Our mindsets and how we think about money plays a significant role in how we manage our finances. Our past experiences, how we grew up, our culture, our education and our lifestyle all have an impact on how we perceive and work with money. Maybe it’s time to start slowly but surely addressing our ways of thinking and making changes that will have a positive impact on our ability to manage our money. Our thinking will not change overnight, but if we are intentional about changing our mindset and biases one small aspect at a time, then we could see a significant improvement over time.
Learning the art of delayed gratification can be one of the biggest weapons for your financial battle. I acknowledge that it is something that most of us struggle with because we live in a world where “instant” is a buzz word, whether we are talking about anything from communication to food to payments. But that is why it is the perfect area to practice incremental changes. Start by delaying buying something that you want by one day, and then another, and then another. If you manage to delay it by a week or 2, you will most likely either forget about it or realise that you actually didn’t really need it to start off with and you would’ve just saved yourself some money.
Educating and investing
Educating and investing in yourself is often overlooked and that needs to stop. You are your biggest asset and the more knowledge you have the more power you have, even if it is just over your own life and your decisions. I know we don’t all have an abundance of time (or energy) to do a degree in finance or financial planning (just to focus on money, but it could be any topic that is of interest to you) but that doesn’t mean that you don’t have the ability to do anything. Sign-up for an online course and work through one video a week or buy a book and read just one page a day. These small tasks seem very manageable and before you know it, you would’ve worked through a whole course or read a whole book. Along with the knowledge that you would’ve gained, you would also have improved your self-discipline which will naturally assist you in managing your finances better.
I have just highlighted three areas that you can practice incremental changes and hopefully experience the incredible power thereof. These are also areas in your life that you can very easily have control over so focus on these and make decisions every day that will place you in a better place tomorrow. Remember, never underestimate the small changes, they can lead to the most amazing results. One step at a time is all it takes.