One of the key tools in budgeting money is the power of compounding interest.
Do you feel overwhelmed or maybe even hopeless that you can accumulate a nest egg for your future? Do you feel like such a nest egg is just for rich people? The old saying that it takes a lot of money to make money is simply not true. It is just a myth. For some people, it might be an excuse to not get started on a savings program. Or perhaps you're one to think saving money cuts into your "fun time." It doesn't need to be that way at all.
It's time to change your thinking and embark on a new paradigm that you are in control and can create a nest egg for yourself. It could be saving long-term for a retirement or perhaps a more short-term goal such as a vacation. Many people just get caught up in frivolous spending and don't know how to get started to save for such goals.
The first budgeting money step is to write your goals down! Figure out how much money is needed to reach a goal.
Then let the most powerful tool in the world go to work for you: compound interest. Saving even small amounts every month can accumulate very quickly as compound interest builds on the principle and interest on an on-going basis.
The good news about compound interest is that it's a tool for the average person and even those with below average incomes. It doesn't matter what stage you are at in life, you have the powerful effect of compound interest available to you. Saving just $100 a month over a long period can yield a significant nest egg.
Here's a great article on the importance of saving and benefits of compound interest over long periods of time:
EXAMPLES:
Starting principal balance: $0
Monthly investment payments: $100
Interest rate: 10%
Future value: 20 years = $75,936
Future value: 40 years = $632,408
Starting principal balance: $0
Monthly investment payments: $500
Interest rate: 10%
Future value: 20 years = $379,684
Future value: 40 years = $3,162,039
Need to learn how to save $100 per month or more? By apply budgeting money tips, you can learn the motivation, knowledge and disciple to a implement a viable spending plan, paying off debt and saving for your nest egg. Then you too will be able to set aside a monthly investment amount to meet your retirement or other financial goals.
Michael Kastler is a personal budgeting coach who has created a variety of budgeting tools including his personal finance book - "Get a GRASP on Your Budget and Your Cash". His budgeting money tips blog helps individuals become debt free.
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