“Twelve years ago I had a wonderful assistant, Kathleen. She earned $40,000 a year at the time. She was tasked to manage the registration table situated at the back of the room during one of my lectures on entrepreneurship and wealth building. The next week she came into my office. “I heard you talk about saving 10 percent of everything you earn,” she told me. “That sounds nice, but there is no way I could do that. It’s totally unrealistic!” She proceeded to tell me about all her bills and financial obligations. After she wrote them all out, it was obvious there really wasn’t any money left over at the end of the month. “I need a raise,” she said.
“I’ll do better than that,” I told her. “I’m going to teach you how to become wealthy.” It wasn’t the answer she was looking for, but she agreed.
I taught Kathleen how to track her spending, and she began to carry her notebook. I told her to open a separate savings account with only $33—just 1 percent of her existing monthly income. I then showed her how to live on $33 less the next month—bring in her own lunch just one day a week instead of going downstairs to the deli and ordering a sandwich, chips, and a drink. The next month I had her save only 2 percent ($67). She saved the additional $33 by changing her cable subscription service. The next month we went up to 3 percent. We canceled her subscription to People magazine (it was time to study her own life), and instead of going to Starbucks twice a week, I told Kathleen to buy the Starbucks beans and other fancy fixings and make her own coffee in the office (she grew to like that even better—me too!).
By the end of the year, Kathleen was saving 10 percent of every dollar she earned without noticing a significant impact on her lifestyle. She was amazed! That one discipline also had a ripple effect on many other disciplines in her life. She calculated what she spent on mind-numbing entertainment and began investing that money on personal growth instead. After feeding her mind with several hundred hours of inspirational and instructional content, her creativity started to soar. She brought me several ideas on how we could make and save more money in our organization. She presented me with a plan that she would implement in her spare time, if I promised to reward her with 10 percent of all the money-saving strategies and 15 percent of all the new revenue strategies that proved profitable. By the end of the second year, she was earning more than $100,000 a year—on the same $40,000 base salary. Kathleen eventually started her own independent contract service business that took off. I ran into Kathleen at an airport two years ago. She now earns more than a quarter of a million dollars a year and has saved and created more than $1 million in assets—she’s a millionaire! All starting from the choice to take one small step and start saving $33 a month!”
Excerpt From: Darren Hardy. “The Compound Effect.” iBooks.
See how it works? It’s the little steps. I’m not telling everyone to save a whopping 20-40% of your salary each month. I’m not even saying 15%….but saving incremental one’s there and one’s here will add up to the significant amount. I always take good care of my monthly subscriptions. I limit myself to going to my favorite Italian restaurant. I make sure I don’t buy anything completely outlandish if I don’t need it. All these little things have added up to a savings account whereas if I look at it — I go “DAMNNNNNN!”
Time Is of The Essence – Tony Robbins Video On Compounding
In This video, Tony talks about starting at particular ages, but what it all comes down to is you can start saving little-by-little now and reap the rewards.