Time is the Secret to Financial Success

Financial plans, strategies and tips only work if you apply them for the long term.

Have you been budgeting, saving and cutting expenses for weeks without seeing much financial progress progress? Even if you’re doing all the right things, you’re missing one key ingredient. Because time is the secret to financial success.
There's no shortcut to prosperity. tweet this!Budgeting, discipline, diligence, savings, giving and investing are all important parts of your financial success formula. But time is the secret ingredient in this recipe, because people rarely talk about it. That’s too bad, because there’s no shortcut to prosperity.

Think of the prescription for financial success like the recipe for making a cake. You can gather all the necessary ingredients in precise quantities. You can combine them exactly as the recipe dictates. But until you put them in the oven and let time do its work, you don’t have a cake. You only have a bowl full of batter. In the same way, time is the secret to financial success.

Whether you’re trying to grow your income, pay off debt or build wealth for retirement, you can’t make the effort successful with a short burst work. In order to succeed, you must work consistently over time.

So how does time help us to make the most of our financial lives? Here are five reasons time is the secret to financial success.

1) Time makes small incomes bigger.

When you first start working as a young person, you’re going to be making a relatively small amount of money. After all, you have a small amount of experience in your field. 

As you grow in expertise, however, your field of opportunity will widen and your income will grow. This means that early in life, you may not be able to do some of the things you want with your money. But if you’re patient and diligent, you’ll eventually have an income that allows you to meet all of your financial goals.
You don't have to sock away large sums of money to create large amounts of wealth. Time does the work for you. tweet this!

2) Time grows small investments into big wealth.

It doesn’t seem possible that $80 per week could ever add up to a large amount of money. But as we’ve discussed before, investing this relatively modest sum over the course of your career can enable you to retire as a millionaire. 

The key here is time — 40 years of working and investing, to be specific — and the fact that your investments grow in value over time. If you invest for the long-haul, you don’t have to sock away large sums of money to create large amounts of wealth. Time does the work for you, because time is the secret to financial success.

3) Time turns small decisions into big differences.

This is another way of describing the Starbucks principle — things that seem like small expenditures can add up to huge amounts of money when we practice them on a regular basis. Buying a fancy coffee three or four times a week can cost you $1,000 or more over the course of a year. 

Likewise, any habit you repeat regularly will be magnified over the course of time. That means small expenses turn into big expenses and small savings turn into big savings. The trick is learning to use time to your advantage.
Avoiding debt will help you keep small interest payments from becoming a big part of your lifetime finances. tweet this!

4) Time makes small debts big debts.

You’ve seen it before: You take out a relatively small loan and then slowly make payments on it. By the time you’re done, you’re shocked to see how much money you’ve paid in interest. Sometimes the interest payments add up to much more than the value of the initial loan. This happens because time magnifies things, and the time you take paying off a loan turns a small debt into a big one. 

Fortunately, the reverse is also true: If you pay your debts now, this can add up to large savings in interest payments over the course of time. Avoiding debt will help you keep small interest payments from becoming a big part of your lifetime finances.

5) Time turns small gifts into big impacts.

Giving is one of the most important things we can do with our money. And even if you can only afford to give small amounts of money, time turns those small gifts into big impacts. If you give a small amount of money to a good cause every month, those gifts add up over time and amount to a significant financial contribution. 

And there’s a ripple effect: If your gift helps just one person turn their life around, that one new life will impact many other lives in positive ways. Over time, the net impact of your small gift can be delightfully large.

No matter how small your habits are, time will magnify them. So if you want to walk in financial freedom, commit to good habits now. Give them time, and they will change your life.