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Time is a gift and our most precious resource. It’s also the power that carries along the most incredible transformations.

But nothing meaningful can happen, of course, if you don’t take the requisite actions that enable time’s great transformational potential.

Meaning, you must plant a seed for a tree to grow.

The trick is to combinewise one-time actions and decisions with patience. In other words, push pause on the day-to-day financial hustle and take the time to identify and leverage your most impactful moves first.

Because there are generally low effort actions available to us that yield incredible results through the power of compounding.

This is evident in James Clear’s philosophy of getting 1% better every day…

… or by toying around with any compound interest calculator online.

Automated investing is a classic example of using set-it-and-forget-it decisions to harness the compounding power of time.

Whether it’s maximizing your company’s retirement fund match or setting up an automatic $50 per month purchase of an index fund in an IRA or standard investing account, these are decisions you can make now that will ride the wave of time, with a big payoff for your future self that comes from decades of growth.

Another simple action with compounding returns is adding an additional chunk of change to your automatic monthly mortgage payment. This move is powerful because a mortgage is generally the largest single debt balance any of us carry, so small changes add up big.

For example, by adding an extra 10% to our monthly mortgage payment, we’ll shave around 7 years off the total 30-year length of our mortgage. Seven years of payments, gone! Just from bumping that monthly payment up a small increment.

I’ll add, also, that building in this extra payment money gives you a leverage point if you find yourself in a position where you need to free up cashflow – you can stop this automatic extra payment to help get through a tough season.

Do you receive a cost-of-living adjustment on your pay each year? What if you decided to live with what you were already accustomed to, and added the equivalent of your salary adjustment each year to your automatic monthly savings?

With this strategy, a $60K salary would work its way up to $80K over 15 years with just a 2% salary adjustment each year. If you ignored that pay adjustment each year and just added the difference to your automatic monthly savings, you’d have worked up to a 25% savings rate on your paycheck.

Think of the long-term leverage points you may have.

What seeds can you plant by taking some key action today or this week?

What small start can you make that you can entrust to the currents of time, and the power of compounding, to help out your future self and family?

First you give life, action [emphasis added] and guidance to ideas, and then they take on a power of their own and sweep aside all opposition.

Napoleon Hill in Think and Grow Rich

Next time, you question what you are doing – ask yourself? What could I do more? In most cases, extra time will be the greatest leverage you can apply!

Dan Pena

I hope you enjoyed this edition of Under 2, an email series designed to share quick bites of wisdom to empower your financial journey (while keeping it short). Be sure to sign-up below to get these messages in your inbox.

All for now,

Lindsey

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