The Power of Compounding Interest

Take some time (even a few minutes today) to research and LEARN the concept and power of compounding interest. It can work for you (as in savings) or against you (as in debt). The easiest visual comparison is that of a snowball of money rolling down a mountain. Every roll (time earning interest), a little bit of snow (money) sticks to the ball and the ball gets a little bigger. Now as a bigger ball rolls, it picks up a little more snow than the last time. This is a fundamental financial concept that everyone should have a good understanding of. This is the time value of money. Save early and save often, and put your savings in an interest bearing account or appreciating investment (mutual fund, etc.). This is also why credit cards are terrible and should never be used if possible. The same way your savings can grow exponentially, so can your debt due to compounding.

FINANCE AND BUDGETING