Matt Bell's Blog, page 21

Profitable Ideas: How Limits Boost Happiness, The Weekly Allowance Conundrum, and More

Weekly list of curated personal finance articles from around the web.

Want to boost happiness? Limit your choices (This Evergreen Home). In a world of countless options, we would be wise to choose limits.

Your phone is the key to your digital life. Make sure you know what to do if you lose it. (VOX). Some relatively simple steps we should all take.

Critical thinking, the weekly allowance conundrum, and more (The Contessa Counts). Lots of good advice here on raising money-smart kids.

Charitable parents prompt charitable kids, says Fidelity Charitable study (RIA Intel). Kids notice how we spend and how we give.

Colleges face gambling addiction among students as sports betting spreads (The Conversation). I’m not a fan of sports betting and find it really questionable that some universities are profiting from this industry at the expense of their students. See also, Sports betting companies advertise on college campuses, — but not to students, they say. 

10 ways to simplify your holiday season (Becoming Minimalist). Keeping it simple will help make it meaningful.

Six surprising things home insurance doesn’t cover (Kiplinger). If you have any doubts about what’s covered, call your insurance company.

When God provides a surplus, it’s always with a purpose (FaithFi). Good counsel about discerning God’s will for the blessings he bestows. 

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

It’s Amazing What You Can Get Just By Asking

Everyone has heard the advice, “It doesn’t hurt to ask.” But my experience has been far better than that. Time and time again, I’ve seen that it often pays to ask.

Just by asking, I’ve gotten fees waived, better tables at restaurants, lower prices on subscriptions, and as I’ll describe below, a costly vehicle repair more than reimbursed by the manufacturer.

Life happens

We used to have a Toyota minivan that we kept for 17 years. For most of that time, it was great—very reliable, with no costly maintenance or repair surprises.

However, at about the 15-year mark, the driver’s door started making the sound you might imagine a door would make if it were dying. Every time we opened it, there was a horrible screeching sound followed by a pop. To be honest, it was embarrassing.

A Toyota body shop estimator said it was unlikely the door could be repaired. It would probably have to be replaced — to the tune of $3,000! That’s about what the van as worth at that point!

Sometimes ‘no’ means ‘maybe’

I tend to ask lots of questions, and in the midst of a conversation about how the door could suddenly stop working properly, the estimator gave me a critical piece of information. Their shop had seen other Siennas from the same model year with the same problem, and in some cases Toyota covered the cost of a new door or a repair.

I wonder if that would have come up if we hadn’t talked so long.

So I called Toyota’s U.S. headquarters, explained the problem, and said I was facing a possible $3,000 bill. Sure enough, the person I spoke with said the company has received other complaints about this issue and even extended the warranty by a couple of years to cover the cost of repairs. However, in our case, that warranty had expired long ago. He said I was out of luck.

If you don’t ask, the answer is always no.

I could have let it go at that, but I didn’t.

I wasn’t rude. I wasn’t impatient. I just calmly said that since they acknowledged it was a manufacturing issue, wouldn’t it still make sense for Toyota to help fix the problem? I mean, shouldn’t a vehicle’s door continue to work properly even after all these years?

He said he’d see what he could do, which I took as a glimmer of hope.

In the meantime, I scheduled the next step, which was for the repair shop to take the door apart to see more clearly whether it could be repaired or would need to be replaced. My wife and I talked through the worst-case scenario. As painful as it would be, we agreed that we’d rather spend the money to fix the van than replace it.

A double dose of good news

A few hours after dropping off the van, the body shop called to say the door could be repaired for a little over $500. Still a lot of money, but way better than $3,000.

A couple of days later, I heard back from Toyota. My contact said the company had agreed to give me a credit worth $750 that could be used for future maintenance and repairs.

I told him the door ended up being able to be repaired for $500, so I’d be very happy with a $500 credit. He thanked me for that information, but said they’d keep it at $750. Wow.

Just say something

I never try to be manipulative about what I ask for, but I do make requests somewhat regularly. Sometimes you don’t even have to ask for anything, you just have to speak up if you’re dissatisfied with a product or service.

In fact, when I was getting our van fixed, I had to rent a car for a couple of days. The rental car smelled like smoke. I noticed it when I was driving away from the rental place, but it had already taken some time to get the car and I needed to get to work, so I decided to put up with it.

Still it bothered me.

When I returned the car, I politely said, “I just want you to know, I was a little disappointed with the car. It smelled like smoke, which gave me a headache, and I had to drive my daughter to her music lessons in that car,” all of which was true.

On the spot, the person checking the car in cut my rental fee in half.

Do you tend to speak up—to make requests? Why or why not? What good deals have you gotten just by asking? Politely asking for a better price can be a form of good stewardship.

This is a great skill to teach to your kids as well, which I talk about in, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management. Politely asking for a better price can be a form of good stewardship.

Take it to heart: “For it will be like a man going on a journey, who called his servants and entrusted to them his property.  To one he gave five talents, to another two, to another one, to each according to his ability. Then he went away.” – Matthew 25:14-15

Take action: If it’s uncomfortable for you to ask for things, start small. Ask for a sample at the ice cream parlor or deli counter. Ask a neighbor if you could borrow a ladder. As you get more comfortable with it, ask for more. When a service provider lets you know about a price hike, call customer service, tell them you’ve been a loyal customer and would like to stay with them, and then ask if there’s something they can do about the upcoming price hike. Always be prepared for a “no,” but I think you’ll be surprised at how often the answer is, “yes.”

Read more: Now’s the Time… to Manage Your Recurring Bills

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Profitable Ideas: When Giving is Hard, Your Kids Don’t Want Your Stuff (Or Do They?), and More

Weekly list of curated personal finance articles from around the web.

When giving is hard (Good Sense). “If you’re in a position of financial difficulty, how do you make room for giving?” See also, Giving generously when in debt. 

My parents have a lot of stuff in their house. I don’t want most of it. (Wall Street Journal). Oftentimes, deciding what to keep isn’t a decision at all. Stuff just accumulates. You’ll do everyone a favor by getting rid of some of it. By the same token, what should you hang onto? That’s what you’ll wonder when you read, He found his dad’s 1930s car at an auction — and got it working again. 

Study finds more than half of teenagers have no rules for using tech at home (Science X). A no-rules tech household isn’t good for anyone. Consider the use of an electronic device contract. 

The rise of the McMansion: 11 charts show just how much bigger and fancier American houses have gotten since the 1970s (Business Insider). When things change slowly over time, we hardly notice and assume this is normal. It’s eye-opening to look back at what was normal 50 years ago.

We need to talk about your retirement ‘spending’ (Morningstar). The case for spreading out the giving of an inheritance instead of saving it all for the end.

What does this college cost? (The College Financial Lady). This article delivers less than promised, but it does point to one helpful source of information — the Common Data Set.

How to give gifts in a culture where everyone already buys everything they want (Becoming Minimalist). Sometimes, the best gifts are those that can’t be wrapped.

Travel insurance: what you need to know before you buy (Clark Howard). I wouldn’t take an overseas trip without it.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

The Pull of the Neighborhood — Four Ways to Keep Your Financial Footing

Think about your neighborhood for a minute, and some of your immediate neighbors. How similar is your lifestyle to theirs? How similar is the car you drive or the types of vacations you take?

Juliet Schor, author of several books that have been very influential to me, such as The Overworked American, The Overspent American, and Born to Buy, says neighborhoods tend to be so homogeneous that marketers can reliably predict “how many credit cards you have, which appliances fill your kitchen, where you buy your clothes, and the magazines you read” solely based on where you live.

A certain amount of financial similarity with our neighbors makes sense. Neighborhoods tend to attract people of similar incomes. It’s perfectly fine if the similar lifestyle you’re living is one you can afford. But it’s worth stopping to consider whether our neighbors are having an unhealthy impact on our spending.

No pretense

A number of years ago, our oldest son and I spent a fun weekend in Chicago. During our visit, I showed him the northwest side neighborhood where my wife and I spent the first five years of our marriage and where he spent the first year and half of his life. It was pretty surprising to him.

It’s a densely populated, very ethnically diverse, working-class area. Big multi-unit brick buildings line the streets where cars are parked on both sides. We owned a condo in an old six-flat that had been gut rehabbed.

I don’t miss the crime or the congestion of our old neighborhood, but I do miss the complete lack of pretense. There’s no Starbucks on the corner, and the people who live there don’t drive fancy cars or wear the latest fashions. We never felt any pressure to keep up.

Today, life is very different. In our current neighborhood, we know people who take a Disney vacation every year. Fortunately, most of our immediate neighbors keep things pretty real, but we don’t have to wander too many streets over before we see various displays of conspicuous consumption.

And let’s face it, our entire American culture is a consumer culture. Whether in our neighborhood, at our workplace, or online, we regularly see people who are living a life that’s materially bigger than ours, and if we’re not careful, it can have an impact on our finances and our happiness. Here’s Juliet Schor again:

It may be as simple as the fact that exposure to their latest ‘lifestyle upgrade’ plants the seed in our own mind that we must have it, too—whether it be a European vacation, this year’s fashion statement, or piano lessons for the children.

Keeping it real

If you’re in the market for new house, keep the potential pull of the neighborhood in mind—the ways it may influence your lifestyle. If you already live in a high-consumption neighborhood, here are four suggestions.

1 – Determine to live your life, not your neighbors’ lives

It helps a lot of you have a budget—or, as I prefer, a cash flow plan—that guides how much you allocate to each spending category, such as entertainment and vacations, based on your income and household size. Create a plan for living a life you can afford, and then stick to that plan.

2 – Declare your neighbors the victors

I’ve always loved an illustration used by my friend and mentor, Dick Towner. He suggests walking to the end of your driveway late one night, looking around at your neighbors’ houses, and yelling at the top of your lungs, “You win! You get the prize for the nicest cars, the best-kept lawn, and the most incredible vacations! As of today, I’m out of the competition!” Then you may need to jog back inside before the police arrive.

3 – Practice gratitude

Regularly giving thanks for what you have does wonders for keeping your focus off of what you don’t have.

One of the greatest gifts we can give our kids is to cultivate within them grateful hearts and the habit of regularly expressing their gratitude. In Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, I devote a chapter to this and other ways we can help our kids learn how to live in our consumer culture without becoming of our culture.

4 – Move

Sure, this idea is pretty radical. However, I know one couple that realized fairly quickly after moving into what they thought would be their forever home that they had made a big mistake. When they had their first child, their priorities changed. They didn’t want a lifestyle that required two incomes. So, as difficult as it was, they moved. And they discovered that living in a more affordable home, in a neighborhood where people lived less expensive lives, was better in so many ways. It was better for their marriage and better for their joy.

In what ways do you see your neighborhood impacting your spending, whether positively or negatively? And if you have some high-consumption neighbors, how do you keep your financial feet on the ground?

Take it to heart: “But godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” – 1 Timothy 6:6-11

Take action: Think of some neighbors or other friends whose financial habits and practices have a good influence on you. The next time you talk with them, let them know. I’m sure they’ll be happily surprised and encouraged to know that the decisions they’re making are having a positive impact on others.

Read more:  An Uncommon But Brilliant Money Move for Young Couples

Profitable Ideas: Startling Stats, The Tipping Point, and More

Weekly list of curated personal finance articles from around the web.

15 startling stats that show the unprecedented nature of our lifestyle today (Becoming Minimalist). A stark depiction of our consumer culture.

The dark side of touch-screen tipping (BBC). I think we’ve reached a tipping point (sorry!) where everyone seems to expect a tip.

God’s generosity changes us (FaithFi). We were made in God’s image and one of God’s most defining characteristics is generosity.

If you’re a parent with children at home, these are the ‘golden years’ (Daily Citizen). Get this: “By the time your children turn 18, you’ll have, on average, spent 95% of all the time you’ll ever spend with them.” Parents, drink in the days when your kids are still at home.

Teens are exhausted by phone notifications but don’t know how to quit, report finds (CNN). I highly recommend watching “The Social Dilemma”—ideally, with your kids, if they are about 12 or older. The common advice among those who used to work for various social media platforms was, “Turn off notifications.” 

Saving more in a 401(k) can now boost your college financial aid (Wall Street Journal). The new financial aid determination process embedded in the redesigned FAFSA is bringing many changes, but this is one I didn’t know about. See also, FAFSA 2.0: Revamped College Financial Aid Process Rolls Out

Americans relying less on cash, more on credit cards may pay more fees. Here’s why (USA TODAY). Yet another example of “Free, free, free…fee!”

15 best apps for buying and selling used stuff (US News). Tools to help you declutter, and maybe pick up a little cash.

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How to Fight Fair About Money

Every healthy relationship involves conflict. In fact, psychologist John Gottman, who has spent more than 20 years studying what makes marriages last, believes that “fighting . . . can be one of the healthiest things a couple can do for their relationship.”

In his book, Why Marriages Succeed or Fail, which I highly recommend, Gottman says that how couples fight is “one of the most telling ways to diagnose the health of your marriage.”

So, don’t try to avoid conflict. Instead, learn to fight fair. Here’s how:

Complain, Don’t Criticize

A complaint focuses on the other person’s behavior; criticism focuses on their character. An example of a complaint is “You overspent your clothing budget again this month.” It becomes criticism when you blame or verbally attack the other person by adding a comment such as, “That was really selfish of you.”

Avoid Contempt

Even worse than criticism, contempt insults or psychologically abuses your partner. An example: “What’s the matter with you? Don’t you ever think before you spend?”

Be especially vigilant about not letting these types of comments creep into your relationship. Think about the words you use and avoid any that convey contempt.

Listen Well

When you’re on the receiving end of a complaint, your instinct will be to respond quickly. Go against that instinct. Instead, listen actively to what the other person has to say. Make sure you understand the issue by asking clarifying questions and mirroring back what you hear.

Speak Non-Defensively

Defensiveness, which includes denying responsibility and making excuses, only turns up the heat on arguments. When she says, “I think you’re spending too much on golf,” it won’t help to storm back with, “I have to spend $60 whenever I play; that’s how much it costs!”

Try this instead: “Well, let’s take a look at our budget and see how much I’ve spent this month compared to the golf budget we both agreed on. If I’ve spent too much this month, I’ll make up for it next month by finding some less expensive places to play or by playing less often.”

Stay With It

Gottman says men especially are likely to bail out of an argument. Even if they don’t grab the remote in the middle of the conversation and switch on SportsCenter, they may check out by responding with silence. Guys: stay focused.

Two Keys to a Great Marriage

Gottman has drawn two simple, powerful conclusions from his years of studying what makes for a healthy marriage. The first is a straightforward mathematical formula: “You must have five times as many positive as negative moments together if your marriage is to be stable.”

The second is this: “Most couples I’ve worked with over the years really wanted just two things from their marriage—love and respect.” While men and women both need love and respect, women especially need to feel loved by their husband and men especially need to feel respected by their wife.

This point about love and respect would make for some especially helpful conversation. Women, ask the man in your life, “What do I do, financially speaking, that makes you feel respected?” And, “What else could I do?” Guys, ask the woman in your life, “What do I do, financially speaking, that makes you feel loved.” And, “What else could I do?”

As I’ve written before, the insights you gain from this conversation could go a long way toward making money work really well in your relationship.

Who do you know who could benefit from reading this article? Please forward it to them. And if someone forwarded it to you, please sign up for your own subscription to this blog.  Twice a week, you’ll receive ideas and encouragement for using money well.  There are many more ideas for creating financial oneness in marriage in my book, “Money & Marriage: A Complete Guide for Engaged and Newly Married Couples.”

What have you learned about fighting fair that could help other couples? Leave a comment below.

Profitable Ideas: Set It and Forget It No More, Generosity Done Right, and More

Weekly list of curated personal finance articles from around the web.

Your ‘set it and forget it’ 401(k) made you rich. No more. (Wall Street Journal). The Journal’s advice? Lower your expectations. Hmm.

Baby boomers are aging. Their kids aren’t ready (Vox). How are your parents doing? And what’s your plan for when they aren’t doing so well?

Taking charge (Humble Dollar). Ideas for coming to terms with life’s uncertainties—financial and otherwise.

5 common failures in personal finance (Best Interest). Sometimes, the best offense is a good defense. Here’s what to guard against.

Own less stuff and make your life easier: 3 ways (Rose Lounsbury). A well-reasoned call to simplify. See also, Maybe you don’t need a different house, you just need less stuff. 

12 ways to protect your account from hackers (Clark Howard). It seems like such a chore, doesn’t it? But getting hacked will lead to a far greater chore.

5 simple ways to avoid over-scheduling your kids (No Sidebar). It’s most parents’ dilemma—feeling like if you don’t sign your kids up for this or that, they will fall behind.

One thing my parents did right: giving gifts (The Gospel Coalition). A wonderful story about the lasting impact of generosity done right. 

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

‘Make No Little Plans’

My family got to spend a couple of days in Chicago recently. We had brunch in Hyde Park, went to the Museum of Science and Industry, and took in a concert at the Old Town School of Folk Music. On one of our treks around town, we drove iconic Lake Shore Drive.

Among the many things I love about our family’s former hometown is the city’s park-lined lakefront. It was an important part of urban planner Daniel Burnham’s vision and is today one of his greatest legacies. It stands as a daily embodiment of one of his most famous quotes: “Make no little plans; they have no magic to stir men’s blood…”

Making no little financial plans

Since I can’t help but look for the money-related implications in much of what I experience, our visit to Chicago made me think about the importance of vision and what legacy will be left by the financial decisions we’re making.

Do you live by a vision that guides your use of money? Two examples from my own life come to mind.

Early in our relationship, Jude and I developed a shared vision that if we were blessed with kids we’d like for her to be able to stay home with them. We arranged our finances accordingly, living primarily on one income when we both worked outside the home so that it would be easier to live on one if and when we had kids.

While Jude did recently re-enter the paid workforce, she was home full-time for the first 19 years of our child-rearing. I’ve seen countless benefits that have come from the decision to live on one income all those years. It’s one we will never regret. (Read An Uncommon But Brilliant Money Move for Young Couples.) 

The other major example has to do with my career path. When I worked in corporate America, I had a good job that paid well and provided other nice benefits. After a few years, though, there were many days when I walked into the building imagining myself looking down on the scene and wondering, “Who is that guy?” The work I did day in and day out didn’t seem all that meaningful. I sensed God encouraging me to take the lessons learned from my financial crash and burn and make them my life’s work.

So, bathed in prayer, with Jude’s full support, with the input of some trusted mentors, and with 18 months’ worth of living expenses in the bank, one day with everything going as well as it possibly could, I quit my job in order to begin writing and speaking about biblical money management full-time.

Since then, there have been some some incredibly challenging seasons and some painful lessons, but I live with the sense that I’m doing what God put me here to do.

The clock is ticking

One of the most common regrets of the elderly is that they didn’t take more risks.

For all sad words of tongue or pen,

The saddest are these: ‘It might have been.’ – John Greenleaf Whittier, Maud Muller

Is there some vision that you sense God has put on your heart? Are there nights you can’t sleep because you’re thinking of it? If that vision has some staying power—and if you’re married, if it’s something your spouse can support—why not get about pursuing it?

While there are certainly no guarantees, for most of us, there’s a pretty good chance we’ll be here on October 24, 2024, and on October 24, 2025, and, God willing, beyond. The days will roll on whether we pursue the vision God has put on our hearts or not.

And you know that when the truth is told
That you can get what you want or you can just get old – Billy Joel, Vienna

My encouragement to all of us is to not grow old wondering what might have been.

Has God put a vision on your heart? What is it? And is there something you would have to do differently financially in order to start pursuing it?

It’s easiest to feel the doubts. To compile a list of the many reasons it couldn’t possibly work out. So why even try?

I guess it comes down to a simple choice, really. Get busy livin’ or get busy dyin’. – Andy, The Shawshank Redemption

To not try is to get busy dyin’, isn’t it?

Recently, in a discipleship group I’m in, these words convicted me in the most wonderful way:

“If anyone wishes to come after Me, he must deny himself and take up his cross daily and follow Me.” – Luke 9:23

What those words said to me is that if what I’m pursuing is all about me, it probably won’t succeed. But if it’s about something bigger than me, if it’s truly about God—honoring Him, obeying Him, serving Him—then maybe, just maybe it will.

And they also said that pursuing His vision might cost me something. Am I willing to give up some comfort to get after it? Am I willing to put in the work? To try to solve the many problems? To try to answer the many questions? Am I willing to trust the vision at times when it seems like no progress is being made? Most of all, am I willing to risk failure?

What about you? What vision has God put on your heart? What would it cost you to pursue it? And perhaps more importantly, what would it cost you not to?

Now to him who is able to do immeasurably more than all we ask or imagine, according to his power that is at work within us, to him be glory in the church and in Christ Jesus throughout all generations, for ever and ever! Amen. – Ephesians 3:20-21

Profitable Ideas: The Price of Success, Random Acts of Kindness, and More

Weekly list of curated personal finance articles from around the web.

The price of success (A Wealth of Common Sense). Life is a series of trade-offs. Knowing what matters more is really important. 

The risk-taking activity that ‘helicopter parents’ should allow their kids to experience (CNN). It’s risky to encourage our kids to play it too safe.

Random acts (Humble Dollar). If your giving has become routine, here’s a great way to shake things up.

How to fall in love with your life (Becoming Minimalist). A good roadmap to a better life.

30 things you can do today to reduce debt (No Sidebar). These ideas are not just about reducing debt, they’re about spending wisely. There’s bound to be an idea or two here that you could use.

A few laws of getting rich (Collaborative Fund). Some great insights about just how messy money can get.

How much should I spend on groceries? (US News). It’s the third highest-cost item for most families, so having a benchmark can be helpful. A few money-saving tips will help as well.

Raising faithful stewards (Eternal Perspective Ministries). Wonderful ideas for getting kids started on a good financial path. (I have a few thoughts on this as well in Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management.) 

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

One of the Least Appreciated ‘Secrets’ to Warren Buffett’s Success

Think of the name Warren Buffett and you immediately think, “One of the world’s richest people” or “One of the greatest investors ever.” Both are true. But do you know why he has been so successful at building wealth through investing?

Many books have covered this topic and they usually describe him as a “value” investor with a knack for investing in undervalued companies.

But there’s something else at work here that requires far less skill to emulate. It’s exemplified by two remarkable facts.

First, Buffett became a millionaire at age 30.

And second, as one of my favorite business/investing writers Morgan Housel noted, “$80.7 billion of the 87-year-old investor’s $81 billion net worth was accumulated after his 50th birthday. And $78 billion of the $81 billion came after he qualified for Social Security, in his mid-60s.”

What’s the “secret” that ties these two facts together? Time. It’s one of the most crucial and under-appreciated aspects of Buffett’s success.

Buffett didn’t become a millionaire at age 30 by winning the lottery or receiving an inheritance. Instead, he started investing at a surprisingly young age. Here’s Housel again:

…Buffett became serious about investing several years before puberty… It is tempting to look at an outlier – a company, a brand, a net worth – and study the most recent things that added to its success… So we write 2,000 books on how Buffett sizes up management teams when the biggest and most practical takeaway from his success is, ‘Start investing when you’re in third grade.’

One way to think about how compounding works is to consider doubling periods — that is, the amount of time it takes for money to double in value.

According to the rule of 72, if you divide your annual return into 72, that will tell you how quickly your money will double. For example, if your portfolio generates an annual return of 9 percent, it will double in value in about 8 years.

Here’s an example, showing how a 20-year-old with a $10,000 portfolio (Don’t scoff — remember, Buffett got started in the 3rd grade) will see his account grow over the course of multiple 8-year periods, assuming an annual return of 9% and no further contributions. (You’ll see that it actually more than doubles each period).

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But think about this: Just as an annual return of 9 percent will turn $10,000 into $20,000 in 8 years, it will turn $1 million into $2 million in 8 years as well. Especially when your portfolio becomes sizeable, having the time to take advantage of one or two more doubling periods will be extremely beneficial.

Here’s another way of making the same point. Instead of starting with a lump sum and not contributing anything more along the way, the graphic below shows what would happen if a 20-year-old started with nothing but invested $200 per month and generated an average annual return of 9%. The lower number and blue part of each bar shows the amount she has invested at each point in time; the upper number shows what her portfolio is worth (the green shows her earnings).

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After 8 years, she has invested $19,200, but her portfolio is worth $28,181. Nice. After 16 years, she has invested $38,400, but her portfolio has grown to nearly $86,000. Now it’s getting interesting. But look all the way out at age 68. At that point, she has invested $115,200, but her portfolio totals nearly $2 million.

And here’s the important point. Look at what happens if you remove one doubling period—maybe this person didn’t think it was so important to start investing at such a young age or they retired sooner. Removing one doubling period means two things. The person would have invested just $19,200 less ($200 per month times 8 years). However, they would have ended up with $1,017,614 less money ($1,960,900 minus $943,286). That’s an incredible penalty for missing one doubling period.

The take away? The power of compounding becomes most powerful when you give it the most time, so start building your portfolio as early as possible. It may not seem very exciting in the early years. But once you’ve built a decent base, it’ll get much more exciting—and profitable.

As you near retirement age, having one more doubling period available to you—perhaps by working longer so you can let your nest egg grow—can make a huge difference to your financial health in your later years.

Time has been a critically important factor in Warren Buffett’s success, and it will factor heavily in your success as well.

As the Bible states, “Steady plodding brings prosperity; hasty speculation brings poverty” (Proverbs 21:5).

In my new book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, I devote a chapter to teaching your kids how to invest. Incredibly, with time on their side, they could have their retirement largely funded before they graduate from high school!