Episode 890 Small Changes in Money is Big Change
[00:00:00] Scott Maderer: [00:00:00] Thanks for joining me on episode 890 of the inspired stewardship podcast.
[00:00:07] Joe Saul-Sehy: [00:00:07] I'm Joe Saul-Sehy
[00:00:08] LCI from the stacking Benjamins podcast. I encourage you to find ways to be inspired, to find financial freedom. And one way I do that is to listen to this, the inspired stewardship podcast with my friends. Scott Maderer.
[00:00:28] Scott Maderer: [00:00:28] so many of us get tied down into the, I want it now. And the comparison traps, where we look at, what other people have. We don't pay attention to the underlying factors. We don't pay attention to whether they're in debt, up to their eyeballs, whether they're stressed out. Whether they're never going to actually have a decent retirement or future, whether they're not going to be able to pay for their kids' college without going deeply into debt.
[00:00:53] Welcome. And thank you for joining us on the inspired stewardship podcast. If you truly [00:01:00] desire to become the person who God wants you to be, then you must learn to use your time, your talent and your treasures for your true calling. In the inspired stewardship podcast, we'll learn to invest in yourself, invest in others and develop your influence so that you can impact the word.
[00:01:19]In today's episode about developing your influence through stewarding your treasures. I talk with you about the compound effect and how it works with money. I also share why understanding this as powerful, but putting it into action is even more powerful. And I also share why so many of us don't actually ever put this into action.
[00:01:41] As we talk about stewarding your treasures. Wouldn't it be great. If you could support this podcast and do it without costing yourself an extra dime, it turns out you can. All you have to do is use inspired stewardship.com/amazon. When you're ready to make a purchase via [00:02:00] Amazon and a small commission, we'll come back to support the show.
[00:02:03] If you enjoy the show, when you're ready to buy from Amazon, just use inspired stewardship.com/amazon. When we talked about money and talk about compounding. The first thing that usually comes to mind for most people is this idea of compound interest. And the truth is compound interest is an important concept.
[00:02:24] And I'll talk a little bit about that today on the podcast and why it's so important, but I also want to think about compounding here in
[00:02:33] terms.
[00:02:34] Scott Maderer: [00:02:34] Of compounding behaviors and mindset as well. Just like we've been talking about all week, but let's start with the idea of compound interest. The truth is that if you have compound interest working for you, it's remarkably powerful, but when you have it working against you, it's also remarkably powerful, but in the wrong direction, So the idea [00:03:00] behind compound interest is really simple.
[00:03:01] If I deposit a thousand dollars into a bank account and it has a five per cent compounding interest rate, then a thousand dollars times 5% means $50. And then I would put that with the thousand and I would have $1,050, but then the next year you would have. $1,102 and 50 cents, because you would gain interest not only on the original thousand, but also on the 50 and so on and so on.
[00:03:33] So over a long period of time, the fact that the interest that you earn earns additional money means that your money grows very quickly. This is the idea of saving for retirement. This is the idea of saving for big purchases. This is the idea of using compound interest as a way of making money for yourself, that you can then do other things, [00:04:00] but let's turn it around.
[00:04:01] Let's say you borrowed money to buy a car or to do something else. And you have an interest rate on that money that you borrow. So what that means is your monthly payments are paying. Some towards the principle, the money you borrowed and some towards the interest, the money that you owe the bank or the individual, or whoever for the privilege of using their money instead of your own money.
[00:04:32] And what that can mean is over time, you'll end up paying more than you actually borrowed. Because you'll also pay the interest. It's basically the exact same situation, but in reverse the person that's making the money is the person that lent the money. So these concepts of compound interest and how it works for you or against you are incredibly powerful.
[00:04:56] But if you think about it, the real underlying [00:05:00] thing here, Is around your behavior in your mindset, because if you have the idea of, I deserve it, I need it. I want it now, regardless of how much money I have, I can borrow money and I'll make the payments. I can quote, afford the payments. That mindset keeps you going from debt to debt and constantly having the power of compound interest work against you.
[00:05:27] But on the other hand, if you think to yourself, how can I put some money away today and maybe save some money and live on less than I make so that in the future, I'm able to pay for something. And that will work for me. This is the way that we can begin to turn money into income streams. You can begin to have money work for you.
[00:05:52] You can have. The ability to actually have your money earn more money than you do working. That's a tipping point where [00:06:00] you could technically retire because you're financially independent. These things are powerful concepts and really, even more powerful than just the idea of how compound interest works is the idea of how your mindset affects whether or not you can avail yourself of that power.
[00:06:19] Because so many of us get tied down into the, I want it now in the comparison traps, where we look at what other people have. We don't pay attention to the underlying factors. We don't pay attention to whether they're in debt, up to their eyeballs, whether they're stressed out, whether they're never going to actually have a decent retirement or future, whether they're not going to be able to pay for their kids' college without going deeply into debt.
[00:06:44] And maybe even saddling their kids with debt that starts their life already in the hole. All of these things affect how we approach our life. The mindset behind it is so much more powerful than just the math [00:07:00] behind it, because you'll never get there. To the math part, if you don't work on the mindset and the behavior part, if you don't understand the little compounding ideas of taking and making small changes in your behavior so that you can make big changes in your life and in your money, the truth is that's how you make the big changes in your money.
[00:07:28] Most people don't make massive change because they suddenly won the lottery or became inherited $20 million or anything like that. In fact, if they haven't done the work to get to the underlying behaviors, then oftentimes if they do suddenly come into a large amount of money, it doesn't actually end up being a blessing.
[00:07:46] It goes away very quickly because they haven't actually learned. The underlying behaviors that allow them to work with the money in a positive way. The truth is it's [00:08:00] not a math problem. It's an us problem. It's a people problem. It's how we look at the world that really affects whether or not small changes end up costing us money or small changes begin to.
[00:08:15] Create money for us. And as they create money, it also affects what we do with that money. How do we treat that money? Do we look at that money as ours? Do we look at it as something that we've done or do we look at it as something that we've been blessed with so that we can turn around and bless the world?
[00:08:35] Thanks for listening.
[00:08:36]thanks so much for listening to the inspired stewardship podcast as a subscriber and listener, we challenge you to not just sit back and passively listen, but act on what you've heard and find a way to live your calling. If you like this episode on the stewardship of treasures. You can sign up for our treasures [00:09:00] tips by going to inspired stewardship.com/treasures or text in the U S four four two two two treasures tips.
[00:09:14] And we'll send you five weeks of our best tips on stewarding your treasures until next time. Invest your time. Your talent and your treasures develop your influence and impact the world. .