Power of Time for Building Wealth from Thrift

One recurring theme among the Wealthy is their ability to harness the Power of Time and use it to their advantage. I recall a comparative presentation promoting the benefits of compound interest. An individual who built up their capital from ages 18-28 would have more than another indivdual who invested from 29-65. It is simplistic, but the lesson is that when time is allowed to compound the gains, that will enable an investment or endowment to grow substantially.

Looking at it another way, Thrift is the practice of making good decisions by avoiding bad ones. What characterizes a bad decision? A false sense of urgency. The "take it or leave it" mentality. There is a reason why pressure sales tactics create a sense that delaying the decision is the worst possible alternative.

Consider the discounts before and after Dec. 25. Prior to Christmas, we are expected to believe that we are getting a deal until we are induced to purchase. Imagine our surprise when a mere 24-48 hours later, the same merchandise is being offered at a substantially greater discount. It is insulting to have been played for suckers.

How do we consciously make decisions that consider time. One good tactic is to measure each decision like a business; assessing the impact on the month, quarter, year, and long-term. Consider the decision to get a major home expansion (i.e hot tub, backyard pool). This would have a detrimental impact on the month as it would be a non-recurring expense. It might be evened out in the quarter, but other decisions would have to be made to sacrifice. The effect on a year and long-term would be dependent on how this changes the lifestyle, when compared with the increase of value to the property.

In contrast, imagine the decision to pursue an educational credential that would draw from short-term finances, but could potentially increase long-term income opportunities. In this sense, the time is an ally, and supports the case for the investment.

The art of Thrift - yes it is an art - involves shifting away from consumption towards wealth-creating opportunities. One decision factor is the effect of that choice over time. As more time passes, the outcomes of Thrift will be realized with increased Wealth and net worth.