Proverbs 13:11 – ‘Wealth gained quickly will dwindle away, but the one who gathers it little by little will become rich.’
Give me $1,000,000 and I will comfortably live out the rest of the days of my life without actually spending the million. Ha! Christine, you say, that is not possible. You need to spend the money to be able to live.
Let’s do a little math. What is 5% of $1,000,000?
Well if 10% is $100,000, then half this is $50,000, right? So your million dollars sits in a savings account and earns you 5% per annum. So if you earn $50,000 for the whole year, then this means you’re earning around $137 per day, or around $959 a week.
How much do you earn on a weekly basis? I can honestly tell you now that my family earns – and lives comfortably – on less than this. So yes, I can boldly say that if I had one million dollars to live on, I would actually only live on the interest it could earn me at 5%.
But what if the economy isn’t doing so well, Christine, what then?
Well let’s say you can only get 3% – which is closer to current figures – then this is still $30,000 per annum. And yes, I could live on this! In fact, my husband and I with our two children do. We save as much as we possibly can and live on what we need to be comfortable.
So I look at the above figures and get excited – even though I don’t anticipate being given $1,000,000 anytime soon! What’s even more exciting to me is the fact that this $1,000,000 has the potential to grow over the year.
How is that you ask? Well, you get paid your interest monthly after it is acquired daily. So, after a month you get paid your 5%, or 30 days of earning $137 in interest each day. So January 1 you start with $1,000,000. January 31st you’re paid $4,247 in interest!
Now you have $1,004,247. Now, presumably you don’t spend the whole amount in one day. You make use of the money to live over the next month. And for every day that you have over $1,000,000 sitting in your account, you are then earning your interest of $4,247 for the following month as well as interest on your recently acquired interest! Wow.
Yes, this is an extreme example, but it does show you how interest can increase over time and truly work for you. This is the benefit of any savings account. For money that isn’t needed right now, why not place it into a savings account where it can earn interest? This is a way to earn that you don’t have to work for – the money does it all for you and then your earned interest goes on to develop more interest for you. This is an example of residual or passive income.
It is my prayer for you:
- That you will truly grasp the importance of a savings account
- That you will take the time to shop around for the best rate of interest your money can earn and set up an account
- That you are able to consistently deposit money into your account so that it can work for you
Lord I thank you for the opportunity to do something so simple that can greatly benefit my financial situation. Help me to be a good steward of the money you have placed into my care.
Shop around for the best interest rate that you can find. Many banks offer a higher introductory rate for new customers. You are already saving, make sure the money is earning as much for you as it can! Term deposits are another way to earn more if you don’t need the money for a length of time.