Use the Snowball Effect to Get Better Financial Results

According to the Cambridge Dictionary, a snowball effect is a situation in which something increases in size or importance at a faster and faster rate. It sounds too simple and general, but it is a useful principle that can be used to achieve significant results over time. Practical examples of this are as follows, along with how the opposite can also be true:

Savings/Investments: Do you find it hard to save or invest? Start with saving just the smallest amount possible and then build upon there. For example, if you start with a small percentage, such as 2% and increase it by 2% each year, then within 5 years you will be investing 10% of your income. If you are unable to save at all, then you need to either increase your income, decrease your expenses, or possibly do both.

Paying off debt: Want to pay off your personal and business debts quickly? Allocate a small percentage of your income towards paying off your balances, starting with the smallest balance first. Once you have paid off the smallest balance, then use those payments towards the next largest balance. If you start with the largest balance then you will lose the moment due to a lack of sense of achievement.

Increasing your income:  If you increase your income by 10% per year, then it will double in about 7 years and in approximately 5 years if you increase it by 15% per year. Even more modest increases can make an impact over time. Small actions, such as allocating a consistent amount of your time and resources to increase your business volume will add up significantly over time. For example, that one extra phone call (made or received), blog post, additional employee hired, etc. matters. For a multitude of tips, search prior blog posts.

Avoid this approach: Most people want instant results and because of this they either stop too soon or start too strong in an unsustainable manner. There is nothing wrong with strong approaches, but it must be sustainable over the long-term. All you have to do is apply this approach to weight loss and fitness and see how many of your friends and family start an exercise program and eat extremely healthy and then stop after a few months. It is hard to go from no exercise to spending an hour and a half 5 days a week exercising.

Over time your results will get better and better, but give it time to be productive. Think of your actions as planting a fruit tree, as it will take time to bear fruit.

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