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Just recently, I was thinking about my late father and what I wished he had told me about life in general. What readily came to mind, was what I wished my father had told me about money.

In the course of my discourse with my father, while he was alive, a few of the things he told me about money was that “money has legs and it walks”. He told me to make use of my money without wasting it because if not, it could walk away. “Money dey waka”, the Warri man would say, my dad reminded me, often.

Another thing he told me about money was that I should not eat with ten fingers in the mouth, rather, I should eat with five fingers in the mouth and the remaining five, in my pocket. Even with his lack of education, he had a way to educate me on the virtues of savings, by telling me not to eat with ten fingers in the mouth.

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What he did not tell me, however, was that the phrase, ‘early to bed, early to rise’, applies to money and savings. As much as I liked those pieces of advice from my dad, I did not start practising eating with five fingers early enough.

Financial educators and analysts alike have a way to put across the effect of that phrase on money and savings. They call it, the time value of money, others rephrase it by saying that ‘time is money’. The Jews will tell you that every penny and minute counts.

Does time play a part in wealth accumulation? Both research and common sense have proven that time plays a massive part in the accumulation of wealth. In growing your money or wealth, time seems to be the most important factor because the more time you give your money, the more time it has to grow.

This is even more important and relevant to those saving for retirement as their quality of life at retirement will depend on how much they are able to accumulate prior to retirement. That pre-retirement accumulation depends on how much time you let your money to grow.

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This is how much time affects that accumulation.

If you are forty-five years old today, and you start putting N1000 a month into a bank account that pays an average of 10% annual interest, you will have about N765,000 by the time you are sixty-five.

If you had started 10 years earlier, at thirty-five to save the same N1000 monthly in the same bank account, you would have had about N2,279,000 by the time you turn sixty-five.

If you had started 20 years earlier, at twenty-five to save the same N1000 monthly in the same bank account, you would have had about N6,375,000 by the time you turn sixty-five.

In the three scenarios above, the monthly savings was the same, the bank account, the same, the only thing that changed was the time within which the saving took place. The time within which the money was allowed to grow. For every year that you wait or delay saving for the future, you lose. For example, by waiting 20 years from age twenty-five to age forty-five to start saving N1000 monthly, you lose about N4,800,000.

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The Power of Compounding

Now you can see that time plays a very crucial part in building your future wealth, not only because the longer you contribute to your savings, the more you accumulate, but because with time, the contributions or savings you already made, will generate more income for you.

Therein lies the power of compounding. Compounding is the ability of the money you save today to bear fruit tomorrow, and the ability of that money and its fruit to bear more fruits the day after tomorrow, figuratively speaking.

It is this power of compounding that should motivate you to ensure that you do not let a month or year pass without making a savings or contribution to your retirement plan or future wealth accumulation account. The unfortunate thing about compounding is that you cannot make up for the lost time.

Put your money to work

You have worked hard to earn your money, therefore, let your money work hard for you by putting it to work early enough – by saving, timely, consistently and constantly. And watch it grow.

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