The Law of Accumulation
The Law of Accumulation:
how your financial fortune accumulates slowly over time and then becomes
enormous, like a snowball. The Law of Accumulation: Every great financial
achievement is an accumulation of hundreds of small efforts and sacrifices that
no one ever sees or appreciates.
Develop Discipline
The achievement of
financial independence will require a tremendous number of small efforts on
your part. To begin the process of accumulation, you must be disciplined and
persistent. You must keep at it for a long, long time. Initially, you will see
very little change or difference but gradually, your efforts will begin to bear
fruit. You will begin to pull ahead of your peers. Your finances will improve
and your debts will disappear. Your bank account will grow and your whole life
will improve.
Build Up Momentum
The first corollary of
the Law of Accumulation says: "As your savings accumulate, you develop a
momentum that moves you more rapidly toward your financial goals."
It is hard to get
started on a program of financial accumulation, but once you do get started,
you find it easier and easier to keep at it. The "momentum principle"
is one of the great success secrets. This principle says that it takes
tremendous energy to overcome the initial inertia and resistance to financial
accumulation and get started, but once started, it takes much less energy to
keep moving.
Start Slow, Finish Fast
The second corollary of
the Law of Accumulation says, "By the yard it's hard, but inch by inch,
anything's a cinch."
When you begin thinking
about saving 10 or 20 percent of your earnings, you will immediately think of
all kinds of reasons that it is not possible. You might be up to your neck in
debt. You might be spending every single penny that you earn today just to keep
afloat.
If you do find yourself
in this situation, instead of saving 10 percent, begin saving just 1 percent of
your earnings in a special account, which you refuse to touch.
Increase As You Go Along
This small amount will
begin to add up at a rate that will surprise you. As you become comfortable with
saving 1 percent, increase your savings rate to 2 percent, then 3 percent, then
4 percent and 5 percent and so on. Within a year, you will find yourself
getting out of debt and saving 10 percent, 15 percent and even 20 percent of
your earnings without it really affecting your lifestyle.
Action Exercises
Here are two things you
can do to apply this law immediately:
First, decide upon your
long-term financial goals and then resolve to work toward them one step at a
time. The first steps are the hardest and you must discipline yourself to avoid
backsliding into old habits.
Second, practice the law
of accumulation in other parts of your life as well. Resolve to master a
subject one page at a time. Lose extra pounds one ounce at a time. Learn a
language one lesson at a time. The cumulative effect can be enormous.
