I came across the scenario pictured in the above icon – this week.

It is a startling reminder of The Compound Effect – the 8th Wonder of the World.

I have spoken before about how the Compound Effect continues (day be day) to form your life – in a good or poor way. In an achieving or in a detrimental way.

The example is of a young Tradie who is about to start his own business. He has to obtain all the licences, ABN, company setup, insurances and more.

He seeks advice about the best Insurance he requires for Income Protection, Health and so on.

He is questioned about his lifestyle and one of the questions which is asked very early is – do you smoke?

He shares that he smokes about a packet a day and the cost is $41.00 per packet. To me this (in of itself) is a lot a money. However I do also have my vices and my daily coffee and time wasted in procrastinating – do also have a cost to me. GUILTY!!!!

However let us look at the future financial effect on this young man’s future if he continues to smoke a packet at day. And we know the cost will increase. We also know that it has potential dangerous health problems – which would lead to loss of income and even loss of the business.

  1. What is annual cost of this habit? $41 by 52 = $14965
  2. Remember smoking is a habit – it does NOT improve your personal development, your skills or your lifestyle. It doesn’t help to build your business, your confidence or competence. It’s only an opportunity for a time to relax and take a break. You can do that with a $5 cup of coffee. I do acknowledge it is habitual and addictive and perhaps one of the hardest habits to give up.
  3. What is the lifetime cost to this young man? With retirement age now at 67 – he has 42 years of business years. In itself giving up smoking saves him – $628,530. Which is substantial in itself.
  4. However invested in the correct Insurance Bond (with life cover, trauma cover, cash build up and option for loans at lower than bank interest rates. He has the opportunity for this $41 per day, $14965 per year and $628,6530 over 42 years to GROW INTO (at age 67):
    1. $3,693,010 a@ 7% return
    2. $$.9244 a@ 8% return
    3. $6,582,290 @ 9% return

What I have not yet included is the COMPOUNDING EFFECT. The money saved on smoking becomes an ANNUAL contribution to the Insurance Bond. The contributions remain in the BOND and each year interest is accrued on the contribution plus the return on investment for that year. After TEN years of contributions – the money available is now TAX FREE. So not only does the contribution plus the annual dividend compound on itself – year after year – it is TAX FREE as well.


If not it must surely be a most powerful tool – which applies to all areas of life – ESPECIALLY to FINANCE.

I hear so often – I don’t have the money for this! I cannot afford to do this! I don’t have the time for this!

Yet by simply taking some time to look over our weeks and determine what we need to accomplish, how we go about accomplishing the tasks, the time it takes, what we sacrifice in doing these (fast food instead of good hoe cooked meals, soft drinks instead of water, fatigue and TV instead of talking, playing and listening to our family, sitting and lying around instead of sport and interaction).

Yet by simply determining – WHAT is important, HOW best to plan these activities, HOW to remove the tasks or expenses that are not important, WHERE to find some help if needed, WHEN is the best time to ensure the IMPOPRTANT activities are locked in and overall knowing WHY certain decisions are made – we can dramatically improve and change our lives for the best.


When you are able to clearly state – What the big PROBLEM is and begin to make the changes necessary – in very quick time – not only do become a HERO in our life – we also improve other parts of the WHEEL and our Family, Fun, Finance, Leadership, Faith, Emotional and Physical Health.

I hope you have been reminded of THE COMPOUND EFFECT, been encouraged to apply THE COMPOUND, or make THE COMPOUND EFFECT work for you in your life.

Everything improves if we have the courage and the patience to acknowledge the one big hurdle most of us dare not acknowledge and face that TRUTH.


www.youtube.com/muznario1 (The Compound Effect – short video)