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Wednesday, December 20, 2006

Baby steps count

Last evening, watched Chris Gardner's interview on the CNBC. Both the recent movie and the book, The Pursuit of Happyness, are based on the life of Chris Gardner. He was a single parent and homeless for some time but through determination and resourcefulness, he rose to the top.

When asked what advice he had for others, Chris Gardner mentioned "baby steps count" and be bold enough to pursue it (your dreams). Both pieces of advice were good but I especially liked "baby steps count".

In my view, the advice is very relevant when it comes to personal finance and life in general. In personal finance, even small amounts of money when saved can yield big savings over time. As I mentioned in one of my previous posts, one of the important thing that matters when it comes to savings is the amount of period over which the money is left to grow. The sooner we start savings, the more we have over time. In addition, regularly saving even small amounts gives us the discipline to stick to it, and encourages many people to increase the amount of savings.

The advice is also relevant when it comes to investing in stocks and mutual funds. By investing even small amounts regularly, we are able to use dollar-cost averaging which can lower our overall cost basis over time.

In other areas of life also, the advice can be very useful. Too often many of us get nervous about a task because of time and effort it may take. However, by breaking it into smaller chunks and working on it regularly can enable us to do it. For example, in school, I would often get nervous just on the thought of reading 50+ pages of lessons within a week and then turning in the assignment. However, by breaking the reading into 8-10 page per day, the task became manageable. Similarly, regular practice in sports and other areas of life becomes easier while still being beneficial when broken into smaller steps.

Many of us are never going to become millionaires over night but I think if we do want to become one at all at some point in our lives, it is essential to start saving early and regularly because baby steps do count.

Labels: frugal; Investing; invest

posted by Ruby @ 6:29 AM

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