Compound Interest

When I was in the second grade, my mom took me to our local bank in New Jersey – Hudson City Savings – and opened up an account in my name with fifty dollars in it. I got a little savings book with my name neatly type-written on the cover. I remember feeling suddenly very “adult” – especially now that I was rich! Every week, or whenever I got some money, I took that little book straight to the bank where a kindly official smiled at me, and with a hollow ka-thunk of his big rubber stamp, recorded my small deposit. Even better than the big inky smudge was the idea that, through the magic of something called “compound interest,” the money in this book would continue to grow. Even during the night while I slept. Like Jack’s Beanstalk! At the beginning of a New Year, many of us are left looking at our depleted savings accounts, wondering what the hell happened? Where did all that time and money go? Not to mention the good intentions we had at the beginning of last year. It mocks us like a cheap champagne hangover. In this delicate state, I am loath to offer “resolutions” on top of all the other burdens we already feel. But what I often try to do for myself at the beginning of each year, is simply to begin saving again. Small deposits, put somewhere safe, that over time, slowly accrue interest. I have five “buckets” that I like to use. You may have more or less. The trick is to make daily investments in each of these, small enough so that we don’t feel the pain. 1. Physical. Do something every day that improves your physical health. Instead of two hours parked in front of the TV or computer screen, can you turn it off and go for a 20-minute walk? Maybe you can cycle to the store instead of driving? Can you take 10 minutes out of your day to stretch – first thing in the morning and last thing at night? I have even started scheduling meetings with clients while walking in the park. We’re more apt to begin on time, finish on time, and we get a little exercise in the process. 2. Emotional. It’s vital that we spend our emotional energy wisely. The ways in which our emotional energy can be squandered are endless: the 24-hour bad news cycle, traffic, unreasonable deadlines, toxic people. Try to surround yourself with people who will uplift and inspire you, not deplete and depress you. If that jerk on the radio makes your blood boil, then why are you listening to him? Spotting the negative influences may take some practice, we have become so used them. But we don’t have to indulge them. 3. Mental. The mind is like a muscle and needs exercise too. Can you learn one new thing every day? Big or small, it doesn’t matter. Maybe it’s somebody’s name, a piece of history that you’ve always wondered about. Maybe you can learn one new word from The New York Times Most Frequently Looked-up Words List? I read where author Philip Roth recently bought himself an iPhone. “Every morning I study a chapter in my iPhone for Dummies,” he said. “And now I’m proficient.” This from the man who won the Pulitzer Prize! 4. Spiritual. Try to get in touch with a “higher force,” whatever you perceive that to be. You don’t have to meditate for three hours a day, go to a mountaintop, pray to God or even believe in a God. But try to connect with something bigger than yourself for a few moments each day. Even if it’s just to stare in awe at nature, or see your humanity reflected in another person. One of the best ways to do this is to practice gratitude daily. Pick out the things in your life that you are grateful for – especially those things you would normally take for granted. The most effective prayer in the world has two words: “Thank you.” When you do this, you will find yourself reconnected to the source. 5. Interpersonal. I call this the daily “reach out.” It might be someone who has been on my mind recently. An old college friend I owe an email to. Someone I bumped into on an airplane once. An introduction I would like to make for someone. It costs us nothing to pick up the phone, write 4 lines or tweet 140 characters. But it says to somebody, “Hey, I’m thinking about you.” If you can add value, or give them something, then so much the better. Nobody can do everything on their own. We need other people, just as other people need us. So try to practice one daily reach out. You may be surprised by the results. 2012 has been tough in many ways. We’ve seen a bruising election campaign in the U.S., political unrest overseas, a heartbreaking tragedy in Newtown, the destruction of Hurricane Sandy, and a still sluggish economy trying to grow. But every New Year brings us renewed hope, and the chance to begin saving again. By taking me to Hudson City Savings Bank, my mom knew, even if I didn’t, that I probably wasn’t going to get rich anytime soon. But she also knew that good habits, practiced regularly over time, help us to grow in the right direction. May all your small deposits yield big dividends in 2013. Happy New Year!