How big of a percentage is .1%? Obviously it’s small, like incredibly small, smaller than your bank account and your motivation to go into your job each day. For example if you were given a .1% raise on a hypothetical yearly salary of $50,000, it would equal exactly $50. Not a lot of money obviously, maybe good for buying a sandwich or a coffee from Starbucks for a week and a half, but that is it. Although if you’re a long time reader of my blog then you should know that paying that much for coffee is insane and you should be instead saving that money.
However if we zoom out and take that .1% raise and apply it on a more regular basis than once a year, things become a little different. There exists a concept in many self improvement circles (and to be honest, personal finance is financial self improvement), that if you’re able to be just .1% or 1% (the number can move around a lot) better each day then eventually over time you will be light years ahead of where you were a few short years ago. And the same concept will definitely apply to money, in fact if you taken so much as an intro to finance class then you should intimately familiar with the concept of compounding interest. The concept that money, or really anything can grow exponentially if you give it enough time and keep increasing it by a percentage.
However lets go back to that original example. If I made a commitment to increase my salary/yearly income by .1% a week, I would have approximately $52,667, not great but if I kept doing this for 40 years I would have almost $400,000 dollars. However let’s switch the compounding periods from a week to every single day. If I did that then I would have a little over $72,000. This would be a huge jump for pretty much anyone, equating to a 44% raise in just one year. However if you carried this for your entire working career (let’s say it’s 40 years), you would have something in the realm of $108 million dollars, which let’s be real is very unrealistic but I guess possible in the mathematical sense. Also improving .1% a day for a year is a lot obtainable than keeping it up for every day for 40 years. The point of this is get people to realize that just improving your finances .1% a day/week/month can have huge dividends in the future.
Disclaimer: All the numbers used in this article are estimates and I am not giving financial advice. Also I am not a financial advisory professional. Any investment decisions should be made with the help of an investment or financial advisory professional.