Do you have great Interest in growing money?

Do you grow plants? When God created the world, He chose not to make a money tree. Don't you wish He did? All you have to do is pluck a few dollars everyday. Most unfortunately, there's no such thing. Even so, there is an interesting phenomenon in money management that makes it seem as though money is growing on trees. It's called interest compounding.

Compounding is when interest is added to the principal, so that from that moment on, the interest that has been added also itself earns interest. This addition of interest to the principal is called compounding (i.e. the interest is compounded). The principal amount, for example, may have its interest compounded every month: in this case, $100 initial principal and 1% interest per month would have a balance of $101 at the end of the first month, $102.01 at the end of the second month, and so on.

It's interesting to realize that this principle has its source found in His Word. Dishonest money dwindles away, but he who gathers money little by little makes it grow. (Proverbs 13:11). Did you catch the basic concept there? Gather money little by little, and thereby make it grow. By the way, did you know that if you invest any amount into a deposit at 6% interest, your principal amount will double in 12 years? In other words, your $20,000 will double to $40,000 in 12 years. Your $100,000 will double to $200,00 in 12 years.

That's precisely what compounding does. Whether you start with $100 or $1000 or $10,000 or more, the results over time invested at a reasonable rate can be phenomenal. The factors in compounding are time, amount and interet rate. But the most important key to compounding is being debt free. That's because compounding will work against you the moment you take a loan.

As stewards, we'er charged to manage His resources as efficiently and effectively as possible. The story of the talents which we read earlier, indicates that investing money wisely - and reaping the benefits financially - is a practice He encourages.

And that makes the magic of compounding a concept that's crucial for us to understand ... and put to work.

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Today's Bottom Line

Compounding is a financial tool that helps us manageHis resources responsibly.

The Bible does show many ways to overcome any financial crisis. Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can download the Small Groups kit from our estore.

Calculate your mortgage, credit card repayment, loan interest as well as your compounding interest and more with our 25 calculators!

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