By stepping out from the splurging trap, people not only eliminate debt but also gain control, confidence, and peace of mind. Once set in motion, this snowball effect becomes one of the powerful forces for long-term financial growth
Most of the people in the world dream of long-term financial growth and financial freedom, yet only a few achieve it. The reason behind it is not a lack of income or money, but rather a lack of passion, patience, perseverance, and consistency. Every wise financial decision made today adds and builds a layer to a bigger, larger, and faster growing snowball tomorrow. Each and every disciplined investment contributes to its exponential growth.
Snowball investing is one of the most effective ways to control spending and channel funds towards meaningful goals. By following the principle of snowballing one can turn financial stress into financial strengths with the small regular investments into substantial wealth through the power of compounding. A fundamental mindset shift is one of the basic requirements for moving from splurging to snowballing. The phrase "Stop splurging; start snowballing" represents a philosophical metaphor for delayed gratification and intentional living. Splurging provides instant satisfaction but leaves little room for future growth. The Marshmallow mindset teaches us to resist unnecessary spending today so that we can enjoy much larger rewards tomorrow. Every rupee not wasted on impulse purchases becomes a seed for future wealth.
The snowball effect, once set in motion, becomes unstoppable. It transforms financial burdens into lasting prosperity. Snowball grows slowly at first, but as time passes, it accelerates exponentially. For this, patience and discipline investments are two basic features. Once the financial momentum begins, it accelerates rapidly, turning modest beginnings into powerful outcomes. This philosophy of stop splurging, start snowballing can be explained through two powerful concepts: the Marshmallow Effect and Hockey Stick Effect. The Marshmallow Effect is the mindset of waiting and refers to the ability to delay immediate gratification in exchange for greater rewards in the future. And the Hockey Stick Effect is the result of waiting. Just as a hockey stick remains flat before curving sharply upward, success often follows a similar pattern. Growth is slow at first, and then suddenly accelerates.
One of the clearest examples of these concepts in action is a Systematic Investment Plan (SIP). SIP is a powerful investment strategy. SIP allows individuals to invest a fixed amount regularly, usually every month, into a mutual fund. It encourages one to invest first and spend the remainder instead of spending first and saving later. When investors start a SIP, the early years often feel disappointing. Growth appears slow, and the portfolio seems small and subtle. However, the investors who stay disciplined eventually experience the Hockey Stick Effect in the long run as compounding accelerates wealth creation like a snowball rolling downhill growing bigger and bigger over time. What begins as a tiny amount gradually becomes larger and larger.
The biggest rewards often come from staying invested for a longer time rather than investing larger amounts. For many years, financial growth may look flat, and many people become impatient and stop investing just before the most important phase begins. The money that once seemed insignificant starts multiplying rapidly through compounding. It is imperative to stay invested and maintain discipline irrespective of market conditions.
Saving money is not the same as growing money; we must let it flow and allow it to grow. A river that flows eventually reaches the ocean, whereas a pond that stays still slowly dries up. If we learn to enjoy the joy of savouring every step of investment in a SIP journey, it can reduce stress and increase gratitude, as true investment is not just about returns but also about embracing the process with patience and awareness.
To "splurge" means to spend extravagantly or wastefully. In today's fast-paced technology-driven world, spending money has become easier than ever before. Some of our habits like designer clothes, latest gadgets, online shopping are just a few taps away on a smartphone, often leading to impulsive buying, unnecessary subscriptions, and a weakened financial foundation. For example: if a person spends Rs.100 daily on coffee or tea, they will spend nearly Rs. 36,500 per year. Redirecting that money towards debt repayment or investment could result in significant financial progress over time. Splurging may feel satisfying in the moment, but it delays long-term goals such as owing a home, building an emergency fund, creating a financial buffer, or achieving debt freedom.
Unfortunately, many people save money whatever is left after saving. The big or the real problem is not low income or lack of saving; rather, it is all about the absence of wise thinking and strategic action. When the snowball principle is applied to savings and investments, wealth starts to multiply. For example, if a person starts investing Rs. 1,000 monthly at the rate of 12%, the investment could grow to approximately Rs. 112,000 over 10 years. If the same investment is continued for 10 more years with a dividend reinvestment plan, it could grow to around Rs.1 million.
Modern lifestyles are full of opportunities to spend. People want instant gratification, which often leads to excessive spending habits without any purpose. This habit is a splurging trap. By stepping out from this trap, they not only eliminate debt but also gain control, confidence, and peace of mind. Once set in motion, this snowball effect becomes one of the powerful and unstoppable forces for long-term financial growth.
Therefore, a small but disciplined and consistent investment can become a stepping stone towards a more secure and prosperous financial future, as people will not have to go after a pension or a permanent job for financial security in a country like Nepal.
Joshi, PhD, is a faculty member, Patan Multiple Campus
