Compound interest is a fundamental concept in finance that can have a profound impact on your financial future. It is the process of earning interest on both the original amount you invest or save (known as principal) and any accumulated interest from previous periods. Being aware of how compound interest works can help you make smarter financial decisions.

The key to harnessing the power of compound interest lies in time. The longer you stay invested, the more your money can grow. This is because as interest compounds over time, it has a compounding effect on your savings. Even small, regular contributions can result in significant wealth accumulation over an extended period.

It is important to note that compound interest can work both for you and against you. When you're borrowing money, compound interest can make your debt grow exponentially if not managed properly. On the other hand, when you're saving or investing, compound interest can be your best friend as it allows your wealth to snowball over time.