Watch how compound interest builds wealth exponentially, and how inflation secretly drains your purchasing power.
A traditional financial spreadsheet shows you a linear projection of numbers. By mapping personal finance as a physical system, we can actually see the tug-of-war between growth and decay.
This is the simplest model to understand because it relies on a single reinforcing loop and a constant leak.
Your accumulated savings and investments. The goal is to keep this overflowing.
A reinforcing loop. The fuller the tank gets, the wider the interest pipe opens.
A constant outflow pipe draining the real value of your money over time.
Try this: Drag the
Interest Rateslider to 8%. Watch the water level in the Wealth Tank rise faster and faster as the reinforcing loop takes over.Try this: Increase the
Inflation Rateso it is higher than your interest rate. Watch your wealth tank drain, even though the interest pipe is still flowing.
Personal finance is simple because it usually revolves around just one main tank. But what happens when the outflow of one tank becomes the inflow for another?
Let's look at how systems behave when they are chained together.