This article is paraphrased from a 10/12/07 Motley Fool article:

You should be highly skeptical of any and all get-rich schemes … except for the super-simple formula I’m going to show you below. Because this one really works.

It works so well that it’s been used by the world’s billionaires — from moguls of yesteryear such as Rockefeller and Ford to today’s tycoons Carlos Slim and Warren Buffett. But enough already. Let’s get to the formula.

The formula

It is, simply: FV = PV * (1+r) ^ n

Where:

FV = future value
PV = present value
r = rate of return
n = time (or number of years)

Compounding 101
Now, some astute finance brains will know that equation not as some mystical secret but as the “future value of money” (FVM) equation taught in college.

The FVM formula simply states that your future wealth (FV) is a function of three variables: the amount of money invested today (PV), the rate of return generated (r), and the length of time in which that money is put to work (n). So maximizing future riches requires three steps.

Step 1: Increase PV
It takes money to make money. But by actively and consistently slivering off a portion of your earnings every month to save and invest, you’ll have more and more of that money working for you.

All things equal, the greater amount you invest today (PV), the greater wealth you’ll build for tomorrow (FV).

Step 2: Increase r
Next, you’ll need a way to grow that capital. Historically, the stock market has been the most effective wealth-building vehicle of all. Plowing your money into a low-cost index fund wouldn’t be a bad idea. All things equal, the greater your rate of return (r), the greater wealth you’ll build for tomorrow (FV).

Step 3: Increase n
The last ingredient in our super-simple wealth building recipe: maximum time in the market.

Look back at the equation. You’ll see that n is an exponential function — meaning that for every year you’re not invested, you give up the awesome (almost magical) benefits of compounding.

All things equal, the longer you’re invested (n), the greater wealth you’ll build for tomorrow (FV).

The final Foolish variable
So don’t waste another “n.” Start plugging whopping returns into your own real-life wealth equation today.

Unfortunate things happen to everyone, which can put you in very difficult situation. No matter how secure you may feel your job is, anything could happen to quickly change your situation. New management, the merger or acquisition of your company, or personal and economic challenges, such as illnesses or disability, can all impact your income status.

In the event that something does happen, you should always be prepared in order to avoid making a bad situation worse. What if, for example, you lost your job tomorrow and it took you four months to find another job? Would this drive you into debt, or have you planned for these situations?

As an insurance, you should have three to six months of living expenses set aside. You will not be accessing this account on a regular basis, but there is a possibility of needing extra cash at any moment. For that reason, this fund should be separate from your regular checking and savings account, but it should be earning interest for you while remaining easily accessible.Your best bet today may be an online, high-yield savings account like the ones offered by HSBC Direct and ING Direct. These accounts offer 4 -5 interest, and your funds can be quickly transferred to and from your regular bank account. The rates and plans for offers like these can be researched at www.bankrate.com.

To build your fund, you should be disciplined to consistently set aside a part of you paycheck each time you are paid. If you have direct deposit available to you at your job, you can set up automatic balance transfers through your bank and/or high-yield savings account. That way every time you are paid, a specified amount is automatically swept to your emergency savings account. You probably won’t even notice the money missing, but if you do there are sure to be some areas you can cut some corners on expenses.

Start with what you can, and only access the money during true emergencies. Saving $50 or $100 at a time will quickly add up. Once you have saved enough money for your fund, you will be used to setting aside that $50 a month. You can then move on to the next phase of contributing that amount to an investment fund to help enjoy a better retirement.

Among other reasons, self-made millionaires are often generous people because they understand that the law of reciprocity applies to business, money and personal happiness. You know the feeling you get when someone gives you something and you feel the obligation to make it up to them. You’re familiar with the sayings, “You scratch my back, I’ll scratch yours,” and, “You reap what you sow.” That’s the law of reciprocity.

When you do nice things for people, people do nice things for you in return. When you do good things, good things tend to happen to you. And for some reason when you give, nature finds a way to make sure that you get back two fold.

Be generous with your time, money and patience, and you will be repaid many times over.