The Beauty of the Compound Effect
The compound effect, or how small changes in your life can have a huge impact
Making small, consistent changes in your daily routine can lead to extraordinary results in the long run.
That’s the beauty of the compound effect.
We all have heard about the marvellous long-term effects of compound interest. If you save $100 a month and earn an interest of 1% on your capital, you will have $1,206 in the first year, of which $6 will be earnings for interest. After 30 years, you will have saved $41,933, of which the outstanding amount of $5,932 will come only from interest. And that’s only with a 1% interest.
That’s the beauty of the compound effect in action.
The earnings are added to the principal, and the interest is applied to an ever-increasing amount, so the effects in the long term can be enormous.
The beauty of the compound effect is that it doesn’t apply to the finance world only. It can also impact considerably our personal life, positively or negatively.
Small changes in our personal life compound over time to bring incredible results.
Compound effect: choices + time + consistency
To work in your personal life, the compound effect requires three elements (financial compound effects would require a fourth element, interest):
· Choices: your choices have an effect in the short term that compounds in the long term. Those choices can have a positive or negative impact.
· Time: the longer the time, the bigger the effect. Tiny actions can have an extraordinary effect over the long term.
· Consistency: consistency is vital. It is an overrated superpower. Without consistency, there cannot be any compound effect.
If you choose to do 10 minutes of exercise or read five pages of a philosophy book every day, your action might seem small, but if you keep the consistency over a long period, the results will be astounding.
Ten minutes of exercise every day allow your body to get used to more challenging workouts with time. The positive effects on your body and exercise body compound over time.
Same with reading a few pages on a topic that interests you every day, or writing, or painting, or any other activity that requires skill. If you do it consistently long enough, the effects will be unimaginable.
Compound effect on good and bad habits
When we talk about choices, time and consistency, we enter the terrain of habits, good and bad.
Habits can make or break a life. You can become a better person by building positive habits or destroy your life by being dominated by bad ones.
Habits are so powerful due to the compound effect. They compound over time, either positively or not so positively.
With building positive habits, you start small, but when you keep doing it consistently over time, the results begin to compound and work in your favour.
Take meditation, for example. You start by trying to focus on your breath for a few minutes, but your mind wanders everywhere. If you do that for a few minutes every day for a while, it becomes easier, and you are able to focus better and for more extended periods.
Before you realise it, you are meditating for 30 minutes or more with no difficulty.
Read more: Good habits make you better
Consistency is key
The key for the compounding effects to work is consistency.
For that, I like the don’t skip twice rule.
You can miss one day once in a while. We all do. We are not machines, so please don’t treat yourself too harshly when that happens.
But try not to skip twice in a row.
That’s when consistency starts to break. Once you miss something twice, you realise you are not being consistent, and the likelihood of you returning to the path of consistency goes down.
The more you skip, the more difficult it will be to come back to a positive and consistent pattern.
If you miss something one day, that’s fine, but try not to miss a second day in a row.
Unleashing the power of small actions
Small, consistent changes over a long period have a considerably bigger impact than abrupt and sudden changes.
Don’t underestimate the power of small actions.
You don’t get fit by running a marathon once and not running anymore. You do it by stacking the kilometres and the hours at the gym regularly.
You don’t lose weight by skipping breakfast once. You do it by reducing your calorie intake (and doing exercise), one day in, one day out.
You don’t save money by not spending your full salary in a single month. You do it by saving a little every month.
Little changes compound over time and multiply their effects.
The key is to maintain consistency over a long enough period.
Compound effect on writing
I started writing for this blog in 2020, during the covid lockdown, and it helped me stay sane in all that craziness.
Back then, I only wrote two or three articles a month and used most of my weekends for it. I lived alone and couldn’t leave the house, so that was fine.
When the pandemic was over and my social life started back in earnest, I couldn’t dedicate enough time to writing, and my cadence and regularity suffered. In some months, I only wrote one post, and there were months without a single post published.
I loved writing, but I couldn’t keep the practice going.
Then I realised that I just needed to write every day, even if it was a little bit, and the compounding effect would do the rest. I just needed to be consistent enough for a long enough time.
I started waking up earlier and writing a bit every day. I would continue writing more over the weekends, but I’d try to also write during the week, and so I did.
I now sometimes write 15 minutes in one day, other days 30, but the secret is I write something every day. This has made my writing to come easier for me, so it is not only that I dedicate more time to it, but I also write more in less time.
My writing productivity has increased, so I now write a long-form article like this once a week, plus shorter-form posts on LinkedIn every working day, and that’s because I just write a little bit every day.
Compounding success
This is just an example. There are many more out there.
Compounding can be a great ally and friend of yours if you use it wisely.
The secret is to realise that small little changes, if enacted for long enough, can have huge effects, both for the better and worse.
This realisation, if used correctly, can be of great help to anyone. Compound effects can be applied to finance, health, personal growth, or to any other aspect of life.
It can be used to build small habits that will improve your life or stop the ones that are destroying it.
Compound effects are powerful, so use them wisely!
Originally published at https://humanefutureofwork.com on June 8, 2023.
