Everybody, on a basic level, knows the effect of compound interest on an investment. We have done plenty or arithmetical problems at school involving compound interest. With a sufficiently high-interest rate and enough time, compound interest causes significant growth to an investment. It’s safe to say most of us are aware of the basic cause-and-effect framework of compound interest. Yet, too few of us realize that the principle of compounding applies to other aspects of life as well. Even simple things like buying a Xfinity Triple Play Deals can have a compounding effect on one’s life. This blog explores how the decisions you make today compound your life tomorrow.
Compounding in Life
The principles of compounding apply to many areas of our life, not just classroom exercises. You can see its effect in many aspects of your own life, including fitness, health, productivity, business and personal relationships. In essence, consistently taking rational decisions throughout your life end up making your life better in the long term. If you look at it, life is just a series of daily choices. These choices add up to create a larger outcome in the long run. Every conscious decision you take is a seed for the future. Good decisions result in a good long-term outcome, bad decisions result in a bad one. In the end, it’s the thousands of little things in life, as opposed to the few big ones, that define your life.
The Compound Effect
One piece of reading that I think should be mandatory for adults of all ages is The Compound Effect by Darren Hardy. Darren maintains it’s the hundreds and thousands of small actions in your life that determine the type of life you will have. He lays out a basic formula in the very first chapter of his book. Smart, small decisions + Time + Consistency = Radical difference in life. According to Darren, small steps that might seem insignificant at the time create a huge difference in your life. This is the best way to put one’s self on the road to personal and professional success that you desire. Compounding is very similar to another concept known as the 10,000-hour Rule.
The 10,000-Hour Rule
The 10,000-Hour rule is considered the key to success by many behavioral scholars. Essentially, it involves the practice of doing specific tasks, accomplished within a 20-hour workweek in 10 years. There are many dissenting elements to this rule. Regardless, the essence is that 10,000 hours of practice will enable you to become an expert on specific tasks/practices.
How does the Compounding Effect Work?
The core underlying assumption of the compound effect is that every action results in specific consequences on your future. Meaning, even the simplest of actions compound their effect on your life. Actions that you take over the course of your life grow. A good example to understand the compound effect is to imagine a person who spends four dollars every day on coffee. The real cost of this coffee habit over the course of 20 years amounts to almost $51,000 factoring in inflation. This is the compound effect. A simple choice of getting a 4-dollar cup of coffee daily results in a total cost of almost half-a-hundred grand.
Responding or not responding to situations and stimuli in your life should not be taken lightly. Any action that is repeated over time results in a tangible compound result. Here are some actions that you should incorporate in your daily routine to reap the benefits of the compound effect:
- Read ten pages of a great book every day
- Eat less than 150 calories every day
- Work out for 10 minutes every day
- Walk for a few minutes every day
- Meditate for 5 minutes every day
- Drink 8 ounces of water every morning
- Start a journal and write in it every day
- Save 5 dollars every week
- Invest a few minutes in your personal development every day
If you do all or any of these things every day for a year, the effects on your life will be very tangible and visible. So start taking advantage of the compound effect in your life today!
Making informed and rational decisions are key to reaping the true benefits of the compound effect. If you have Xfinity Basic Cable and use it to help with your home workout sessions, you’re making the right decision. Conversely, if you use it just to catch up with your reality TV shows, the compound effect on your life will be minimal. Today is the most important time in your life. The decisions you take today will ultimately affect your future. So make sure even the smallest decisions in your life are taken rationally, with the big picture in view. This is one way to ensure that your future self will live a better life than your present self.