The Compound Effect: A Closer Look

We all have a habit which we are practicing for years and is making significant changes in our lives. It can be reading a book, exercising or walking in the woods. Sometimes we make small changes in our daily routine and with consistency, they lead to drastic improvements. For example, you just exercise for 30 minutes daily. Initially, changes will not be visible but after a few years, this small change will get you in shape, increasing your stamina and resistance. Similarly, if you just start saving a small amount every month, you will have a good sum in a few years. This is the power of compounding. Einstein once said, "compounding is the eighth wonder of the world". Whoever understands compounding, enjoys it and who doesn’t, pays for it. This article will help you understand The Compound Effect and how you can use it to achieve more by doing less. The entire idea of this article has been taken from the book, The Compound Effect by Darren Hardy.

The Compound Effect

Compound Effect or The Snowball Effect is the result of small consistent action which is minor or negligible in the beginning but becomes massive after sometime. For example, you and your friend have given a choice that you can either take $3 million today or $1 that will be doubled every day for 31 days. What you will do? Obviously, you will take $3 million. Let’s say you friend has taken $1. You will be flabbergasted to see that $1 has grown to $5.3 million on the 31st day. That’s the power of compounding. Let’s take another example. You take a decision to eat just 125 calories less and one of your friends starts eating a pack of crisps with same number of calories. Both of you consistently follow this habit. After one year you will see no change. But after 3 years, you will lose 33 pounds and your friend will gain 33 pounds.

Similarly, if you start reading only 10 pages of a self-help, motivational or inspirational book daily, you will be amazed to know that you can read more than 43 book in 3 years. Experts say, if you want to become knowledgeable in a field, read 3 to 4 books. Now, imagine the level of knowledge you’ll have in that industry after reading 43 books.

Putting The Compound Effect to Action

It is clear that the compound effect is quite effective in achieving big things by taking small action. But you should remember that it’s a double-edge sword. As these steps are small, ignoring them is as easy as taking them. So careful choices and consistency are the key here. Following are the steps that will help you ensure that your actions are positive and on the right track.

Owning 100%

It’s difficult to accept what you are today is because of the decisions you took in the past. But if you accept this, it will help you make an entirely different life. Because when you take ownership of life, you take cautious and positive decisions, that in turn, change your destiny.

Small Choices

The compound effect is not only applicable to health and wealth. You can use it in almost every area of life. For example, saving a small amount for a few years can give you a good sum. Spending weekends with parents can help you make a lot of memories. And listening to a podcast can help you in gaining positive knowledge.

GIGO (Garbage-in-Garbage-Out)

As discussed earlier, the compound effect will be only helpful if choices are positive otherwise, it can worsen the situation. For example, if you listen to news for hours, read newspapers, hangout with negative people and watch crazy things, you will also become negative. On the other hand, if you read self-improvement books, listen to podcasts and choose positive people to stay around, you will become productive and efficient.

Final Thoughts

Compound effect is a wonderful concept to change the life but it should be kept in mind that it cannot only improve but can also deteriorate your life. Therefore, actions and choices should be made carefully to avoid its negative effects. However, if you take 100% ownership of actions, you can easily change your life for good.