The compound effect of daily habits
You might ask yourself, how is tiny changes in your daily life going to make any sort of lasting change? We can look the answer to that in finances.
Let’s say you make the tiniest change with your financial habits. Let’s say you take $1 a day and put it in a piggybank. $1 is nothing. It won’t make much of a difference for you. At the end of the year you’ll have $365 without realizing it. Now let’s say you do that for 50 years. You’ll end up with $18,000 without realizing it.
Of course inflation rates will devalue your money, but imagine if you put that $1 a day in an ETF like the S&P500 which has an annual return of about 11%. If you do that for 50 years, put a dollar a day, 11% compound interest would start accumulating, interest on top of interest on top of interest, at the end of that 50 years, instead of having $18,000, you would have about $680,000. Crazy right? That is the power of compound interest. That is the power of 1% shifts of compounding your habits and your lifestyle choices day in and day out.
Now let’s do the math on your personal life. If you committed today in becoming 1% better than yourself yesterday, that’s doing or learning something that you didn’t yesterday, 365 days later, you would be about 37x more powerful and potent. You did it for 2 years, you’d be about 1400x more powerful and potent. If you did it over 5 years, you’d be millions times more powerful and potent. If you did that for 10 years, you’d be a quadrillion times more powerful and potent. That quadrillion number seems like a crazy made up number, but it’s not though. It’s real. It’s what is possible and the potential that lies within each and every single one of us. We have no clue what is possible for us. It’s really how we create our destinies.
People overestimate what they can do in a year and underestimate what they can do in two or three decades. — Tony Robbins
So often, when we’re chasing these big goals, these large ambitions, that feel so far away, we feel like giving up and we say that we shouldn't aim that high because we’re gonna end up disappointed. The most important thing that we have to remember in those times of desperation is that everything is a process.
Going all in on your goals everyday it’s like overwatering a plant. We just have to show up every day without getting so frustrated, and over time, with the compounding effect, the result will come. Even though the results that we want are massive, the steps in the moment don’t feel significant.
Most people get tripped up by the simplicity of the compound effect. They quit so early because they don’t see any significant changes. What they don’t realize is that these small seemingly insignificant steps, completed consistently over time, will create a radical difference.
Get that grand vision of where it is that you want your life, your health, your vitality, your knowledge and your skills to be, but choose right here and right now. Today, you’re gonna get 1% better, and watch your life unfold beautifully.
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