COMPOUNDING EFFECT
BY-VICKY KUMAR
The human brain is notoriously poor at grasping exponential growth, and that might explain why so few people invest their savings. But understanding its power will set you apart from the rest and make you a better investor. It will give you confidence knowing that your monthly saving contributions will build up to a much greater value after 20 or 30 years.
YOU CAN USE COMPOUND EFFECT POSITIVELY BY USING FOLLOWING METHODS-
1.CHOICES
2.HABITS
3.MOMENTUM
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1.CHOICES-
. Everything in your life exists because you
made a choice about something. Choices are at the root of
every one of your results. Each choice starts a behavior that
over time becomes a habit. Choose poorly, and you just might
find yourself back at the drawing board, forced to make new,
often harder choices. Don’t choose at all, and you’ve made the
choice to be the passive receiver of whatever comes your way.
In essence, you make your choices, and then your choices make
you. Every decision, no matter how slight, alters the trajectory of
your life—whether or not to go to college, who to marry, to have that ast drink before you drive, to indulge in gossip or stay silent, to make
one more prospecting call or call it a day, to say I love you or not.
Every choice has an impact on the Compound Effect of your life.
This chapter is about becoming aware of and making choices
that support the expansion of your life. Sounds complicated, but
you’ll be amazed by its simplicity. No longer will 99 percent of
your choices be unconscious. No more will most of your daily
routines and traditions come as a reaction to your programming.
You’ll ask yourself (and be able to answer), “How many of my
behaviors have I not ‘voted on’? What am I doing that I didn’t
consciously choose to do, yet continue to do every day?”
By employing the same idiot-proof strategies I’ve used to
catapult my own life and career, strengthened by the Compound
Effect, you’ll be able to loosen the mysterious grip of the things that
are unwinding your life and pulling you in the wrong direction.
You’ll be able to hit the Pause button before stumbling into idiot
territory. You’ll experience the ease of making decisions that lead
to behaviors and habits that support you, every time.
Your biggest challenge isn’t that you’ve intentionally been
making bad choices. Heck, that would be easy to fi x. Your biggest
challenge is that you’ve been sleepwalking through your choices.
Half the time, you’re not even aware you’re making them! Our
choices are often shaped by our culture and upbringing. They can
be so entwined in our routine behaviors and habits that they seem
beyond our control. For instance, have you ever been going about
your business, enjoying your life, when all of sudden you made a
stupid choice or series of small choices that ultimately sabotaged
your hard work and momentum, all for no apparent reason?
You didn’t intend to sabotage yourself, but by not thinking abot your decisions—weighing the risks and potential outcomes—you
found yourself facing unintended consequences. Nobody intends
to become obese, go through bankruptcy, or get a divorce, but
often (if not always) those consequences are the result of a series
of small, poor choices.
2.HABITS-
Aristotle wrote, “We are what we repeatedly do.” MerriamWebster defi nes habit this way: “An acquired mode of behavior
that has become nearly or completely involuntary.”
There’s a story about a man riding a horse, galloping quickly.
It appears that he’s going somewhere very important. A man
standing along the roadside shouts, “Where are you going?”
The rider replies, “I don’t know. Ask the horse!” This is the story
of most people’s lives; they’re riding the horse of their habits,
with no idea where they’re headed. It’s time to take control of
the reins, and move your life in the direction of where you really
want to go.
If you’ve been living on autopilot and allowing your habits
to run you, I want you to understand why. And I want you to
let yourself off the hook. After all, you’re in good company.
Psychological studies reveal that 95 percent of everything we
feel, think, do, and achieve is a result of a learned habit! We’re
born with instincts, of course, but no habits at all. We develop
them over time. Beginning in childhood, we learned a series of conditioned responses that led us to react automatically (as in,
without thinking) to most situations.
In your day-to-day life, living “automatically” has its defi nite
positives. If you had to consciously think about every step of
each ordinary task—making breakfast, driving the kids to school,
getting to work, and so on—your life would grind to a halt. You
probably brush your teeth twice a day on autopilot. There’s
no big philosophical debate; you just do it. You strap on your
seatbelt the minute your butt hits the seat. No second thoughts.
Our habits and routines allow us to use minimal conscious
energy for everyday tasks. They help keep us sane and enable
us to handle most situations reasonably well. And because we
don’t have to think about the mundane, we can focus our mental
energy on more creative and enriching thoughts. Habits can be
helpful—as long as they’re good habits, that is.
If you eat healthfully, you’ve likely built healthy habits around
the food you buy and what you order at restaurants. If you’re fi t,
it’s probably because you work out regularly. If you’re successful
in a sales job, it’s probably because your habits of mental
preparation and positive self-talk enable you to stay optimistic
in the face of rejection.
I’ve met and worked with many great achievers, CEOs, and
“superstars,” and I can tell you they all share one common
trait—they all have good habits. That’s not to say they don’t
have bad habits; they do. But not many. A daily routine built on
good habits is the difference that separates the most successful
amongst us from everyone else. And doesn’t that make sense?
From what we’ve already discussed, you know successful people
aren’t necessarily more intelligent or more talented than anyone else. But their habits take them in the direction of becoming more
informed, more knowledgeable, more competent, better skilled,
and better prepared
3.MOMENTUM-
If you remember your high-school physics class (you do, don’t
you?), you’ll recall Newton’s First Law, also known as the Law of
Inertia: Objects at rest tend to stay at rest unless acted on by an outside
force. Objects in motion tend to stay in motion, unless something stops
their momentum. Put another way, couch potatoes tend to stay couch
potatoes. Achievers—people who get into a successful rhythm—
continue busting their butts and end up achieving more and more.
It’s not easy to build momentum, but once you do, look out!
Do you remember playing on merry-go-rounds when you were a
kid? A bunch of your friends piled on, weighing the thing down
and then chanted as you worked to get the thing moving. Getting
started was slow going. The fi rst step was always the hardest—
getting it to move from a standstill. You had to push and pull,
grimace and groan and throw your entire your body into the
effort. One step, two steps, three steps—it seemed like you were
getting nowhere. After a long and hard effort, fi nally you were able
to get up a little bit of speed and run along side it. Even though
you were moving (and your friends were cheering louder), to
get the speed you really wanted, you had to keep running faster
and faster, pulling it behind you as you ran with all your might.
Finally, success! You jumped on and joined your friends in the joy
of feeling the wind in your face and watching the outside world
turn into a smear of colors. After a while, when the merry-goround started to slow down, you’d hop off and run alongside for
a minute to get the speed back up—or you could simply give it a
couple good pushes and then hop back on. Once the merry-goround was spinning at a good clip, momentum took over, making
it easy to keep it going. Adopting any change is the same way. You get started by
taking one small step, one action at a time. Progress is slow, but
once a newly formed habit has kicked in, Big Mo joins the party.
Your success and results compound rapidly
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