Putting Compounding To Work

“Compound interest is the eighth wonder of the world. Those who understand it, earn it… those who don’t… pay it.”  ~ Albert Einstein

When we invest money, the interest we earn on that money also earns interest for us.  Over years of consistent investing, the interest-earning-interest can wind up being a significant sum.  While we might not see big results right away, the impact of compounding will soon become significant. This is the concept of compounding interest.

Here’s thing about compounding that most people don’t realize… it’s just as effective in other areas of life beyond finance.

The healthy habits we intentionally develop, and continue to practice year over year, yield desired results.

  • A healthy diet yields good health
  • Healthy spending habits yield control over your finances
  • Healthy saving and investing habits yield financial freedom
  • Continuous learning exposes you to new ideas and fresh perspectives

Here’s one more thing most people may not realize about compounding… it can also work against you.  Compounding is not limited to yielding increasingly good results.  Our bad habits, practiced year over year, can unintentionally yield undesirable results.

  • A bad diet yields poor health
  • Poor spending habits yields a consistent lack of money and debt
  • Failure to save and invest yields financial insecurity and potentially poverty
  • Deciding not to learn lead to becoming stagnant, outdated, and irrelevant

The most important thing we can know about compounding is that it will do its work in our life whether we invite it to or not.  The most important thing we can do with regard to compounding it to make sure we’re putting it to work for us.

ACTION:  Develop and regularly practice the habits that will compound to bring you the results you seek.

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Does it Really Matter

Does it really matter if today you:

  • Exercise or go to the gym
  • Eat a healthy diet
  • Zone out in front of the TV all night instead of doing something more productive
  • Hold a grudge
  • Spend time improving yourself through reading and study
  • Neglect the most important relationships in your life
  • Complain about things that aren’t going well in your life

My response is, no.  In the big scheme of things, it doesn’t really matter if you did one or all of those things today.  In fact, I would even argue that it likely wouldn’t matter much if you did or didn’t do all of those things for a whole week.

But eventually, it will matter.

Suppose you want lose a few pounds and be healthier, so today to start eating better and exercising.  At the end of today, after you’ve eaten well and exercised, are you going to notice a significant difference?  Will you be healthier and at your desired weight?  No, you won’t.   You’ll look the same as you did the day before.  It’s likely you won’t even notice much of a difference after a week.  This is a point where people become frustrated, and often give up on a long term goal; when significant results don’t immediately follow effort.

However, if you stick with your plan to eat well and exercise every day, after 365 days, you’re going to notice a big difference.  At the end of the year you will undoubtedly look and feel much different, and better, than you did 365 days ago.

Now suppose at the end of 365 days of sticking with your plan I was to ask you, “So which day out of the last 365 days caused you to achieve the results you’re enjoying today?”  You might say it was the day you decided to take action, to which I would absolutely agree.  But if I pressed, to know which specific day’s effort made all the difference, your answer would be:  they all did.

Likewise, suppose you’re in good shape and living a healthy lifestyle, but you decide to skip working out today and also to eat foods that aren’t the healthiest.  Will this day totally ruin your health?  No.  If you return to your healthy lifestyle tomorrow, will this one day’s activity even make a dent in the big picture of your health?  No, it won’t.  But, if you continue this habit for 365 days, you’ll also see significant results in the deterioration of your health.

It’s the compounding effect of our consistent actions that yield results in our life, both positive and negative.  This compounding is at play shaping all areas of our lives:  health, relationships, career, personal development, finances, and attitude.

Is there any area in your life where you’d like the compounding effect to work for your benefit to achieve results you’re looking for?  If so, begin by following this simple checklist:

  1. Think about the change you’d like to make, and what your life looks like as a result of this change.
  2. Determine the actions you need to take today to achieve your desired result.
  3. Take those actions.
  4. Go through all 4 steps in this checklist again tomorrow.

We’re all building something with our lives, and the compounding effect is a significant principle that will yield powerful results, both positive and negative.

So decide today to put the compounding effect to work for you by providing consistent actions that will yield the results you’re after.  And if you mess up or miss a day, don’t be too hard on yourself, and certainly don’t give up as a result.  Just recommit the next day, and get back to providing the consistent effort that will be rewarded by the compounding effect; because it really does matter.

The Secret Ingredient

I believe there is a not-so-secret ingredient to achieving results in any area of your life.  Before I share this not-so-secret ingredient, let’s first review the other necessary ingredients in the proven formula for achieving results:

Vision + Knowledge + ? = Results

The first 2 components of the formula make sense, right?  Without a vision of the result you want, it would be challenging to even know where to begin.  We must first know where we’re going (know the result we seek) before we can move toward its achievement.

Likewise, we must also possess the knowledge required to achieve the results we want.  A vision will only prove frustrating if we lack the requisite knowledge for its attainment.

So, you’re probably wondering, “What is the secret ingredient you say I need in order to achieve results?”  The complete formula for achieving results is:

Vision + Knowledge + ACTION = Results

Does that secret ingredient leave you feeling dissatisfied?  Were you perhaps expecting something more exciting and grand?  The truth is, any results or success we seek only come through the disciplined and consistent application of action.  We’re not talking about action that fills our time and causes us to appear busy, but rather specific actions that move us closer to our desired results.

Very often, this is the step that trips people up.  If we’re honest with ourselves, we usually know the necessary action we should be taking to achieve the results we want.  We simply need to be courageous enough to take the action we already know we should.  We need to cause something to happen.

What results are you trying to achieve that could use a healthy dose of necessary action?  You probably already know what action you need to take.  So… when will you take it?  Today would be a good day to start.

Don’t delay.  Results await!

Compounding a Compliment

If you want to make someone’s day, share with them how much you genuinely appreciate something they’ve done for you.  If you want to make their week, share it with someone they work for, or someone close to them.

This week I received a nice email from a department leader that my team and I support.  In the email the department leader shared about a recent meeting one of our business units had with a vendor I support.  Even though I was not present, at the end of the meeting, this vendor made a point to mention to everyone how much he appreciates the support I’ve been providing him.

When I read the email, I felt great!  Not only did I appreciate hearing the comments the vendor made, I thought it was extremely cool that the vendor let others know what a great job he thought I was doing.  It really did make my week.

We also have the same capacity to makes someone else’s week by sharing their accomplishments and our appreciation for them with people they know.  For example, you can:

  • Tell a parent about something their child did that was unique, helpful, or showing of good character.
  • Let the owner or manager of a restaurant know what a great job your waiter or waitress did for you.
  • Tell the spouse of someone you know how much you appreciate something their spouse has done or a character trait of theirs that you admire.

What’s cool about doing this is that not only will the person you’re speaking positively about feel good, so will the person you told.  People like to deliver good news, so you’re also giving the person you told the opportunity to pass along a kind word.  It’s a 3-way-win:

  1. You’ll feel good for passing along a kind word.
  2. The person you told will feel good about passing it along to the person you were speaking well of.
  3. The recipient will feel good hearing your compliment AND knowing that you spoke well about them to other people.

Who has done something good for you recently, or over an extended period of time?  Who has some positive character traits that you admire?  Once you determine who that is, tell someone close to them about it.  The opportunities are endless.  Don’t wait, start today.

Comfort and Order

“Humans are designed to seek comfort an order, and if they have comfort and order, they tend to plant themselves, even if their comfort isn’t all that comfortable.  And even if they secretly want something better”

Donald Miller

A Million Miles in a Thousand Years

 

I was half way through Donald Miller’s book (pg. 100) when I read those words above.  I found them to be both haunting and eye-opening.  They’re haunting, because I’ve been in this exact scenario for many years, and eye-opening, because it finally feels like the root cause to one of my primary struggles has been revealed.

I find it extremely easy to put off making a change when I’m comfortable or complacent in my current situation.  I’ve been struggling with making a career change for many years.  I currently work in Information Technology, but my preference is to work with people, rather than with hardware, software, and systems.  I’ve wanted to make a change for several years, but I’ve made minimal progress.  Often, weeks or months go by without me having done one thing to move closer to a new career.  I know what I’d like to be doing, but I find it easy to put off taking action, primarily because my current situation isn’t all that bad.  It’s comfortable enough to keep me from taking decisive action toward bringing about the career change I desire.

I knew this, to a certain degree, about myself, and could observe this scenario in my own life.  However, reading Miller’s words, that so clearly articulate this concept, it felt like a harsh slap or glass of cold water thrown in my face.  As if my mind was screaming, “He’s describing you!”

After reading those words, I’ve been keenly aware when I’m letting comfort and complacency chart my course.  It gets me fired up, because I can’t think of a single time in my life when I was driven by comfort and complacency, that it ever led me anywhere significant.

How about you?  Are there any areas in your life where you’re actions, or lack of actions, are being driven by the desire to maintain comfort and order?  Is the desire for comfort and order taking you where you really want to go in life?  If you’re struggling in this area, join me in taking the following actions:

  1. When you feel yourself being motivated by the desire to maintain comfort, acknowledge it. Call it out right there on the spot and say, “I’m not letting comfort chart my course any longer!”
  2. Think about the next step you need to take toward a goal or path you’ve set.
  3. Take that next step. It doesn’t matter how small a step it is; take it!
  4. Repeat the process as often as necessary

I don’t think we were designed to live lives that were above all, comfortable.  I think we’re at our best when we’re growing, improving, and pursuing the goals we’ve set for ourselves.

Decide today to stop letting comfort keep you from pursuing a remarkable, fulfilling life.  All you have to lose is the discomfort of being comfortably stuck.

The Intersection

On Monday evening January 12th Ohio State played the University of Oregon for the College Football National Championship in Dallas Texas.  What struck me most about the game was not the score or the collective ability of each team, but the very clear life lesson that was on display during the game.  The lesson was that great things happen at the intersection of preparation and opportunity.

Although I was rooting for the University of Oregon, myself being from Oregon, I was really impressed with the performance of the Ohio State quarterback Cardale Jones.

Consider this:

  • The National Championship game was only his the 3rd college start as quarterback
  • At the beginning of the season, he was the 3rd string quarterback on his team

I was amazed by these facts while watching the game.  While on the biggest stage in college football, Jones showed the command and poise of a seasoned quarterback.  He didn’t look like a 3rd string quarterback, or someone who had only started 3 games.  He looked like he belonged there.  Was he perfect?  No.  Did he make mistakes?  For sure!  However, he was able to step in for his team when his number was called late in the season and perform extremely well.  Well enough to help win a National Championship.

It is obvious from his performance that he had been practicing and preparing for the opportunity.  His preparation intersected with his opportunity, and great things happened.

If Jones hadn’t been diligent in practice while he was still the 3rd string quarterback, he never would have done so well when he got the nod to lead the offense.  Imagine what a different outcome Jones would have had if he had said, “Once I’m the starting quarterback, then I’ll really start practicing!  However, since I’m only the 3rd string, there’s really no point in doing my best at practice.”  Jones had great performances during his 3 starts because he put in the effort to prepare himself in practice; to be ready for the opportunity, even when he didn’t see one or know that one was coming.

What about you?  Are there areas where you need to begin preparing for a future opportunity?  Is there a class you need to take, a habit or discipline you need to develop or stop?  Is there a reading, networking, exercise, or eating plan you need to get on?  If so, begin today.  Don’t’ delay and think, “I’ll start preparing when I see an opportunity.”  That kind of thinking leaves out half of the intersection equation:  There can be no greatness-causing intersection between preparation and opportunity if opportunity shows up alone.

So begin preparing today for the opportunities you seek in the future.  My guess is that, if you’re preparing, the opportunities are closer than you think.

What Football Can Teach Us About Goal Setting – Part 2

There was some good college bowl games played on New Year’s Day 2015!  Ohio State and Alabama played a close game in the Sugar Bowl that went down to the last play, and Oregon dismantled Florida State in the Rose Bowl, breaking a Florida State 29 game winning streak in the process.  Despite the differences in each game, there was one aspect that was exactly the same:  Each team knew the significance of the goal line.

I love the name:  “goal line”.  It very clearly states the objective of the entire game for each team, no matter what side of the ball they’re on.  For the offense, the objective is to cross the goal line and score points for your team.  For the defense, the objective is to keep your opponent from crossing the goal line and scoring.

The goal line is a very clearly defined critical reference point that each team is striving to cross or protect.  There is no question from anyone, on either team, as to the objective of the game and the goal they’re working toward.

Imagine if there was no goal line in football.  The game would be confusing and chaotic, with no one really knowing what they were supposed to be doing or what the objective of the game was.  It can be like that in our own lives without clearly defined goals.  If we don’t know what goal lines we want to cross for our lives in 2015, we will be unclear and confused as to our daily direction.  In addition, unless we’re content just drifting through the year like a leaf in a stream, going wherever the current takes us, we’re going to be disappointed on December 31st 2015 when we realize we haven’t made any progress or significant changes in our life.

What goal lines have you defined for yourself for 2015?  Do you know what you’re moving toward achieving throughout 2015?   If so, great!  Begin taking steps every day to move ever closer to crossing your goal line.  If you haven’t determined what your goal lines for 2015 are, it’s not too late.  Spend some time deciding what you’d like to accomplish this year and clearly define what success in those areas looks like for you.  The definitions you create will be your goal lines.  Your objective for the year will be to make incremental progress toward crossing them.