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Leveraging the Compound Factor

It is never encouraging when a problem is compounded by other factors.  This typically means an issue has become more difficult to manage.  In other words, when something compounds, it grows in size or significance.  Compounding is always at work creating inertia in various areas of our lives.  Sometimes compounding reaches a point of critical mass where a system maintains or increases momentum without the any additional energy.  By the time the full effects of compounding are seen, you can be sure that momentum has been building over a long period of time.   

In fact, most aspects of life will compound over time.  Sometimes the change is so slow that it is difficult to recognize.  However, it is important to realize that, like gravity, this law is always working in the background.  Constant habits today are creating trade winds that you will be sailing with in the future.  This is even true with small, regular routines.  Compulsively checking social media, weekly calls to a family member, eating a snack before bed, or contributing to your company’s retirement savings plan...  For good or bad, our regular actions substantially effect our future. There are many important areas in life where I am counting on this process.  Here are a few examples.

Finances.  Preparing for the future needs of our family requires diligence.  One day, I will no longer be able to work and earn an income.  I know that I need to begin preparing for that day now.  Compound interest is the only way most people can prepare to meet that future need.  If someone begins saving $100 a month at the age of 20, they will have saved $56,400 by the age of 67.  However, if that $100 a month is invested and earns 10% interest, compounded annually, that same amount would be worth over a million dollars by the same age!  Making monthly deposits in a good mutual fund over many years can bear huge results.  

Relationships.  My strongest relationships are the ones that I’ve nurtured for years or decades. While I’ve made new friends already this year, a friendship is like a tree that takes years to develop deep roots.  Ideally, family forms the core for human relationships.  My spouse is my best friend, but my children, parents, and siblings are all very close.  I am also grateful for many other close friends who make my life immeasurably richer.  These relationships don’t default into awesomeness, though, and require time, sacrifice, and a willingness to genuinely serve the other person.

Vocation.  The common denominator between exceptional producers in any field is that they have intentionally develops skills over time.  Malcolm Gladwell famously popularized the notion that 10,000 hours of practice is required to become world class in any specific field. While subsequent researchers have qualified that notion with an expanding list of caveats, there is no doubt that developing exceptional skills or knowledge requires time. 

Health. Have you ever noticed that the people you see jogging don’t look like they need to?  Of course, you know the reason.  Healthy eating and regular exercise only have a significant impact on our health over a long period of time.  Doing well for 24 hours, or even a month, won’t really move the needle.  Research reveals that in developed countries, far more people die from lifestyle related diseases than infection diseases.  And we all know the cure.  It just takes consistency and discipline.

If you are like me, it is easy to look back and wish we had developed certain rituals years ago. It’s kind of like the adage, the best time to plant a tree is yesterday. Yet the reality is that we are still sowing seeds today that will bear fruit in our lives down the road.  It is critical to consider the power of compounding because it is a universal law that is always in operation.  We don’t get to decide if this principle will shape our lives.  We can only be intentional in how well we leverage its effects.  Feel free to comment below about areas where you hope to see the power of compounding in your life. 


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