Compound Effects

November 3, 2018

I’ve first learned about the compound effect at school, when our teacher explained how compound interest works and how it’s calculated. It was presented as something which is inherently difficult to understand, hard to grasp by our minds, but very powerful when applied to large amounts of money. It seemed mysterious and wasn’t very interesting to me at that time — mainly because I had only a few deutsche marks weekly pocket money and no bank account to put the concept into action. I forgot about it for quite some time.

At that time, I was also too young to see from example that the very same concept applies in almost all areas of life — that compound effects take place wherever repetition occurs.

Compound Effects Take Place Wherever Repetition Occurs

Compounding describes the cumulative growth of a specific resource due to previous investment in that resource. Investing once doesn’t already provoke a compound effect, but repeating the investment can trigger and increase that effect. A repeating investment can be a task, which we perform again and again or a specific thought on which we reiterate and progress. It’s important to see that this definition includes all kind of repetitions — also automatic ones that we don’t perform by intention, i.e., for which we’ve not actively decided for. Those are often referred to as „bad habits“.

I’m aiming at reflecting on intentional repetition here. Since those repetitions also take their share from our overall capacity for attention (yeah — it’s 100% :D ), they often also have the effect on creating more consciousness on the auto-pilots in our minds and bodies (that is also, us). And by investing more in the intention, less attention is spent elsewhere (at least according to my observations).

Compound effects occur with material resources, our relationships and with our minds and bodies. I want to give some examples for each of the areas to make it more accessible for your actual life (and for the sake of being able to remind myself at times, which I’m sure will totally happen).

Compound Effects in Finances

The obvious example is compound interest which is the direct effect from successfully investing money. By investing money — be it in stocks, funds or term money — we can let the money work for us. The effect of a one-time investment is (depending on the amount of money you put in of course) very little, because it produces relatively little compound interest. But once this interest is reinvested, possibly also with some additional resources, growth can happen. Repeating this task over a long time consistently, eventually may lead to exponential growth.

Compound Effects in Relationships

However, those effects not only happen with material resources but also in relationships, with friends or with our coworkers. It’s a different kind of metric, and labeling it „investment“ may sound a little bit calculated. But basically, also in these areas repeated actions can lead to positive effects. Intentional habits in in these areas are, e.g., acting reliable, speaking the truth, showing trust, or simply hanging around and spending time with each other. Similarly, one-time occurrences of this kind of behavior may already have a positive effect, but repetition more likely leads to stable and trustful relationships.

Compound Effects in Health

The same applies to how we treat our bodies in terms of exercise, eating healthy or sleeping well. Having one nurturing meal or one good night sleep may have an excellent effect, but is only one drop in a bucket when we do not pursue those regularly. I’m also noticing this with the somatic bodywork sessions with my clients. One session usually can be quite impactful, but the consistent training in body attention is giving the positive effects and the energy to produce lasting change. Creating a habit out of a good investment in our bodies can lead to being generally healthier and more awake during our days. Furthermore, by doing something not for the first time, we ideally make use of what we have learned and practiced all the previous times.

Compound Effects in Attention

For most people, the mind is a quite chatty place. We’re busy with running repeated narratives, having compulsive thoughts or are comparing ourselves to the people around us. Often, we notice a sense of internal quietness only after the noise is back on track. Having one great experience of mind-silence — or mindfulness — can be a moment people remember over a long time. By repetitive training of mind-quietness, be it through meditation or by mindfully performing mundane tasks, experiencing more of such moments is more likely to happen. The option of having a quiet mind and having a sense of control over our thoughts leads to more options w.r.t. mind-quietness.

Notes on Personal Learning

Over the past couple of years, I’m exploring more and more of those different areas. One key learning is, that most of those intentional habits go hand in hand. Eating healthy supports exercise, exercise supports sleeping well, being rested supports daily meditation which in turn supports being passive while staying highly attentive. This also means, that picking one area with one new habit can already lead towards very beneficial effects. Research shows that it’s good to pick only one area for change, since it might be difficult to be consistent from one day to another in multiple different areas of life. This is also backed by my own experience — too often I believed in this momentary image of myself, which is able to pick up any habit and stick to it. This doesn’t happen and this is why putting the reps over time is giving the compounding effect. What’s helpful for me is a simple habit tracker I’ve developed for myself. It’s called HabitBoard and supports me in staying on track.

When I went to school, things like habit trackers weren’t invented yet. What I’d have wished for in retrospect is, that I’d have realized the tremendous impact tiny repetitive actions can make over a long time. Since the major force behind those effects is the repetition over time, the best time ever for starting an intentional habit is now.

Eventually, such changes need to be backed by a strong personal why. For me, it’s training and expanding my attention to be more awake during the limited time I’m spending here with you, my friends and family. It’s a beautiful journey.

What’s your intentional habit or something which you’d like to incorporate more into your life? I’d love to know!

Resources for Further Reading and Learning

Over time I’ve also read a lot on the topic of changing habits, creating habits and compound effects. I want to share some relevant resources with you: „Your Money Or Your Life“ by Vicki Robin is a book that is covering the area of financial responsibility from bottom to top while also expanding on other areas of life. Leo Babauta with his blog Zen Habits is someone who’s very consistent by himself and highly inspirational to me. James Clear did a lot of research and writing in the area of creating habits. Lastly, the book „The Compound Effect“ by Darren Hardy describes ways of using the compound effect to create personal success. It’s my hope, that those resources expand the topic for you.