How to become rich: The compound effect

If I offered you either $1 Million Dollars now or a penny that would double every day for the next 30 days which would you choose? If you were like most people you probably chose the $1 million but what if I told you that if you had chosen the penny instead that by the end of the 30 days you would have $5,368,709.12. This is the power of the compound effect.

Being rich starts in the mind long before it starts in the wallet and one of the most essential starting concepts to achieving anything, not just riches is the compound effect. The compound effect is the idea that very small decisions add up over time and compound into big effects. For instance, if you decide to cut out soda from your diet, and you’re an avid soda drinker who would drink 1 20 OZ Dr pepper a day at 250 calories, that compounds to over 7000 calories cut out of your diet a month.

The compound effect is a law of nature, therefore, it has no biases and will also work in the reverse so if you were to instead add that same soda to your diet your caloric intake would increase 7000 calories over a month. When you realize the compound effect is always working you can use it to your advantage. Removing bad habits will prevent them from growing larger and potentially spreading into other bad habits that will also compound. While at the same time you add good habits that will have a dramatic positive effect in all aspects of your life.

The key is to start slowly by adding or removing a habit or two a month. Then carefully monitor that habit to ensure you do it every day for 3 weeks. After around 3 weeks you shouldn’t need to constantly remind yourself to do the habit because it should be formed by now. For instance, let’s say you want to be in better shape. You’d start by adding in the habit of going to the gym 3 times a week so every Monday Wednesday and Friday. Then you’d want to eat less junk food and fix your diet so you would add the habit of counting your calories while removing the bad habit of eating certain foods. Over time these small habits will compound into serious health improvements.

Let’s take another example, say you wish to make more money in your field. First, you would want to add the habit of reading a book a month in your field. Then you might want to start associating more with masters in that area so you make the habit of surrounding yourself with people of excellence. Or you can make more money in your field by being more productive, which you could do by studying the concept of deep work and removing distractions to add more time. In this instance, you are removing negative habits which compound into positive effects.

No matter what you set out to achieve, the compound effect is the first step in reaching your goals. It can be used to: get in shape, meet more love interests, make more money, achieve higher success in a niche or industry, spend more time with loved ones etc. Simply add or remove habits that will be useful in the future for achieving those goals. Another great way to cement a couple of habits is to establish a morning ritual. That way the simple act of getting out of bed or the shower is the trigger that starts that daily habit. Such as meditating then drinking a full glass of water. This can also be applied to a nightly ritual before you go to sleep. By adding a morning and nighty ritual you can add 4 to 6 new habits that will benefit you right now.

The majority of successful people all have healthy habits and rituals of things they do daily. In fact, most of them attribute their success to adding a few good habits into their day and having consistency. If you want to be rich or successful this simple concept will allow you to take control of your life. I highly recommend reading the compound effect by Darren hardy which originally taught me this concept. Ralph Waldo Emerson once said, “Sow a thought and you reap an action; sow an act and you reap a habit; sow a habit and you reap a character; sow a character and you reap a destiny”.

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