If I offer you a choice between two options, which would you choose: $1 million dollars today or 1 penny that will double everyday for the next 31 days? Choose one.
If you choose $1 million dollars, that will be all you get. If, however, you choose the penny that doubles everyday for 31 days you will end up with over $10 million dollars. What I find fascinating is that for the first 27 days the doubled penny option still lags behind the $1 million dollars option. But from day 28 onward it skyrockets ahead. This is a simple illustration of the compound effect at work. The real power in the compound effect is a function of an exponential increase that occurs over time, particularly in the latter days of that time. Another way to say it is that what gets created in the latter days is more than the combined sum of what is created in the earlier days.
The compound effect occurs in all areas of your life, not just money. Any effective action, done consistently over time, will have a compound effect—positive or negative. These actions are your habits. And just like with the penny, for a long time these habits may appear to be having little or no effect at all. I call this the underground work. Consider how a plant grows its root system below ground before any growth is visible above. Similarly, your initial efforts may not look on the surface to be making any difference at all. And this is where many get tripped up, because it’s tempting to stop actions that will eventually bring benefit and continue actions that will eventually bring harm.
Think how much time and energy you spend stopping and starting over. The compound effect leverages the momentum created when you stick with it instead. This is as true for your relationships and financial investments as it is for your exercise and food choices. If you keep at it over time, it will have an exponential impact on your life. This means you don’t just reap what you sow; you reap a multiplication of what you sow.
Remember, this principle works both for things you want as well as things you don’t want. It’s possible to consistently choose actions (habits) that are not aligned with what you ultimately want for yourself. That is like planting weeds hoping to reap fruit trees. When you don’t have the sense that the action you take and the choices you make really matter and really have an impact on the future you’re living into, it will have the compound effect working against you. But it’s a powerful place to operate from when you live that what you plant today will bring a multiplied harvest at a later time…if you stay with it. It’s in staying with it that you will move to the realm of the exponential return.
You already have habits. Which ones align with your desired future and which ones are sabotaging your desired future? The exponential return of your future is being created by you right now. The impact may not yet be visible, but if you stay with these habits for the next year, 10 years, 25 years, what will your life look like then? Not only will the compound effect of your habits have an impact on your life, but the compound effect of your life will have an impact on our world. What will that be?