Big Idea Daily | The Compound Effect

The Compound Effect.

 

It’s huge. 

 

Darren gives us a few examples of the Compound Effect in action.

 

First, the magic penny. You may have heard the story before but it’s truly remarkable and Darren describes it brilliantly.

 

Two choices: I’ll give you $3 million in cash today (bam!) or, I’ll give you a penny and double it every day for 31 days. Which would you prefer?

 

Let’s say you take the $3 million now and your friend opts for the doubling penny.

 

If you take that $3 million today, you look pretty smart on Day 1 when your friend gets a penny. You also look pretty smart on Day 5 when your friend gets 16 cents. And on Day 10 when he gets $5.12. (He may be feeling a little lame at that point wondering what he did.) 20 days later and your friend is only up to $5,243. You’re feeling pretty good.

 

Then the magic of the compound effect kicks in. Fast forward to Day 31. Your friend gets $10,737,418.24 to your $3 million.

 

As Darren says, “Very few things are as amazingly impressive as the “magic” of compounding pennies. Amazingly, this “force” is equally powerful in every area of your life.”

 

We can apply this principle to any aspect of our lives.

 

Darren walks us thru the example of three friends who are pretty much identical in every way. One is kinda sorta happy with his life, complains a bit but keeps on doing the same thing. Another decides he needs to enjoy life a little more and gets a new big screen TV, adds a bar to his house and indulges in an extra fancy drink each week while cooking some rich meals he sees on the Food Channel. No big deal. Just a few little tweaks. The third decides he’s going to take a tiny little baby step to improve his life and just cut out 125 calories per day and walk an extra couple thousand steps per day (< 1 mile). Again, nothing dramatic. Small choices.

 

They all look pretty much the same after five months. But fast forward 31 months and those tiny changes have made a significant difference.

 

Friend 1 is the same. Friend 2 weighs 30+ pounds more than he did at Day 1. (125 extra calories per day add up!) Friend 3 *lost* 30+ pounds. (125 less calories per day add up!) So, friends 2 and 3 look COMPLETELY different—friend 2 weighs *60 pounds* more than friend 3! 

 

Oh, and the ripple effect of those changes cascade. Their entire lives are different.

 

When the healthy friend took the baby step to eat a tad less and walk a little more, he felt pretty good and decided to add reading a little bit as well. That got him feeling even better and he found himself stepping up his game at work a bit and spending more quality time with his family. That all compounded and now he’s making more money, happier at home, etc. etc. etc.

 

The opposite occurred with the less healthy friend. His rich meals and late night TV viewing left him feeling a little more lethargic and he had negative ripples cascade out in his life.

 

Small choices. Consistently applied over time. Radical differences.

 

The Compound Effect.