Making Big Changes: The art of compounding

Small and consistent efforts lead to success over time. We all have things we want to change in our lives. Some people may want to eat less junk food; others may want to read more books. When it comes to actually making these changes, we often fall short. We don’t follow through on the things we want to do that we know will make us better. We don’t eat the salad instead of meat. We decide to sleep for an extra hour instead of read a book. We get up an hour later than we want to. We leave a work assignment to the last minute and we promise that we will never do it again — but we do. Why have these decisions failed?

There are a lot of factors at play, but I would say that a lot of the failure of those decisions can be attributed to the fact we believe change happens quickly. We think that when we wake up tomorrow, everything will be different. Then, we will be able to do anything we want. But unfortunately that is not how the world works. Important changes to our lives take a long time to implement.

The reason habits are so effective is because they compound over time. When you execute a habit, you are more likely to execute it again. If you decide you will have a salad for lunch each day, your body will naturally come to expect a salad for lunch. If you merely decided you were no longer going to eat meat, you would most likely not follow through with that decision. You have not made any commitment to an implementation plan, so nothing is likely to change. Instead, build a habit around what you want to do. And over time those habits will become more deep-rooted and part of your daily routine.

Small changes lead to massive improvements over time. Let’s use the example of investing. When you invest money in an index fund, it is reasonable to expect you will earn around a seven or eight percent return over the next year. You could cash out and you would now have some extra money to spend. Or you could leave the money in the account and wait a year to earn another seven or eight percent on your money. Then you will have even more, because the money you made from last year will compound too. And over the long-term — a decade or two — you will have a significantly larger amount of money, because the gains from each year continue to compound and result in a higher return.

The power of small improvements

We like to get in the mindset where we think we can make big changes immediately. Indeed, I think some changes can be made in this way, but those are the exception, not the rule. The multimillion-dollar self-help and guidance industry tells us that we can wake up one day and change our lives. It makes sense when we say we can make such big changes quickly — we are in control of our actions — but that is rarely the case. It takes hard work to make a change. It takes a big commitment. We need to make a lot of difficult decisions and changes to our routines in order to get ahead. The best path forward, therefore, is to start making small improvements, and let those compound over time.

If you commit to reading 20 pages a day, over the next year you will have read dozens of books. And the knowledge you have acquired from those books will continue to build up, and it will grow. Your mind will learn new things, and it will combine that knowledge with other facts you have learned in the past. Your mind will synthesize new ideas and come to better conclusions. Over time, this habit will only become more powerful.

Making better decisions does not happen over night. Instead, better decisions are the result of small changes being made to our lives. If we can make ourselves one percent better at something each day, over time that will make a big difference. If we read 20 pages a day, in a week we will have read 140 pages and we will have a large amount of new knowledge to refer back to in the future. The rule of compounding applies to all big decisions. Do you want to move into a job in tech? Build a habit around learning to code for 30 minutes every evening. Do you want to get better at writing? Write 100 words every day. Over time your brain will develop a habit, and you will have made a lot of progress. And in ten years, you will be amazed by the amount of progress you have made.