The Power of the Compound Effect
Oseola McCarty was a washer woman from Hattiesburg Mississippi. She earned a meager living washing other people clothes, yet at the age of 87 she had accumulated $ 250000-00, earned three doctorates, been awarded the presidential medal by Bill Clinton and the united nations coveted Avicenna award for educational commitment.
How could someone from such a humble background accumulate so much money and leave such an amazing legacy. Her secret was very simple. Every day after receiving small payments for her washing services, she would go to bank and deposit a portion of her money into her savings account at the Trustmark bank, in Hattiesburg. She never knew what compounding was or ever understood how it worked. All she knew was that she needed to consistently make deposits into her savings account to prepare for the day she could no longer work.
Oseola left an incredible legacy, by accumulating such a sizable amount of money. Yet she only earned a meager sum every day. She really got the attention of the media when she was asked what she wanted to do with her money after she passed away. She was a simple woman and did not understand how much money she actually had. To make things smile for Oseola, the banker that was taking care of her affairs put ten coins on the table in front of Qseola and asked her how she wanted to distribute her money. She pushed one coin forward and said that he must give that to the church, she pushed three coins forward and said that he must give those to her relatives and in an amazing act of generosity she pushed six coins forward and said that they must use those six coins to establish a bursary for underprivileged people to help educate them. $ 150000 was donated to help uplift and give someone a better chance at life. The average American family has accumulated only around $ 50000 when they reach retirement age. This highlights just how significant Oseola’s achievement and effort was. Oseola’s life is a perfect example of how small positive efforts over time will always deliver astounding results.
It is time to stop allowing yourself to be bamboozled any longer. There is no quick fix for success, you are not going to make R 2 000000 a year by spending only two hours a day on the internet, or loose 10 kg a week by drinking the latest magic potion, rub 20 years off your face with a new cream, fix your love life and relationship with one pill a day or find lasting success with any amazing scheme that is available on TV for three easy payments of R 99.99.
It is time to get back to basics and to realize that when you commit to take consistent action over time. You can succeed at anything. By using the compound effect you equip yourself with a success tool that works. No need to buy crystals, sit under pyramids or chant. Simply commit to take what may seem like a few small insignificant actions every day and you can have, do and be anything you want to be. Success is not doing 500000 things perfectly. It is about doing 5 or six things well about 500000 or 600000 times. Have you ever heard the saying, “Slow and Steady wins the race” or the story of the “Tortoise and the Hare”? Consistency wins every time.
The compound effect is simply the principle of reaping huge rewards, from a series of clever choices that you make over a long period of time. The most amazing thing about compounding is that although the payoff is so significant, the small incremental steps feel insignificant in the moment. The changes are so subtle that they are almost imperceptible. The disciplines of carrying out these small actions each day is almost unnoticeable. The small changes offer little or no immediate result, no big win, and no obvious payoff. So why bother?
Don’t allow yourself to be tripped up by the simplicity of the compound effect. Stay focused on reality and know that the small seemingly insignificant steps repeated over time will create a radical difference in your life. Let me give you an example to highlight my point.
Two good friends, live in the same neighborhood, with very similar lives. They each earn R 350000 a year, are all married and have average health and body mass. They all have that little bit extra body flab around their waists. Friend number one let us call him Graham starts making small inconsequential positive changes to his lifestyle. He begins reading 10 pages and listening to 30 minutes of some instructional or inspirational material on his commute to work each day. He cuts 125 calories out of his diet a day. This equates to a cup of cereal or trading a can of coke for water.
Friend number two David continues to make a few poor choices. He buys himself a big screen TV, so he can spend more time watching his favorite TV programs. He loves the food channel and cooks a number of the recipes he sees on the food channel. These recipes taste great but they are packed with about 125 extra calories a day. He has also installed a bar in his lounge and he adds one alcoholic drink to his world each day.
After five months has passed there is no perceptible difference between the Graham and David. Graham keeps up his new habit of reading every night and listens to his instructional and inspirational CD’s on his commute to work each day. David is enjoying life and keeps watching TV and cooking great meals every day. There is no real difference between them. In fact if you charted the two men’s weights, you would see a rounding error of zero.
Even after ten months there is no noticeable difference between the two men. It is only when we get to the 18 month that we can start to see a slight difference between the two men. It is at about month 25 that there are real visible differences between the two men. By the time we get to month 31 the changes are startling. Graham has lost 9 kg and is trim whilst David has put on 9 kg and is fat.
This example highlights the incredible power of the compound effect and shows the difference small almost imperceptible changes can make in your life. What small changes are you going to make in your life today that are going to result in massive changes over time? The compound effect works whether you know about it or not.