You are given a choice to either take 3million$ or take 1$ that would double each day until 31 days. What will be your choice?
Well most people that don’t understand the working of compound interest would choose to have $3m for themselves but the person that choose the second option will have 3 times the wealth than the other person. This is the power of compound interest. It all comes to the point of how can compounding change our life’s.
What is compound interest?
Suppose you are a waiter earning 20$ per day you save 5$ everyday after cutting expense. Well 5$ isn’t that big of an amount is it? But when these 5$ are saved upto 5 years. Then after 5 years you’ll have about 8 to 10 thousand dollars. Successful people deeply understand the working of compound interest and have used it to change their life. Warren Buffet the world’s most richest investor used the principle of compounding to build up the wealth he has today.
How can you use It?
The way you can implement the compound effect is quite simple but you got to have patience in yourself because the result can take up years. To bring big changes in your life using compound interest you would have to start small and make slight changes.
Suppose you are an obese person and wants to lose off fat and get trim but you are too lazy to go to the gym and you don’t have the will power. Compounding can be used in situations like these and little changes should be made.
- You should start by cutting a little sugar out of your diet (replace it with healthy food little by little)
- Take the apartment stairs (start by reaching 1st floor with stairs and then take the lift).
- Prefer walking short distances then relying on cars etc.
These few steps will bring little changes, The little sugar reduction and eating of healthy food will give energy to your body, The walking and taking stairs will slowly but gradually make your muscles in good condition.
Doing this for a few months will result in good changes you will feel much better about yourself because the little sugar you cut off, when added up is a large sum that you replaced with healthy food thus resulting in you losing weight, Things such as taking the stairs, walking is much easier for you now, These changes in your health reflected upon your personality and made you perform better at work increasing your chances of promotion this year and your stress and anger related issues have declined.
All these small changes resulted in you being a much better version of yourself
These laws can be used to get rid of different addiction / bad habits you just have to start of little by little
If you find this article useful, start implementing these laws to change your life for better!
I recommend you the book "The Compound Effect - by Darren Hardy"
Here’s the summary for that book:-