40 pages • 1 hour read
The Compound Effect: Jumpstart Your Income, Your Life, Your Success
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Index of Terms
Compound Effect
The Compound Effect is what happens when something small occurs regularly over a long period of time. Eating an extra cookie every day will add 24 pounds in two years. Spending daily slightly more money than one earns can lead, in time, to bankruptcy. On the positive end, drinking one less soda per day will remove, over two years, those 24 pounds; regularly investing a small amount of one’s earnings at interest eventually builds up into a life-changing sum.
Establishing small, consistent good habits that change the course of one’s life applies the Compound Effect: By moving in a slightly different direction, a person arrives at a completely different, and better, place. As Darren Hardy writes, “profound success [is] the result of small, smart choices, completed consistently over time” (10).
Several techniques help to amplify progress. These include keeping journals of one’s behavior regarding the activities to be changed, using “why-power” to replace long-established bad habits with good ones, and avoiding negative influences—especially among acquaintances and media—that change habits for the worse.
Momentum
Like a steam train that uses a lot of energy to get up to speed but requires much less power to maintain that velocity, new habits take time and energy to launch. Once they’re well established, they require only a little daily effort to maintain. This “Big Mo,” or momentum, carries new habits forward toward success. Essentially, the hard part about new habits is getting them started; after that, they’re easy to sustain.
Ripple Effect
The ripple effect is an offshoot of the Compound Effect. As improved habits begin to compound, they can affect other areas in a person’s life. Losing weight improves energy and mood, which, in turn, may lead to better results at work and in relationships, which can lead to higher earnings and closer friendships. Slightly more modest spending habits will improve one’s bottom line, which lowers anxiety and reduces stresses at home and work.
The ripple effect also works in reverse. For example, weight gain can injure one’s health, reduce work performance, damage home life, and induce stress eating, which makes everything worse. Either way, the Compound Effect “can create a ripple effect that impacts your entire life” (10).
Why-Power
The energy that motivates us to overcome bad habits, obstacles, and other barriers to success is “why-power,” the dream or goal that motivates you the most (58). When attached to our daily habits, “why-power” animates us so that the hard work of acquiring success becomes a pleasure. Without “why-power,” even success won’t satisfy us. For example, people who pursue money and things often report they’re disappointed when they attain them. This is because their pursuit didn’t fulfill their deepest desires for self-expression and fulfillment. “Why-power” is more about those deep wants.
The strongest generator of “why-power” is a person’s “core values,” which “define both who you are and what you stand for” (61). Knowing your core values simplifies your life and decisions. Hardy cites his own core values: “Growth, Excellence, and Impact” (62).
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