The positive financial impact of compounding interest is well known and has been reinforced by some of the brightest minds in our history. Benjamin Franklin described compounding as “Money can beget money, and its offspring can beget more.” A quote commonly attributable to Albert Einstein is, “Compounding is mankind’s greatest invention because it allows for the reliable, systematic accumulation of wealth.” Compound interest is one way our money can make more money. It is a simple, yet effective way of building financial strength.
As we look to continue to build and strengthen our character, the concept of compounding interest can provide some insight. Before we go there, it is important to acknowledge that we all have an element of our nature that wants a quick fix to our struggles or a fast track to achieving our life-long goals. We want financial security now and there is a strong appeal to some quick, potentially high return investment. We listen to a motivational speaker at some high energy sales conference and we expect great results on day one. We attend a weekend marriage retreat and plan to apply the ‘5 principles of a great marriage’ on Monday and then we expect to finally have the relationship we desire. We get the DVD series and new juice blender to lose 20 pounds in 2 weeks and we believe we have found the fountain of youth (we have cabinets full of DVDs and blenders in case any of you are wondering).
The reality is quick, lasting fixes don’t happen in the major and most important areas of our life. As we think about the principle of compounding interest, there are some relevant learnings that compounding can have in many areas of our lives beyond financing. When we look at a graph of building financial strength with compounding over time, the ‘wealth curve’ appears relatively flat in the early years and then slowly builds momentum and the curve gets very steep in later years. The consistent application of some small dollar amount placed in a savings or investment portfolio will put any one of us on the path to building a small fortune over time. The principle is that we need to stick with it, leave the money alone, and let the interest grow.
Guiding our thoughts, decisions, and actions by the principle of compounding in other areas of our lives can help to build and strengthen our character.
There are probably many things we can do to improve the relationships of those closest to us. There are countless books and blogs out there to help all of us. Applying the principle of compounding by making a decision to do something small and consistent over time will help. For example, we could just focus on being a better listener. When we feel like immediately jumping in with a comment or correction, if, just once a day, we held back and focused on listening with the intent to understand the other person, we would be on a better path to building strong relationships with those that matter most. Just changing our behavior once a day in conversations will build momentum in our relationships and the compounding interest curve will continue to rise with the eventual outcome being healthier relationships.
In Health and Wellness:
We all have struggles with some aspect of staying physically healthy. For some it is overeating, others it is getting little to no exercise, for still others a lack of sleep can contribute to health problems. There are plenty of resources out there to help us get on the right path to improving our health. With the principle of compounding, find one small, relevant step we can do and stick with it. Perhaps leaving a few bites of dessert behind is a potential step to take or drinking one less can of soda throughout the day. For others it may be walking one more lap around the block or maybe 5 more minutes of some cardio-workout. The point is that whatever the choice, making one small change, consistently over time, will pay tremendous interest over time with regards to our health and wellness. There is a great deal of academic research and practical experience to dispute the lasting impact of any extreme fad diet or exercise regimen. However, the consistent application of small incrementally positive steps toward improving our health will make a lasting impact.
In Personal Development:
We all have areas we need to improve professionally and personally. Perhaps attending some high energy seminar will kick us in gear to take the first step. However, it will be small incremental changes that will bring about lasting change. For example, reading books relevant to our chosen profession for 15 minutes a day or keeping a daily journal of progress toward some goal are small steps, that over time, have proven to produce huge dividends in personal growth and accomplishment. These actions start small, build over time, and gain momentum to have a positive sustainable impact.
Remember the compounding of interest…just keep making steady, small, consistent steps in the right direction and the results will be tremendous over the long haul. The curve will be relatively flat at first, but it will get steeper over time. It is how we finish, not the “dash and flash” at the start, that really matters. As we continue to apply the principle of compounding in other areas of our life, we will continue to build and strengthen our character and our Character Creates Opportunity® for us to make a real difference in our world.