To form habits, financial or otherwise, you have to put in the work. Often that means making small changes or tweaks consistently over a long period of time. Days, weeks, months, years — if you really want to change your behaviour, you have to commit yourself to something for a long time.
Incidentally, timing — or rather, time in the market — is also one of the keys to investing and building wealth. In fact, time invested might be your most important asset.
And yes, that’s because of compound interest. You realise some earnings on your investments, and those earnings realise more earnings, and so on.
Why not apply that principle to the rest of your life? “The power of compounding can be applied to reading a book, eating healthy, spending quality time with the people you love, working out, getting up early, using a system to get things done, and changing many areas of your life,” writes Thomas Oppong for Medium.
Practising small habits or skills every day and building on them is akin to your investment portfolio compounding. Incremental changes lead to exponential growth.
“Compounding is like making ‘daily deposits’ into goals, ideas, projects, people that are important to you, and watching them build over time,” writes Oppong.
Oppong encourages readers to “aim to go the extra mile by five per cent in every piece of work, interaction or action you take.” That’s a bit excessive, but you get the gist — if you have an area of your life you want to improve, or a skill to hone, start small, invest some of your time and attention, and do that consistently over a long period of time. You’ll watch compounding payoff in your real life.
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