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Blog Short #152: The Compound Effects of Habits

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Have you had the experience of something sneaking up on you before you realized you were in trouble?

Maybe you’ve used your credit cards liberally but didn’t realize the balance was climbing.

Or you got in the habit of putting off tasks at work and instead spent hours on social media, ostensibly for breaks, but you did it so much that your work declined, and you were fired.

Or you ignored your partner without really noticing and spent most of your time with friends or on other pursuits, and then one day, your partner left you.

There’s a process underlying these experiences outside the apparent denial. It’s called compounding, and it’s dangerous, especially when applied negatively. The good news is that it’s awesome when used positively!

Let’s take a look at how you can make use of it.

What is Compounding?

Compounding is a process whereby something increases exponentially over time.

You know the word from banking. When you put money in a savings account, the interest is compounded so that each month, you get interest on the original amount you put in plus the interest you accrued the following month. Over time, you’re accumulating greater and greater interest each month because it “compounds.”

This same process holds true for habits or any repeated pattern of behavior or activity. Whatever you do regularly or habitually has compounding effects over time.

If you’re doing something positive like exercising daily, your fitness level will improve faster and faster as you stay with it.

But, if you spend most of your day sitting and never exercise, you’re doing damage physically and neurologically that you may not feel daily, but that will catch up with you at some point when you find yourself with health problems that are hard to turn around.

Compounding happens in all spheres of our lives automatically. You can’t control it, but you can take advantage of it if you’re aware of your actions and behavior.

Before we get to strategies, there’s one more thing to keep in mind, and that’s a specific effect of compounding.

Gradually and Suddenly

You’ve heard of success stories where people say they’ve labored for years to get to where they wanted to go, but when they arrived, it happened quickly and suddenly.

An example would be an author who writes multiple books with a slow build of followers, and then suddenly, he catches on, and people are clamoring for his books. He’s in demand for interviews, and money’s flowing in.

When you see this from the outside, you think he’s had instant success, but that’s not true. It took years of work to reach this place in his career. You only saw the explosive part.

Compounding is behind that kind of leap. There’s a tipping point where compounded effort multiplies on a larger scale and bumps you up suddenly. There’s an informative book about this phenomenon called “The Tipping Point” by Malcolm Gladwell, which you might enjoy reading.

Daniel Pink refers to this process as “gradually and suddenly” in his book The Power of Regret. When the compounding reaches a particular point, the results appear like a “tornado.” If you’re using it for good, you’re happy and gratified, but if applied to harmful habits, you feel regret when the reality hits you.

In those cases, the results can be catastrophic because of the compounding effect. It’s as though the singular bad habit spreads throughout your life at greater and greater speed, similar to how a disease replicates. We’ve all just been through COVID, so we know what that’s like.

In terms of habits that compound, I like James Clear’s description best because it helps us get serious about what the effects could be. He says:

If you want to predict where you’ll end up in life, all you have to do is follow the curve of tiny gains or tiny losses, and see how your daily choices will compound ten or twenty years down the line. Time magnifies the margin between success and failure. It will multiply whatever you feed it. Good habits make time your ally. Bad habits make time your enemy.

Now, let’s look at how you can use compounding to your advantage.

Strategies and Process

1. Become aware.

The first step is to see where you are. This step is pivotal because everything else rests on it, so don’t leave it out. Take an inventory of your habits, especially those that affect your relationships, health, productivity/work, and finances. Add any other areas that you feel are essential to you.

Write out the most influential habits you have under each category. Include positives and negatives, and be honest to get an accurate picture.

This task might take some time, but it’s worth doing because habits are so automatic that you often don’t see how embedded they are in your daily life or how much they influence your behavior.

2. Imagine compounding effects.

Look over each habit and imagine possible effects five, ten, or twenty years out. This part is meaningful because it will make you look at the reality of what you could face in your future if you don’t make changes now.

For good habits, you can feel excited about the possible outcomes you’ll experience, which will help you stay on track and continue those habits. But for the bad ones, you need to make changes.

The purpose of this exercise is to get real about where you’re going and to prevent situations you can control now that you won’t be able to control later because you waited too long to take action.

3. Set up new habits.

Make a list of the habits that need changing and prioritize them. What needs to change first?

You can’t change everything at once and shouldn’t try. If you do it that way, you’ll fold and do nothing, so just start with one thing. You know this already, but we tend to start big and fall flat.

Habits take time to change and instill. Some strategies that help with that are as follows:

  1. Make small improvements. James Clear advises a “1% better every day” approach. Using that approach helps prevent falling off when you don’t succeed quickly or hit a lull, which you surely will. If you improve even slightly every day, you’ll eventually get those compound effects that will move you along swiftly.
  2. Make it visible. Write it, schedule it, put it on a bulletin board in the kitchen – make it so visible you can’t ignore it. I like big, bold signs in the house that I have to see because embedded habits are sneaky and stay just under your awareness radar. You need constant mental reminders to keep you steady.
  3. Track progress. You WILL FAIL if you don’t track your progress. Remember that habits are ingrained in the neuron paths in your brain and are automated. They have a power of their own. You have to combat that by keeping yourself tuned in to what’s happening, and tracking is the way to do that. Weekly, check in with yourself. Better yet, get an accountability partner, so you have to check in. Reviewing your progress, or lack of, weekly lets you know how you’re doing and will keep you going.

If you use these strategies and stick with them, you can overcome any bad habit and create a positive one in its place, especially since you know the effects will compound faster over time.

Good Habits

Good habits are easy to keep going for the most part, but keep an eye on them and make sure you don’t drop the ball. The hardest thing about dealing with good habits is waiting for results. If you’re working toward a goal, you can become impatient and give up when you don’t see progress.

Keep in mind that compounding works slowly at first and builds over time, so waiting is part of the process. Keep going, and eventually, you’ll feel the rewards.

That’s all for today!

Have a great week!

All my best,



Clear, J. (2018). Atomic Habits. Avery.
Gladwell, M. (2000). The Tipping Point. Little, Brown.
Pink, D. (2022). The Power of Regret. Riverhead Books.

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