The Power of Compounding Applied to Habits

In his book titled Atomic Habits, author James Clear makes a compelling argument for the power of small incremental changes over time. Everyone in finance is aware of the power of compounding as it applies to interest, but I thought this was an interesting quantitative take on the same concept applied to self-improvement.

Here’s how the math works out: if you can get 1 percent better each day for one year, you’ll end up thirty-seven times better by the time you’re done. Conversely, if you get 1 percent worse each day for one year, you’ll decline nearly down to zero. What starts as a small win or a minor setback accumulates into something much more.

Habits are the compound interest of self-improvement. The same way that money multiplies through compound interest, the effects of your habits multiply as you repeat them. They seem to make little difference on any given day and yet the impact they deliver over the months and years can be enormous. It is only when looking back two, five, or perhaps ten years later that the value of good habits and the cost of bad ones becomes strikingly apparent.

Source: James Clear | Atomic Habits: An Easy & Proven Way to Build Good | 10/16/2018 | Visit