How Every Small Change You Make Pays Compound Interest

This is a guest post by my friend Sarah Peterson.

In the summer of 2014, I went on a quest that I sometimes referred to as the “life improvement project”. I became a student of happy living. I consumed as many articles, books, podcasts, videos, and documentaries – anything that I could find that revealed exactly how people lead remarkable, passionate lives. I became entrenched in making tiny (but powerful) changes to my life, and during this period I had an “aha” moment:

Every single change we make to improve our lives pays compound interest.

I came to this realization about a month after I decided to make the first tiny change in my life by waking up earlier.

I had begun to build my business and noticed that there wasn’t enough time in my day to work full-time, commute for half an hour each way, maintain our home and also build my business (all while being a newlywed).

So, my solution was to wake up half an hour earlier.

It was difficult at first. I was groggy and most of the time it was hard to drag myself out of my comfortable, warm bed. But once my body adjusted to the rhythm I’d established, I realized just how valuable the decision to wake up earlier had become to my life.

Not only did this one small change give me more time in the day, but it also helped me sleep better at night and gave me the ability to harness my creative energy when it was at it’s highest.

The one tiny commitment I made at the beginning of my life improvement journey paid me interest in the form of time – time that I could then invest into something else that would further improve my life and also accumulate interest and compound over time.

Those newfound minutes gave me the ability to begin to do two things: journal and meditate. Both of these things provide me with more focus, which pays me interest in the form of doing better work at a faster pace. I’m able to get the “important missions” done more effectively and efficiently than if I didn’t meditate.

They also pay me interest in the form of greater accountability.

I’ve always been somebody who struggles with eating right and exercising, mainly because I love ice cream and I have a hard time saying no when my husband, Jason, wants to go for a walk to our neighbourhood ice cream shop for some cold sweet goodness in a cone.

But meditation and journalling both provide me with the accountability and willpower to say no. And guess what? Those are investments that pay compound interest as well.

Nourishing your body makes you healthier, more energetic, and improves your focus. Exercising helps you sleep better, which reduces your insulin levels, causing you to store less fat. Deeper sleep provides you with more focus, energy, and willpower during the day.

I could go on forever about all of the positive changes I’ve experienced since making that initial change of waking up earlier, but I think you get the picture.

Every tiny, seemingly insignificant change you make to your life doesn’t just change that one area of your life. If these changes are positive, they pay interest. But not just any interest: compound interest.

Compound interest happens when you earn interest off of the interest you’ve already earned. So in financial terms, if you invest $100 and make 10% on it each year, you’d have $110.

The compounding part comes in when the interest is calculated based on that new total. Instead of making 10% on $100 the next year, you’d make 10% on $110. So instead of earning $10, you’d earn $11. This continues – so next year, you’d make 10% on $121.

In my example, waking up earlier paid me interest in the amount of time it earned me to meditate and journal. Those activities compounded the interest because they also improved my life by giving me more focus and willpower to do better work and to be healthy.

How to Start Making Small Compounding Changes in Your Life

Chances are, you’ve seen the impact that small changes can make to your life.

Have you ever gone to the gym one morning and found that you had more energy throughout the day? If you’ve ever had that feeling, you’ve experienced this at a small scale. But the real progress is made when you make these changes stick.

So what change should you make to start accumulating compound interest on your life?

I don’t have all the answers, but I found that these few things worked for me:

  1. Start Small: The best place to start is where you are. Cut one 30-minute TV show out of your day. Spend 15 minutes less on Facebook. Meditate for 5 minutes. Don’t try to jump from the ground floor to the second story. Just take the first step.
  2. Listen to Yourself: If you don’t know where to start, tune into yourself. What are your feelings telling you? If you always feel guilty when you roll over and grab your phone first thing in the morning to check your email rather than making yourself a priority, your body and brain are trying to tell you something. Guilt is often your subconscious telling you that you’re better than your actions.
  3. Sharpen Your Ax: Abraham Lincoln said: “give me six hours to chop down a tree and I will spend the first four sharpening the ax”. When you’re sharpening your ax in your life, you’re choosing to focus on the small number of activities that will give you the highest impact. If you’re trying to choose between three things you can do to start investing in yourself, ask yourself which of them has the highest interest rate.

For example, there are a million things I could do with my blog and business. I could spend more time on social media, or I could focus on YouTube and create video content for my audience. But what pays the most interest for me is writing. Specifically, writing for other websites like I’m doing right now. It will pay the highest interest rate and compound at a faster rate, as I’m able to reach more people with my message.

So consider this in your own life. Which of the things you could start with would pay you the most interest?

Wherever you choose to start, there’s nothing more important than this:

Take Action

We too often hear about a concept or an idea and either never take action because we let it sit for too long or use research or “thinking about it” as an excuse not to act. There’s no wrong answer here, so:

You’ll be pleasantly surprised at how quickly the interest accumulates.

What are some small changes you’ve made in your life that have paid off?

Sarah Peterson is the writer behind, where she encourages people to take action and improve their lives by building a career they love. Join her newsletter to find out how to start a side hustle and do what you love.

  • Love this. So far, for us, the small changes are in our mindset, how we choose to think about things. We travel constantly for work, and were long frustrated by it. Then we decided to make peace with it, and just like that, it became much more bearable. Likewise, we stopped using the word “busy” to describe how we feel. The result: though we have no less to do, we feel less stressed. The power of language and thinking is amazing.

    • I love that one small change in your wording helps so much! I agree that the language you use really can change things. Instead of saying you “have” to work, saying you “get” to work is really powerful, for instance.

      Thanks for reading!

  • I got rid of cable and started reading, walking and exercising almost every day. I have a lot more energy, sleep better and my compounding interest is that my eating habits have improved too, without a lot of effort on my part. My teenagers can’t keep up!

    • Getting rid of cable was huge for me too, Debby! I haven’t had it for years and don’t miss it one bit. Not feeling tied down to watch specific shows on specific days anymore leaves me with full control of my time… to do whatever I want! Sometimes that includes watching Netflix ;) but more often than not, I write, read or exercise. :)

  • The decisions we make absolutely compound. Enough good ones lead to results better than we could hope, but the same goes for bad ones. Waking up early is definitely one of the best. It was the Charlie Munger method for investing in himself.

    • I definitely agree that the same goes for the bad habits. They can take away so much from your life and spur on even more bad habits. It goes both ways :)

  • For the past month, I have also been getting up earlier. It hasn’t been easy! My purpose in getting up is to squeeze out time in my day to exercise. I am actually pleasantly surprised that it has been as successful as it has – perhaps because it’s been becoming more springlike and I’m not so cranky about getting out of my nice warm bed as I would be in the winter? In any case, I have been able to exercise, get my heart rate up, and read more (I read e-books while I use our recumbent bike). I feel better and healthier (though I haven’t exactly dropped the extra weight I was hoping to yet), and I feel like this new habit may actually stick (as I’ve been keeping it going for over a month!).

    • That’s so awesome that you’ve been able to get into the habit of waking up earlier! Over a month is great – it will be hard not to get up earlier after a little while! :)

  • I love this! I’ve definitely found that even small tweaks to my routine can dramatically change my productivity and my mindset. I too started waking up earlier last year and it has been a remarkable transformation for me. Not only am I at my most creative in the mornings (it has become my best time for writing), but getting up early also sets my day on a positive path. Since my husband and I get up early together, we have time to eat breakfast together, chat about the day, and just generally have a relaxing start. Such a good change for us from our previous mad dash to get out the door on time!

    • Hey Mrs. Frugalwoods! I think most people are most creative in the mornings – and it’s a shame to see that creativity wasted by the snooze button and rushing off to work! I’m so glad you guys have seen the benefits of waking up earlier, too :)

  • Hi Ladies-
    I have always been a morning person and can attest to the power of getting things done early in the day. Long ago I negotiated to work from home one day a week with my current job because it is a 1+ hour drive each way. I recently spoke with my boss and am now working remotely two days a week. Getting that extra two hours back in my life has made me more relaxed and happy with my job again. It also gives me a bit more time to focus on developing my side business as well as read more on my industry, which I never seemed to have the time to do in the past.

    You both always provide food for thought and actionable ideas on your blogs-keep up the good work!

    • Hey Sally! I love that you negotiated working from home. that’s awesome! Maybe you’ll be able to transition that two to three days a week :)

  • Great article Sarah! I always think those baby steps are way easier than coming up with this grand plan to change you life all at once. People then have one slip up and they quit for good. Flossing has been an area of my life that I have greatly improved. I made it a habit and now I can’t stand if I don’t do it every day now.

    • Hey Tonya – oh I so agree. We want to jump into making our lives 1000x better in a week, but it’s just not possible. So these tiny steps are really where to start. I find every time I try to overhaul my life by trying to build more than one small habit at a time, I get flustered and don’t stick to any of them.

      I’m with you with the flossing. It’s amazing how something so tiny makes such a huge difference, isn’t it?

  • Love this post and am finding it very timely. I recently challenged myself and my family to watch less tv and spend more time outdoors, in a bid to have more *quality* family time, and I really feel like these changes will pay “compound interest”.

    • Hey Tiffany,

      I’m so glad you enjoyed it! I love that you’ve challenged yourself to do that. Let us know how you feel and what type of interest it pays you :)

  • I think a similar, or maybe additional, way to talk about the good point you’re making is the ‘ripple effect.’ Everything we do causes ripples that affect lots of other things, many of which we’re not even aware of. I think this is behind the ‘good karma’ people often refer to when they go through life taking positive, constructive, and generous actions.

    • So true, Kurt. I’ve heard of the ripple effect certainly, and I think there are very tangible and real (and scientific) reasons why this works. Thank you for bringing it up.

  • I started scheduling workout time for myself. I used to put everyone else first and never found time to workout.

    • Hey Tre, I bet that makes a huge difference in your life. Not only the benefits of working out and being physically active, but also just the sheer fact that you’re making yourself a priority. I can imagine how this positivity would impact other areas of your life too.

  • I love this post. I need to remember to crawl before I walk. I need to start with small steps that can snowball to become bigger things. I am always trying for the large things and get discouraged because it doesn’t work out. I just need to slow down and break down the big ides into smaller more attainable goals.

    • Hey Tracey – it’s definitely a great idea to take smaller steps. That way you get to harness that momentum and those small wins.

  • :) yes it does take small changes.

    Its also about building habits which happen little by little. It’s great that you wrote this because I never really thought about it outside of the financial aspect. But it does. Small habits help build I guess regardless of content.

  • Hi Cait & Sarah,

    I loved this post. Food for thought as always Sarah.

    Over the past year I have become somewhat of a night owl, so getting up early is just not practical (I need my 7 hours sleep).

    But, the IDEA behind gaining that extra time in the day by getting up earlier is the key.

    I tend to gain my extra time in the evening, things are calm and quiet when the rest of the neighbourhood is sleeping.

    This is when I do my best work. I can reflect on my day and in the coolness of the night I find clarity of mind.

    Thank you for your great work. It is always a pleasure to read.


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