[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/algorithmforlife.com\/have-more\/numbers\/#BlogPosting","mainEntityOfPage":"https:\/\/algorithmforlife.com\/have-more\/numbers\/","headline":"Numbers","name":"Numbers","description":"They mean more than you think Compounding is the most […]","datePublished":"2022-12-12","dateModified":"2023-03-01","author":{"@type":"Person","@id":"https:\/\/algorithmforlife.com\/author\/algorithmlife\/#Person","name":"algorithmlife","url":"https:\/\/algorithmforlife.com\/author\/algorithmlife\/","identifier":1,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/7d9ce54bf7884db06c868d4c3d9f401d81cecc940d6403409642a6a34d06caa8?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/7d9ce54bf7884db06c868d4c3d9f401d81cecc940d6403409642a6a34d06caa8?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Person","name":"Dave Burnett"},"url":"https:\/\/algorithmforlife.com\/have-more\/numbers\/","about":["Have More"],"wordCount":747,"articleBody":"They mean more than you thinkCompounding is the most powerful force in the universe.Leading, live, and lagging indicators.What gets measured, gets done.I’m not sure if it’s true, but it is said that Einstein declared the 8th wonder of the world to be compound interest.\u00a0 Compounding is the one force that can give you exponential gains over time.\u00a0 I don’t know why but for most of us it’s in our nature to think in a linear way.\u00a0 Addition, instead of multiplication.\u00a0 You have one person, then two, then three, then four.\u00a0 Whereas the real power comes when you have one person, then two, then four, then eight.\u00a0 That’s the difference between compound and linear thinking.\u00a0 Those additional people make the work, or accomplishing your goals, much easier. Warren Buffett is the grandfather of compounding.\u00a0 He didn’t invent it by any means, but he did dumb it down enough for the rest of us to understand.\u00a0 It’s the power that given enough time, compounding will make you rich, or rob you of all your wealth.\u00a0 You get the doubling of money will make you rich, but how will compounding make you poor? Inflation is a type of compounding that will make every dollar you own decrease in value.\u00a0 It chips away at your spending power year after year, until what you had, just won’t cut it anymore.\u00a0 It no longer buys the groceries.\u00a0 It no longer supports your daily expenditures.\u00a0 It simply makes it more difficult to live. On the other side, if you’re able to compound your money at a rate greater than inflation, you are making real gains, and you end up with more spending power in the future than you had today.\u00a0 That is the true key to building wealth.\u00a0 More purchasing power in the future on a real dollar basis.\u00a0 So when you invest, use that as your measuring stick. Speaking of measuring, something I’ve learned about people and business is what gets measured, gets done.\u00a0 If you measure sales, sales will grow.\u00a0 If you measure costs, they will shrink.\u00a0 Number of calls?\u00a0 Number of contacts?\u00a0 Number of anything, and that will grow.\u00a0 Even more so if you align incentives with performance.\u00a0 If people get paid more if your profit increases, guess what’s going to happen?\u00a0 If you want something to change, measure it, and the factors that impact it, and people will make it change. You can measure change using indicators, and these indicators fall within three main categories: leading , live, and lagging indicators.\u00a0 Things that you are doing today, that don’t impact today, but will impact tomorrow, are leading indicators.\u00a0 Things that measure where you are doing right now, that impact right now, are live indicators.\u00a0 Things that measure what happened in the past, are lagging indicators.Let’s take school for example.\u00a0 Leading indicators are how many classes or lessons are you going to attend this week upcoming?\u00a0 Are you going to all of them?\u00a0 Are you going to watch relevant videos and schedule time to study?\u00a0 Live indicators are what are you doing right now?\u00a0 Are you studying?\u00a0 Are you playing a video game?\u00a0 A lagging indicator measures what’s already happened.\u00a0 Your grade on that test.\u00a0 The average for the semester.\u00a0 Those leading indicators, assuming you stick to them become live indicators, that get you the results that show as your lagging indicators. Another example is your health.\u00a0 When you go shopping, are you only putting healthy foods in your cart?\u00a0 That’s a leading indicator.\u00a0 Are you exercising today?\u00a0 That’s a live indicator.\u00a0 When you step on the scale to measure your weight, that result is a lagging indicator. Same with business.\u00a0 How much time do you have scheduled for calls this week?\u00a0 That’s a leading indicator.\u00a0 Are you making the calls today that you need to?\u00a0 That’s a live indicator.\u00a0 How was your sales performance last month?\u00a0 That’s a lagging indicator, but looking back at it, you know the outcome you are experiencing is a direct result of the work you put in, and how you track each of those things will determine your success tomorrow. So even if you’re not in finance, don’t care much about compound interest or inflation, or how much business you get next month, what you measure gets done and will determine where you end up in relation to your goals."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Have More","item":"https:\/\/algorithmforlife.com\/have-more\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Numbers","item":"https:\/\/algorithmforlife.com\/have-more\/numbers\/#breadcrumbitem"}]}]