Life is a Compounding Machine

Life is a Compounding Machine

All of life is a compounding machine. The decisions and life experiences we have early in life are more valuable than they are later in life. Each day's value is not linear, but exponential. The same goes for every dollar saved, every relationship created, and every workout completed.

I see each day's value somewhat similar to the concept of exponential decay. You pick the rate of decliner

When we are born our potential outcomes in life are extreme. Aside from some data we have, like our genetics, family, location, etc., our life could end up with very different possible outcomes. What happens to us and the decisions we make along the way begin to narrow these potential outcomes over time.

Models

Models are a fine example of how we to visualize this. Statistical modeling is very hard due to the  number of variables that can impact the outcome. A great example of this were the early coronavirus projections. By April, there were projection of up to 5,000 deaths per day and as low as 1,000 deaths per day. But as we approach June, the shaded area begins to tighten as more data comes available.

Early models suggested as high as 5k deaths per day versus 1k deaths

Our lives are the same way. There is a very high level of uncertainty early on, but as more data comes available, the picture becomes more clear.  That data equals your decisions and life experiences. And the earliest ones matter the most. This study may indicate that the emotional support in the first three years of life - support you may not even remember - have affects in adulthood.

Not just money

We often think of compounding in financial terms. The earlier you save the greater time your money has to earn and grow. Each dollar added later has less time to compound, which makes it less valuable. But it's only common because it is easily provable with math. But it can and should be associated with all areas of our lives, even if we can't plug them into a calculator online: early decisions, first friends, career networks, and so on. It is a sad to think it, but it's true: doors close all around you as you age.

Fortunately, life is much more chaotic than compound interest calculators. People reinvent themselves, start businesses late in life, change careers, and so on. You aren't completely trapped by your previous decisions and current path. But it is a reminder to act with some haste, to get started today, because it is still better than tomorrow.

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