Compounding: The Good and the Bad

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John Corron, CFP® – Wealth Advisor –

Some pieces of wisdom are so simple that many people may assume that everyone in their own world already knows it. Sleep is vital to all aspects of health. Trust is vital to all relationships. And driving in a snowstorm is a bad idea (unless you’re a ski bum headed to the mountains for some fresh powder).

I probably take for granted that the power of compounding in wealth and well-being is obvious because I think and talk about it all day. But the truth is, it’s really powerful.

The Good

Saving Income

Starting to save a portion of income early has incredible long-term benefits. A five-year delay in making saving and investing a priority can mean a fortune to anyone’s future self and family. It’s hard to appreciate how impactful an early start is because it takes years before your savings pile grows to a size that compounds significantly. But when it does, wealth grows faster.

Budgeting & Life Planning

Developing solid habits for prudent budgeting and life planning can lead to a much more fulfilled life. Imagine the time and energy saved by building a lifestyle that you can comfortably afford and love to experience.

It sure beats the stress of supporting an expensive and unfulfilling lifestyle that might require a higher paying, less fulfilling job or career. Having the financial flexibility to do what you want when you want takes time to build but getting there is incredible. Compounding good habits around budgeting goes a long way toward building that flexibility.


Compounding good habits for your health is crucial to a well-lived life. Imagine spending very little time with the doctor or stressing about conditions that could be avoided with proactive care. Good health can eliminate many of the stressors that impact us physically and mentally. Each small step taken to combat these stressors is a win for our overall health and a better life.


I could argue that you can’t put a price on the compounding of time well-spent on relationships in life because it is so valuable and vital for happiness. Investing time and energy into our connection with the people in our lives no matter how small, builds into stronger, more fulfilling bonds.


If you express gratitude every day, it is compounded with a feeling of balance, satisfaction with the good in life, shining less light on the bad. Compounding gratitude is a powerful way to improve your life and potentially the life of those around you.

The Bad


Let’s start with the first day of skipping the gym after a good string of attendance, feeling good and seeing some positive results. One day turns into two, then four. And with each passing day of sleeping in or filling time with other activities it gets harder to get back on track.


Let’s assume you’re eating well and intentionally avoiding foods you know are bad for you. You have a stressful day, and a piping hot pizza or a couple of drinks is exactly what you feel that you need to decompress. Man, that pizza tastes good, and those drinks are refreshing! Two weeks later you’re still on the tasty train and it’s starting to impact your motivation to do other things you know are good for you.


You feel good about progressing toward a goal and feel like you deserve a reward, so you treat yourself to something nice. Buying new stuff feels good at the time of purchase. The trend continues and takes resources away from long-term goals.

There’s no question that giving yourself a break after working hard and celebrating with a time out or reward is what makes the disciplined journey worth it. Keep in mind though that we humans psychologically trend toward comfort today at the expense of long-term betterment. These slippages and detours from positive habits and trends equals negative compounding that often lands us in a place of regret, a place that can be hard to break away from.


Not investing time and energy into existing and new relationships often results in weaker connections, more isolation and less happiness. The more time spent avoiding important relationships, the greater the risk of losing them. Lastly, time spent in negative or counter-productive relationships compounds to impact mental health, motivation and potentially personal feelings of self-worth. Continually engaging in these types of relationships builds in negativity over time. It may be hard to step away, but it would be positively impactful on life to do so.

More “Good,” Less “Bad”

With so much noise in life, thinking intentionally about making gradual progress toward goals is easily forgotten or pushed down the priority list. The power of compounding is not a mainstream concept, but it has significant implications for our lives. It takes work to battle against the urge to remain comfortable where and how we are. Leaning into compounding and continual progress is the road to living our best lives. I urge you to get on the compounding train and keep it on the tracks.

Would you like to discuss how “good” compounding can help you find your freedom? Schedule a conversation.

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