Compounding Interest, Compounding Time

You know how you’ve seen those demoralizing financial models that suggest if only you would have maxed out your 401k contributions since you first entered the workforce, that you’d be worth X which is exponentially more than you currently have saved. And now, even if you want to catch up, even if you were to aggressively contribute 4 or 5 times as much as you would have then, you’ll essentially never catch up because of compounding interest?

Yep, that’s what I’ve been thinking about lately. Why didn’t someone, anyone, put more emphasis on doing it then? Why isn’t it required or at least explained in SUPER URGENT ways? It’s like learning a foreign language when you’re young. It’s suggested, but not demanded, even though it would benefit you for a lifetime.

My husband and I are clearly in the midst of our annual (self-imposed) financial audit which explains the obsession with compounding interest. And this time, it is happening in the midst of a career shift for both of us, which also corresponds with what is reportedly considered our prime earning years, so imagine intense feelings, tough conversations, and adult decisions.

And we are also parents, and therefore every decision flows from “what’s best for our kids?”, so we started wondering if the principles of compounding interest could apply to time. It turns out the answer is yes, but it doesn’t exactly work the same. This, according to the various sources on Google, that came up on page 1, including Tim Ferriss who apparently has already thought every thought that I might think. How old is that dude? Oh 40 (also according to Google). Nice Job Tim, you’re killing it.

He wrote about compounding time at least twice, in 2008 and 2016. In 2008, I was getting married, and by 2016, I had three small children. We’ve both been busy.

There are a few ways to compound time. The first is by becoming more efficient with it, identifying what you are best at or most interested in and focusing exclusively on those things, delegating or outsourcing the rest, thereby perfecting your skills and passions, getting better, faster, more effective, and also freeing up even more time to reinvest in what you’re good at and love.

Another way to compound time is to learn from masters instead of finding your own way. In that case, you’ll save time by becoming an expert with massive leaps forward, fewer missteps and hesitation. You’ll be more focused and start from your mentor’s advances instead of scratch, which means a better likelihood of mastery yourself.

The obvious next question as parents then is this — if you can compound time by learning from your masters instead of finding your own way, doesn’t that mean that as parents we can compound time for our children? Can we reframe parenting from caregiver to master in that we have a 20–40 year headstart on our children and specialized life skills and useful knowledge to impart? What would happen if we purposely chose the most challenging lessons we’ve encountered to pass to our children to compound their time, so they started from how far we’ve come, from our midpoints instead of their starting lines?

What if at dinner, for example, instead of talking about our days at school or work, we talked about how to have meaningful conversations at dinner with others, how to position a topic for the most engagement, how to win an argument, dispel tension, eliminate awkwardness, respectfully voice your opinion, evaluate motives, or influence a debate?

What if we consistently taught important relevant life lessons instead of focusing on bath time, laundry and dinner cleanup? There’s reality of course, but still. I don’t know, maybe you, as parents, are you already doing that. Maybe your parents did that for you. We’re not and ours didn’t.

Sometimes we are of course, but it’s largely situational and not consistent. Did your parents tell you to get aggressive about your 401k contributions on day one because compounding interest will benefit you the rest of your life? Did they insist that you learn a foreign language when you were young and encourage you to put it into practice throughout your life? Are there other nice-to-knows that are really essential-to-knows that we can pass on that will benefit our children for the rest of their lives?

It’s not as if we can necessarily save them from the stress, anxiety, heartbreak, and missteps that they will inevitably experience, but if we can offer them the advantage of starting from point J, or M, or S or wherever we’ve evolved in our own journeys, what would they be capable of achieving? How far could they go?

Perhaps there’s a Part 2, I’m still thinking. Thank you for reading and I’d love to hear your thoughts!

Also, we love our parents like crazy. ❤️❤️❤️