What's Luke Thinking?

As I write this, we have just officially completed the first week of 2024, which means the year is 1.92% complete. To some, this may spark the thought “We still have 98% left?” and for others, “2% of the year is already gone?”

Those who see 98% as a huge chunk of the year left might be tempted to relax, because they just have so much time left in the year. On the other hand, those left wondering where the time has gone already, might feel discouraged because time flies so fast and change takes so long to make.

Whichever side you find yourself leaning toward, both benefit by being reminded of the importance of one day.

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

-Aristotle

Anyone with experience or knowledge in the world of finance and related fields is likely familiar with the idea of “compounding.” For those who may not be familiar, compounding is most easily explained with money: if John puts $100 in a bank that gives him a 10% return each year with compounding interest, he’ll make 10% each year on his initial investment as well as each subsequent return (assuming he keeps the return in his bank). In the first year, John will make $10, totaling him $110 in his bank account. In the second year, John will make $11 (10% of 110), totaling him $121, then he’ll make $12.10 (totaling $133.10), then $13.31 ($146.41), and so on and so forth.

Not limited to banks and stock markets, however, our repeated actions have compounding returns in what we gain from them. What makes compounding so great is that it requires small upfront investments in comparison to the returns they generate. Often, when people attempt to make change, they feel they need a lot of results fast. While this is, hypothetically, a way to generate returns, it is often not reasonable (leading to burnout, unable to devote the necessary time, etc) or not even possible (you won’t lose forty pounds this month if you only eat 500 calories per day; you’ll be hospitalized). While most people overestimate what they can do in one day, they actually tend to underestimate what they can do in one year.

With compounding returns, the power and importance of one day, repeated, turns into the power and importance of years on end. Last year, we made decisions that painted what our life looks like now. Now, we make decisions each day that paint our life one year from now and beyond. F.M. Alexander, Australian actor and writer, said “People do not decide their futures; they decide their habits and their habits decide their futures.” If we want to be rich in the future, we need to make saving and investing a habit. If we want to be fit, we need to make eating clean and working out a habit. Despite how powerful the brain is, whatever you wish to be in the future, simply willing it is not enough; we must build habits and actions to make that a reality.

Being one week in, 1.92%, it’s a good time to think about what habits we’ve already been engaging in and what future they are creating for us. Aristotle is quoted to have said “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” If you haven’t already, it’s a good time to work on some habits to build excellence, however that looks for you. Each morning we wake up, we decide if we’ll begin one day, or if we’ll begin day one.

“Yet you do not know what your life will be like tomorrow. For you are just a vapor that appears for a little while, and then vanishes away.” James 4:14, NASB