Albert Einstein once said, “Compound interest is the world’s eighth wonder, he who understands it earns it, he who doesn’t pays it’. Though our subject of discussion is not money related, the book, Atomic Habits is all about the power of compounding. It discusses about the use of the power of compounding to change your habit and get better each day.

I highly recommend everyone to read the book and I admit that this article would be nowhere close to the wisdom of ideas discussed in the book. But if you still want to save your time and get a gist about this highly rated book, please go on reading.

It’s the small changes multiplied by time makes drastic results. This is the underlying principle of this book by James Clear in building new good habits and breaking bad habits.

The main idea discussed in this book are:

1. The power of 1% improvement
2. Focus on system, not on goals
3. Focus on identity
4. Four methods to change a habit

• The Power of 1% improvement

The 1% rule is based on the mathematical principle of compound interest where we earns/pays interest on interest.

The 1% rules says that if we become 1% better every day, we end up becoming 37% better at the end of the year i.e., 1.01³⁶⁵

Same is the case with becoming worse, 1% becoming worse every day leaves us at nearly 0% at the end of the year i.e., 0.99³⁶⁵ = 0.03%

Habits are the compound interest of self-improvement.

James Clear

It does show any noticeable change when we compare one day to another, but time magnifies the difference is condition between two points in given period of time. Say for example, hitting gym for a single day or two cannot make any noticeable change in our body, rather we will only end up having pain/sore muscle. But over a period of time, say for example, over a month or two we can see some noticeable increase in terms of muscle growth or strength or increase in the weight you can lift.

Good habits make your time ally and bad habits make your time enemy.

James Clear

• Focus on system, not on goals

What is system? It was a confusing term when I first gone through this concept as I relate the word system to a computer system. That being said, system is the small chunks of actional items that you can follow on a daily/weekly/even monthly basis to achieve your goal.

For example, for my goal of 2021, to type at 100wpm at the end of the year, I made the daily habit tracker system on the app Notion where I check each checkboxes corresponding to each day after practising the typing on keybr.com for 30 min. I am so happy and proud to say that making this system is the single reason which allowed me to do the typing practise for the past 25 days. This is the same thing I follow to achieve other goals on job search, gym, blog post, daily journaling and so on.

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Why system is important?

Winners and losers have same goal

He takes example of an Olympian. Everyone wants to score first prize. But it’s the implementation of a continuously small improvement, differentiates each one of them towards the end result.

Achieving the goal is only a momentary change.

This is about fixing the system in such a way that we don’t need to do additional task to improve a condition. He takes the example of tidying up of a messy room. If we primary work on a system that stops us from making the room messy, we don’t have to make additional efforts to make it nice. This is the technique I followed while I was working in kitchen. I always tried to make sure to follow the rule, ‘Clean as you go’, so that I don’t end up in a messy bench top which needs additional time and effort to keep clean. This in turn gave me a clean and tidy workspace all the time.

Goals restrict your happiness.

We often say to ourselves that we will be happy once we reach a particular goal. Having this kind of goal-based assumptions can kill your happiness off until the destination. But the truth is that we won’t be as happy as we might have thought when we achieved the goal. This years age goal might have become so oblivious and achieving it might not be as exciting anymore. What if we have made new goals to achieve during the course of time. Having a system and making sure that we follow that system, allow us to reach the goal, and inturn happiness. Seeing the running system also fuel up you to continue with the system.

Goals are odds with long term progress.

The purpose of setting goals is to win the game. The purpose of building systems is to continue playing the game.” James Clear

Goals can stop us from continuing the improvement journey we followed once we achieved it. But system is all about continuous self-improvement, which allows us be better each day. All we have to do is just follow the system, and the system will take care of the end result.

• Focus on identity.

Your behaviour is the mirror image of your identity. So, imangine your identity as what you wanted to be. I use this technique every single day to get up from bed at 5:40 am to hit gym at 6 am. I would imagine myself as a healthy person and ask myself what a healthy person would do after waking up to his alarm. Will he continue laying on his bed or will he get up and hit the gym? In order to prove myself to this new identity I get up and hit the gym.

• How to build good habits

It’s a 4-steps based approach which include clue, craving, response and reward.

1. Cue – The things that triggers brain to do an action.
2. Craving – It provides the motivation.
3. Response – Habit we do.
4. Reward – It’s the end goal.

The four laws of behavioural change-

• Make it obvious 

According to James, he wants us to design our environment is such a way that we have to put fewer steps between us and good habit and more between us and bad ones.

A simple habit of keeping a filled water bottle on my laptop table increased my water consumption. I was under the normal hydration percentage according to BMI body scale, now I can see that I am well inside the normal range of hydration percentage.

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• Make it attractive

It can be done by pairing your habit with something else you already love to do. This is called habit stacking where we stack on new habit over another existing habit. Another concept which is discussed in this book is bad habits give us instant pleasure and gratification while good habits give pain now at a point of time. This is the underlying reason why we fall back to bad habits or not doing good habits after tying for a few days. 

• Make it easy
• Make it satisfying experience.

So, if we want to let go our bad habits, make it non-obvious, ugly, hard and unsatisfying. This is one thing I have been doing to stop me from using social medias while I am on bed. I keep my phone on the other side of the room. By doing this, only way I can pick my phone is by walking till there. This again make me to walk till there to turn off my morning alarm, which allows me to get up from bed on cold winter early mornings.

James argues that there is a point called Plateau of latent potential, where people say its overnight success. But it is a continues curve which is showed below. It takes a lot of effort to break the point but the growth after that point is immense.

As I said earlier, this article in nowhere close to the actual book and I recommend you buy this book and read yourself to make your goal-based systems. There are a few exercises and worksheet discussed in the book which you will find free on James’s website.