May I introduce you to 80/20?
If you were told that a twenty per cent investment could yield an eighty per cent return, would you think its a high risk-high reward scenario?
Or perhaps that it's too good to be true? Initially, those are the thoughts that occurred to me. How could someone devout a marginal amount of effort into an area of their life and expect a significant return?
The 80/20 rule or the Pareto principle, dictates that an approximate eighty per cent of outcomes stem from twenty per cent of causes.
At the start of 2020, I read “Living the 80/20 Way” by Richard Koch, an insightful book aimed to help provide people with practical advice for implementing this principle into their daily life. Helping the reader achieve the outcomes of less work, less worry, more success and having more enjoyment in life.
Now a year later, I can say it has worked for me. While I understand how fortunate I was to have had a very lucky 2020 during this pandemic. For example the ability to complete my final year, 16 weeks of full-time placement (internship)- without any cancellations due to lockdowns like many of my fellow students. Leave me feeling grateful.
However, without the knowledge I implemented within this book my year may have not been so successful. Allow me to explain.
The advantage this book provided was one that is based within a notion of Heuristicality. Koch has written the book to include questions and activities to complete throughout each section. This keeps the reader accountable and provides a tangible way to trial the discussions of the book.
Koch identifies 5 key areas to apply the 80/20 approach to in your life.
- Your Self
- Work and Success
- Money
- Relationships
- Simple good life.
These areas are included within a table requiring you to define a future destination, clear routes, specific actions, a priority for each area, and when you shall begin your endeavours.
So far, quite simple to understand. You are essentially planning out goals across five different areas of your life. No groundbreaking stuff here yet.
What makes this exercise interesting was the prior reading. Upon reaching the final exercise you will have developed a good understanding of the 80/20 rule. With this understanding, Koch discusses applying the 80/20 approach to each of these areas. Maximising the output while minimising the input.
The 80/20 approach is not about being lazy, I can not stress that enough. It is about understanding how to prioritise, seeing the possible future outcomes and how to achieve them in a way that maximises efficiency and yield. In “business” terms, what is the best ROI — (Return on investment).
You: So you just apply effort and planning to very specific areas of your life?
Me: Yes — but half the battle is finding the areas of your life to actually apply them to.
You: Well I don't run a business? I don't think 80/20 applies to me.
Me: Your day is constantly filled with transactions and investments, however, the commodity you’re trading is time. The unique thing about this commodity is that you can't buy any, we only choose how much we spend and where we spend it.
The following excerpt is one of my favourites from “On the Shortness of Life”.
“It is not that we have a short time to live, but that we waste a lot of it. Life is long enough, and a sufficiently generous amount has been given to us for the highest achievements if it were all well invested. But when it is wasted in heedless luxury and spent on no good activity, we are forced at last by death’s final constraint to realize that it has passed away before we knew it was passing. So it is: we are not given a short life but we make it short, and we are not ill-supplied but wasteful of it… Life is long if you know how to use it.” — Seneca, On the Shortness of Life.
So now you have just had a philosophical crash course on understanding that managing your life, your TIME is of the utmost importance. With the correct guidance, we can move towards a state of Eudaimonia (worth a google).
So back to Koch’s subheadings discussed before: Your self, work and success, money, relationships, and simple good life can be explained as follows.
Your Self: What are the major things in life you actually care about? From these major points, which ones best align with your skillset and passions?
The things I cared about were helping and understanding others. I believe my skillset centred around curiosity, optimism and creativity.
Work and Success: What are the outcomes you want from your career? Who do you want to impact? How do you want your work to make you feel? Now just narrow it down to at most three things.
My outcomes from my career include a ‘job’ I enjoy and work that benefits other people. When you can narrow down the options and find purpose from your career you will flip a mental switch that pushes you to find something meaningful to YOU.
Money: Don't overthink your money or investments. Albert Einstein’s famous quote on compound interest still holds true. “Compound interest is the 8th wonder of the world. He who understands it earns it…he who doesn’t pays it.”
Relationships: This one may seem a little abstract, but personally I believe this aspect of everyone's life needs an 80/20 approach. Would you rather have 15 friends who you have a surface level of interaction with? No real ‘value’ being presented by either party involved.
If you had 5 friends instead, you will have more time to give fewer people, you will be more involved with those 5 people, you can provide each other with real value. Increasing your happiness in the process, due to the meaningful interaction happening.
Simple good life: Still your thoughts for wanting more.
A great friend of mine had a realisation that I wish to share because of its value. Early on in his corporate career, he learned that people search for more, want more, need more. He saw first hand what his senior’s and executives were living, the example they set.
It was a life of more, not a life of enough. He asked himself if that was the life he wanted, never happy with where he was. Unable to stop and appreciate the success he already possessed.
How can people who want more stop? I believe that subconsciously these people are searching externally for something that will provide a brief distraction from an internal problem.
So for a simple good life, I try to ask myself —
What will *blank* give me that I do not already possess?
Reflecting on the 5 areas Koch discussed, I was able to create a custom worksheet that includes an 80/20 approach for different aspects of your life. It has helped me excel, and I hope it will help you too.
If you wish to use my custom worksheet, just comment down below and I will email it to you free of charge.
This piece is for entertainment purposes only, always consult professionals when seeking advice.
