The Pareto Principle (The 80/20 Rule)


Also known as the 80/20 Rule, but what is it? In short, it states that roughly 80% of effects come from 20% of the causes. It's a very interesting rule because it can be found across many fields of activity. Many successful people have implemented this principle to create desired outcomes in areas ranging from business to their personal lives.

The Pareto Principle is usually brought up in economic discussions. We've heard endlessly about the 1% and the wealth they have, but for sake of the principle, let's shift our focus on the 20%. In a matter of speaking, roughly, the top 20% of income earners will be producing roughly 80% of the wealth for a given society. This isn't something to be envious of, but something to be studied. They understand something that most people don't and that's how to be utilize their time and increase their earnings per hour.

So you may be wondering “The principle seems simple enough, but what exactly do I do now? How can I become like the top 20%?”. Glad you asked. Remember, you're looking for the 20% of activities that you do on a regular basis which produce 80% of your desired outcomes; everything else is just waste. The first step is to analyze the actions in your daily routine and record what results they produce. Take the top 20% performing actions and cut the rest. Cutting wasteful activities can come in the form of eliminating them out entirely or having someone else do it for you (hire a personal assistant). See the chart below for a more visual representation of how you should view your tasks.

It may take some time, but a point to remember is to have the end in mind. This end is to become free: financially free, mobile freedom, and have more free time. Everyone is different and everyone values their time differently. You as an individual must figure out how much your time is truly worth and maximize your earnings for your time. We all have 24 hours in a day, it's just a matter of learning how to utilize that time to get the maximum result.

There's a book we'd like to recommend called The 4-Hour Workweek by Timothy Ferris. His book is centered around this principle and give some great tips on how to put the Pareto Principle in practice in various ways. Another book which we'd like to recommend is the E-Myth by Michael E. Gerber. These two books compliment each other well and help shift your mindset how you want to spend your time with your business.

Before this blog post concludes, we want to leave this bit of encouragement. There may be some of you reading this who will feel overwhelmed when you look into streamlining your life. Once you have the data to show what you should and shouldn't be doing, if dropping all wasteful activities cold turkey isn't doable right now, just pick one thing to give up doing (delegate or eliminate). There's no right answer which one you choose first because it'll improve your life regardless and get you one step closer to improving your life. As always, thanks for reading and we'll see you next time.


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