Sreelakshmi Prasad

Chief Editor

The 80/20 Rule Explained: How Less Work Can Give You Better Results!

1 Jul 2020

 3-mins  Read

The 80/20 Rule

Have you ever thought that most of what we do is absolutely unproductive and a waste of time? Well, it’s one thing to experiment and fail because we learn from that process. But what’s the point of doing something again and again if the results are insignificant!

What if I told you that hard work is not necessarily the key to leading a successful life? Well, though it isn’t exactly as it sounds, it is true. It is smart- work that actually counts.

This is what the Pareto Principle is all about. More commonly known as the 80-20 rule, Vilfredo Pareto stated that:

“80% of your output comes from just 20% of your inputs.”

The idea bloomed when Pareto noticed that 80% of the healthy peas in his garden were produced by just 20% of the pea plants. He used this to study and understand the economy. But over a while, people observed that this principle can be applied to various aspects of life.

For example:

  • 80% of the profits of a company come from only 20% of its customers
  • 80% of the work in an organization is done only by 20% of its employees
  • 80% of your daily phone usage time is consumed by 20% of your apps
  • 80% of the problems come from 20% of the defects

Of course, the percentages will be different from person to person. Still, the fact that only a small portion of the activities actually contribute to most of your result remains true. The first step to improving productivity is to be aware of these numbers. Then we put in our effort into 20% of the things that gives us 80% of the result.

How do we apply the 80/20 rule to personal finance?

Now that we know that only about 20% of the things we do contribute significantly to our well-being. The next step is to identify the activities that are part of that 20%.

For example, 80% of your expenses result from 20% of the things you spend on. So, if you’re looking to cut back on your expenses, only focus on that 20 % of the things that add up to the majority of your expenses. Instead of cutting back or completely changing your lifestyle to save money, be smart and only work on those things that matter.

Similarly, when you go shopping, invest your money and buy things that you will use 80% of the time. Most of us tend to make extravagant purchases that sit and rot away after a single-use. Instead, choose to buy things you will use every day and will add some kind of value to your life.

What do we conclude from this?

The 80-20 rule has many dimensions. But primarily, the law plays an essential role in helping people prioritize and achieve maximum results!

Though it may seem complicated at first, it actually isn’t. You could begin right at home. Start by analyzing what you do in a day. You will realize that only about 20% of your day usually is spent productively. To be more successful, put in more time and effort into those productive activities to better your results. Though this may seem like a very small change, it could spark the beginning of a butterfly effect and lead you to a more fulfilling and successful future!

The 80/20 rule along with the Parkinsons’ Law can boost your effectiveness and efficiency!

Just remember – It’s not about hard work, but about smart work!

To learn more about the 80/20 rule, you can check out: How to Apply The 80/20 Rule!

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