Posted on June 18, 2009 by Colin

Earning Compound Interest On Your Knowledge

I’m a big fan of Ramit Sethi’s blog (and book), I Will Teach You To Be Rich. One of the key concepts that he focuses on in teaching people to accumulate wealth is to start saving early; the sooner the better.

The reason for this is compound interest. This wonderful mathematical principal says the sooner you start saying, the more you will make over the long-term (the difference between starting to save at 22 and starting to save at 24 can be millions of dollars by the time you retire). In essence, the sooner you start saving, the longer that money will have to accumulate interest (and the longer you will be adding to it).

This is a powerful concept, and one that I believe applies just as well to education.

Consider this: making connections between a new concepts and tidbits of knowledge that you already posses increases recall (that is, you are more likely to store it in your long-term memory if you have some context to put it in). The chances that you will know something that relates to a new concept are increased with every new bit of knowledge you already posses. It would seem, then, that it is in your best interest to learn as much as possible about as many topics as possible in order to achieve an optimal learning situation.

Building up a knowledge stockpile can take a long time, but the payoff is excellent. I myself learn very quickly, picking up new concepts right away and rarely missing a connection between something I’m learning and something I already know. This is not due to any kind of overlarge cranium, but because I’ve been reading voraciously since I was very young (6-10 books per month, usually, and sometimes more). I’ve invested a lot of time building up my personal knowledge nest egg, and the interest I’ve been earning on it is the increased retention of new information that I’ve been enjoying.

But even if you weren’t memorizing Dr. Suess books for fun as a toddler, or reading your way through recess in elementary school (guilty), there was ways you can quickly build up a nice lump sum of knowledge NOW, with little or no monetary investment and just a few new habits integrated into your day.

1. Always be reading

I think this tip scares off more people than any other, so I wanted to start with it and get the tough one out of the way. The most common excuses I hear when people tell me why they don’t read is that they don’t read fast enough, they get bored/fall asleep while reading, or that they are more visual or experiential learners (that is, they don’t take in information through reading very well).

Of these excuses, only the last one is at all valid, and even that has a workaround.

To say that you don’t read very often because you are a slow reader is like saying that you don’t play baseball because you are no good at it. Well duh. With rare exceptions, people aren’t just good at baseball when they pop out of the womb. It takes practice; lots and lots of practice. But what’s great is that the learning curve for reading is not steep (after you learn how to read, that is) and you’ll notice significant a significant improvement every couple of books. You can also enhance your reading speed by using little tricks, like making use of your peripheral vision, as Tim Ferriss recommends.

If you fall asleep while reading, try changing up the environment that you are trying to read in. If you are chillaxing in a dimly lit room at home, then head out to a bustling coffeehouse to catch up on your reading. If public places are too noisy, pop in some earplugs, or experiment with different locations in your home. Usually the problem is one of atmosphere, not a Pavlovian response to reading that makes you sleep.

If you don’t feel that you get as much as out of reading as, say, working in a lab or watching a video, I suggest trying out a combination of the two. Read a book on geology and then watch a video on it (or vice-versa). This will allow you to mentally connect the two methods and hopefully will allow you to build those sames associations that you get watching the video while reading (because if you think about it, reading a book is much more versatile and portable than watching a video or applying hands-on learning, which will allow you to learn more consistently).

2. Always be referencing

When I come across something I don’t know, I try to learn it. It’s a very simple concept, but one that most people don’t act on. In many ways, we are taught to hide ignorance, because we feel that society will judge us for it (which is a feeling I’m familiar with because it kept me from asking questions for most of my childhood). I see asking questions and looking up information as a strength, not a weakness. Some of the most intelligent and knowledgeable people I know are also some of the most active interrogators. If I refer to something they don’t know much about, they will draw out everything they can about it. And you know what? Not only do they look smart for doing it, but next time the issue comes up they usually know more than I do about that same topic (because they did additional research, asked more people about it, etc).

Try to be the same way; if you come across something you don’t know, Wikipedia it. Or ask someone. Round out your perspective. Don’t leave gaping holes in your worldview.

3. Always be studying

This tip is easy to balk at because getting a formal education is seen as 1) expensive, 2) something that only students do, and 3) lamer than lame. I disagree with all three assertions, and I’ll tell you why.

Because of modern technology, formal education and Open Source equivalents have never been more accessible. I personally am always taking at least two courses from a community college here in Los Angeles (Santa Monica College, in case you are interested) and seldom pay more than $60 PER COURSE. You didn’t misread that. For the price of that new video game, you could receive an education on classical literature or ethics or PHP programming or graphic design or fashion merchandising. What’s even better is that most colleges will allow you to take courses online, so you don’t even have to change your schedule to fit these classes in.

The alternative to formal education is to make use of the vast amounts of information that are available in books and on the Internet. The Personal MBA, for example, is a pseudo-degree that is more or less a list of books that, if you read them all, will give you the equivalent knowledge of an MBA. You won’t get a degree, but you also won’t pay a hundred thousand dollars for the education. The PMBA even has the books packaged up to buy through Amazon, so for a couple hundred bucks (or less, if you get some of them as eBooks), you can be a business maven. Isn’t it great living in the future?

This DIY approach to education doesn’t end with business knowledge. Many very well-known and respected schools (including MIT, Carnegie Mellon, Stanford, and Open University in the UK) are now putting their courses online for free consumption by the public at large. All you need to acquire this information is a computer and a little self-determination.

What if you don’t have a computer (I know, perish the thought, but some people don’t, whether by choice or by circumstance)? How will you make use of freely available information without Internet access?

The library of course! I know you haven’t been there since you were 12 and still using paper-based encyclopedias for history papers, but libraries are incredible resources, whether you are able to get online or not. The library down the street from me is tiny and a little run-down, but it still contains several racks of language books, travel books, biographies, marketing manuals, software tutorials, sociology tomes and just about anything else you could want to learn about. Not only that, but there are computer from whence one can access the Internet. Huzzah!

A quick note: just because you are trying to learn facts doesn’t mean you should avoid fiction. On the contrary, fiction of all flavors is an excellent supplement to your education! I’ve probably learned more from all the sci-fi I’ve read than most science textbooks, partially because the sci-fi is more digestible, and partially because fiction that is well written usually contains at least a grain of truth. Not only that, but reading fiction will greatly increase the depth and breadth of your vocabulary, which is very vital, considering the size of your vocabulary directly relates to how you experience the world (you can only describe the world using the words that you know, so a larger vocabulary will allow you to experience and understand a greater variety of sights, sounds, emotions and adventures). If you’re looking for some great (and free) fiction to consume, check out Project Gutenberg and Baen Books’ Free Library.

How do you keep increasing your wealth of knowledge? Tried any of the tips above? Know of other resources for furthering your education? Leave a comment below and let me know!