Thursday, 10 March 2016

the Pareto Principle

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 What is The Pareto Principle?

The Pareto Principle is where 80% of results are determined by 20% of earnings, or efforts. It is used by entrepreneurs to work out how best to …well, how best to make money, actually. So for someone like myself, who is self-employed, when I looked at my income a few years ago, it was with this principle in mind. 

How I used it to sort out my income

Where was my money coming from? 

  • teaching yoga
  • giving readings
  • doing healings
 I made more money at a single session of doing a reading or healing, but overall, it accounted for less than 10% of my earnings. My income came from yoga:

  • I did seminars
  • had written many courses
  • I took public classes & private classes. 
The most prolific of my earnings, at that time, was from just a couple of private classes. I got 80% of my income from a couple of private yoga classes. I put the most effort (80% of my efforts) into the public classes, & got less than 10% of my earnings from the. The Pareto Principle in reverse really. So I dropped the public classes, except one, & did a few privates each week, plus the odd reading or healing. I worked less, gave better service overall, & made more money. And reduced my stress levels.

It works for other things too

This principle is not only about money. It covers many things. For example:

  • it has been found that, in a country, the overall wealth of that country will be held by 20% of the people. (I am assuming that the other 80% of us are doing all the work…….)
  • if you look at your clothes, you may well find that you only use the same 20% of them over & over, & the other 80% takes up too much space, & causes clutter
  • when I moved house recently, I kept only what I thought was my 20% of everything: clothes, books (that was the hard one!) kitchen “stuff”, bed linen, towels, cushions, etc. I thought that I didn’t have much to start with, but truly, I could have opened up a small op shop with all the gear I gave to church shops & friends. There is more going as time goes on. Reducing clutter, having less “stuff” reduces stress, & overall, makes for less housework & a cleaner tidier home
  • I intend this year to look at a few more 20/80 “things”. Today I’m looking at my diet a bit more closely, to see what I eat (20%, which really is only a measly amount) that in turn creates 80% of weight problems. And then my 20% of foods that I actually eat often, which gives me 80% of my optimum nutrition. Which I sort of already do. I know the foods that I eat over & over that make me feel satisfied & satiated. And most of the time that is what I stick with & what I buy. But it is time to update things, minimise some things, & swop some other things for lower fat, lower calorie versions. For example, when my cheese is used up I’m going to use cottage cheese with some parmesan instead. Not always…but often, as I’ve noticed that I can go for weeks without cheese…….then when I do buy it, I eat too much of it
  • and I’m looking at my remaining books. What to keep (I love books!!), & what to say a sad adieu to. My beloved Star Trek books are mostly gone (sob!), all the yoga books that I had never even read, excess jewellery & knick knacks. I’ve moved into a very wee cottage & there simply isn’t the space to keep all my bits & pieces. What I intend to do with a less cluttered life is to do more things that I truly love to do

Other ideas for using this Principle

We can use the Pareto Principle on many levels:

  •  you might find that 80% of your problems can be vastly reduced, just by looking at the 20% of causes
  • 80% of wasted money. What are you doing 20% of the time to cause this? 
  • look at your job: what 20% is giving the best 80% outcome?
  • what 20% is causing you the most headaches? You know, messy clutter, time wasting
  • what are the 20% of relationship difficulties caused by? 
Honestly, once you get into it, everything gets a lot easier to sort out. Obviously it’s a bit silly to do it 24/7, but a wee recap now & then is like doing a wee WOF (warrant of fitness for a car) on our life. It can become a regular habit for updating our life, for simplifying things, thereby decreasing stress. And when we drop off the excess of anything, & I’m not just talking about belongings here, we create a void, a vacuum, for something better to come into our life.

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