Pareto's Principle: The 80/20 Rule

There is a universal rule that governs our lives behind the scenes, it resides silently, only observed by those enlightened of its existence. The ones who do recognize its power, spend more of their precious time pursuing their passions, making more money, and living happier lives.

They use the principle to accomplish more in shorter periods of time and eliminate or outsource tasks that do not resonate with their passions and goals. The rule goes by many names and can be seen in economic charts as well as our everyday lives. The rule is called Pareto's Law, the Pareto Principle, the 80/20 rule, or the law of vital few and trivial many.

Short as life is, we make it still shorter by the careless waste of time.  -Victor Hugo

Pareto's Principle states that roughly 20% of actions produce 80% of results, or 80% of effects come from 20% of causes. It is a simple and effective economic principal that has been used for decades by business professionals to streamline business operations and produce higher results. It is fundamental to business efficiency and success, and by understanding the rule, it can also be used to streamline our personal lives.

Italian Economist and Sociologist Vilfredo Pareto (1848-1923) observed that 80% of the land in Italy was owned by 20% of the population. While investigating other countries he found the same unequal distribution of income and wealth in each.

Pareto published his observations and mathematical formulas that described his findings. After publication, researchers in other areas of science and business began to find the same unequal distribution in their fields.

In the late 1940s Business Thinker Joseph M. Juran described what he called the "vital few and trivial many" attributing the concept to Pareto's findings. Thus, Pareto's Principle became the name of one of the most significant of universal principles.

Pareto's Principle Today

Today, Pareto's Principle can also be observed in our daily lives, we only need to take a glance around to observe it in action. Once we can identify the occurrence, we can focus more of our energy on tasks that produce the most results.

The 80/20 rule is not literal, it is meant to represent the skewed disproportion of cause and effect. It could exist for example as 75/25 or 85/15. The numbers do not necessarily have to add up to 100 either, they could be 80/10 or 80/15.

A quick example that I have noticed: Approximately 20% of my articles contribute to 80% of my blog's traffic. By finding the articles that drive the most traffic I can focus more energy on the those topics.

Examples of the 80/20 Rule in Business

  • 80% of sales come from 20% of customers.
  • 20% of products produce 80% of sales.
  • 20% of staff will cause 80% of problems.

Examples of the 80/20 Rule in Life

  • 20% of society holds 80% of wealth.
  • Most people spend 80% of their time with 20% of their friends.
  • 20% of the clothes in the closet are worn 80% of the time.

How to use the 80/20 Rule to Streamline your Life

If you are not producing the results you desire, change your strategy and refocus your energy on the 20% of activities that will produce most of the results. With Pareto's Principle you can:

Accomplish More in Less Time

By focusing on activities that produce the most results and eliminating or outsourcing trivial activities, you can free more of your time while accomplishing more. Reason: 20% of activities produce 80% of results.

Improve your Finances

Everyone's budget is different, but most major expenses are from debt (credit cards, mortgage, student loans). By attacking prior debts and not acquiring new debt, you can improve your finances dramatically. Reason: 20% of financial decisions result in 80% financial results.

Make more Money

With increased production resulting from more time spent on vital activities, you will have more time to focus on providing more value. The more value you produce, the more money you make. Reason: 80% of income is derived from 20% of sources.

Eliminate Stress

Find the small portion of activities that produce the most stress and eliminate them. Reason: 20% of stressful activities produce 80% of the stress.

Purge the Clutter

How many dust collectors do you really need? Try to donate or sell the possessions that you hardly use. They are contributing to 80% of the dust. :) Reason: 80% of the space on shelves hold clutter.

Loose Weight

If you cut out the small percentage of foods that contributes the most to weight gain, (fatty foods, fried foods, sweets). And exercise regularly, not only will you loose weight, you'll have more energy and feel much better. Reason: 20% of foods contribute to 80% of weight gain.

Improve Relationships

Focus on nurturing the small percentage of relationships that provide the most value (spouse, family, close friends). Moments spent and memories made improve the quality of your relationships. Reason: 20% of relationships provide 80% of value.

Travel Lighter

Most luggage is not necessary, By traveling light, you eliminate most of the hassles of carrying extra baggage. I personally travel with extremely minimal luggage, (one carry on bag). If you think you might need it, leave it. If you can't live without it, bring it. Reason: 80% of luggage is excess 20% is essential.

Eliminate Information Overload

Constant bombardment from news, emails, advertisements, and articles :) are taking up time and head space. Cut down on the information consumption to the small percentage that is necessary. Reason: 80% of information useless is 20% is crucial.

Live a Happier Life

More Free Time + Improved Finances + More Money + Eliminated Stress + Less Clutter + Weight Loss + Improved Relationships + Lighter Luggage + Information Elimination = Happier Life!

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