80/20 Rule: How the Pareto Principle Affects Everything

Whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them. – Matthew 13:12

In life, there are some mindsets that can all the difference – if you know how to apply them. The Pareto Principle is one of them.

Also known as the “80/20 rule”, the Pareto Principle can explain the sheer amount of discrepancies in many areas. This can be anywhere from finances, to habits, to life outcomes.

This article is going to explain how you can use the 80/20 rule to your advantage in your life.

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Onward.

The Origin of the 80/Rule and Pareto Principle

In the late 1800s, an economist named Vilfredo Pareto discovered that a small amount of pea pods in his garden produced a majority of the peas. This was an interesting anomaly, so he decided to see where else this “unequal distribution” showed itself.

After pouring over the real estate and financial records of numerous individuals, he found out that a small number of people owned most of the assets. As he continued researching, he found this to be consistent. Economists, being an inquisitive bunch, took this idea and ran with it. All the way to the ends of everything.

The 80/20 Rule says that 20% of the actions in any given area account for 80% of the results. This number is not exact. It can be anywhere from 55/45 or even as extreme as 99/1.

Regardless, the fact remains that a minority of causes produce a majority of effects.

How True is the 80/20 Rule?

Inequality is everywhere.

Life is inherently an unequal affair. Some people are better at certain things than others, some people are taller than others, some people have more intellect than others, some people are more productive than others – the list goes on.

The 80/20 Rule is just a natural universal law.

Since life is a continuous endeavor, things build off of one another. This allows people or institutions who have advantages in one area to continue to stack those advantages over time. This is known as the “Matthew Effect”. When you have more, you will get more. When you have less, you tend to get less.

The Pareto Principle applies to both effort and outcomes. If I am good at a certain area, I have the chance to attain most of the rewards in that area via my disproportional skill set.

Examples of the Pareto Principle in Action

There are many areas where the 80/20 Rule comes into play. Here’s just a few:

Finances

It’s easier to make money when you already have money.

There’s a reason why they say “the first million is the hardest”. Going from 0 to 7 figures is daunting because the gap is so big materially and psychologically.

But once you have money, you tend to make more money. You have money to invest. You have money to start a business. You have money to buy real estate. You can use that money to produce more of its kind.

This is why the “rich get richer and the poor get poorer”. While there is vast abundance in life, there are some people that just have a lot more in comparison to others.

Time Management

According to the 80/20 Rule, only 20% (or a minority) of things you do in a day, week, whatever span of time will be responsible for 80% (or a majority) of your results. This means you need to spend more time, energy, and focus on the things that bring the most results. This may mean deep work.

This type of time management also accumulates. The better you use your time today, the better you can use it a day, a week, a month, or a year from now. That allows you to accumulate more advantages as the years go on.

Recommended Reading: How to Allocate Your Time Better with the Tower Technique

Dating and Relationships

You know those people who seem to have no trouble getting into relationships and who seemingly have their “pick of the litter” when it comes to partners? Contrast that with people who struggle to get a first date. Why is that? Well, the 80/20 Rule applies here as well.

There are just some people who for whatever reason find it easier to find short-term or long-term partners. This could be because they are ridiculously physically attractive, they are social (which means a wider network), they are in the spotlight a lot (the quarterback of a football team in the NFL), or they just have “charm”. These people will be attractive to the most amount of people at any given time. These people are in the minority, while most people fall “neither here nor there” but are just “average”.

While I do believe that there is someone out there for everyone, that doesn’t dismiss the fact that a significant minority of people, especially guys find it hard to date, period. If that is you, you’ll need to focus on good old fashioned self improvement. While there’s not much you can do to change your physical makeup (bone structure, height, etc.) you can develop behaviors that make you more attractive to others as time goes on.

Skill Acquisition and Business

Google is known as being the titan of the search engine industry. They profit from the Pareto Principle.

As of 2020, Google gets over 3.5 BILLION searches per day. Their next closest competitor is Bing with 400 million searches a day. Likewise, in search engine pages for businesses, 25% of people click the first search result. The difference in those searches is cold, hard cash.

Not only does this apply to businesses but also to the micro, individual level as well.

In any field or industry, there are a small amount of people who make most of the money in that area. In any company some of the people make most of the money. These people who make most of the money are often better at what they do than others by either large or small degrees. Therefore, a small advantage can lead to disproportionate gains. This is known as “the slight edge“.

This is why people who “start early” often have a big advantage.

For myself, I saw this come into play with my career. As a teen, I had been unconsciously developing an online skillset. I later found out that my skillset lends itself well to online copywriting and from there I got a boost into the broader field of digital marketing. By the time many of my peers were trying to develop skills, I had a ready-to-go toolset already available for refinement.

These are just some of the ways the Pareto Principle can apply to life. Let’s put it into action.

How to Use the Pareto Principle to Your Advantage

There are several ways you can start using the Pareto Principle to help you rather than hurt you. Here are just a few.

1. Capitalize on Current Advantages

Life can be seen like a game of poker. At the beginning of the game, we all get distributed a certain hand. The objective of the game of life is to play that hand as best as you can. All of us are born in different circumstances. Some of us were born to millionaire parents, some of us were not. Some of us were born in first world countries, some of us were not. However, there is more opportunity to change that now than at any other time in history.

I’m willing to bet that you have several advantages that are unique to you. You might have gotten things “quicker” than others, you might be a bit more musically inclined, you might have gone to school without student loans. Whatever they are, focus on them and try to exploit them. That will give you a good chance of using this Pareto Principle and 80/20 rule to your advantage.

2. Turn Weaknesses Into Non-Issues

On the flip side, we all have things we are not so good at. Some of these can be minor (like being tone deaf), others can be more major like the inability to properly manage money. If it is in a major life area, you may not be able to turn that into a strength or a defining trait. However, you can make it so that it’s not a major drag on your life.

In the area of managing money, you might want to get better at math or set up hedges that prevent you from automatically spending money. Eventually, over time, you can create a lifestyle where your “weakness” becomes something that isn’t a massive intrusion in your life.

This may involve taking massive action.

3. Refine and Optimize

Anything you do once will most likely fail or not go the way you want it. As the saying goes, try, try again.

Similarly, things can get better over time. In any area you start making small iterations so you can eventually take advantage of your resources as best as you can.

Speaking again to money; maybe you can spend less here and spend less there and save more. This can add up to massive savings over time.

4. Experiment

Part of taking advantage of the Pareto Principle and 80/20 Rule is the willingness to experiment. There may be some areas that you enter where you can have a massive advantage.

For example, if someone is 6’5“ in high school, they would be a good contender for being on a basketball team just off of their height. After that, if they refine their skills, who knows what could happen for them. But they won’t know unless they try.

Be willing to start out small. You don’t have to fully commit to things, but be willing to spend time on other areas. You might just find out you have a “knack” for those things.

Conclusion + Wrapping Up

As you can see from this post, disproportion is everywhere in nature and the world. However, instead of being used by it, you can use it to your advantage by capitalizing on strengths you already have. You do this through capitalizing on current strengths, turning weaknesses into non-issues, refining and optimizing, and of course, experimenting.

What’s your experience with the Pareto Principle? Talk about it in the comments.