Stuck In The Mud

“A body at rest remains at rest, and a body in motion continues moving at a constant speed in a straight line, unless acted upon by a net external force.”

Sir Isaac Newton’s first law of motion there, and a personal favourite.

To paraphrase, nothing changes if nothing changes. Inertia is the default setting for all things.

As we move through life we get into the habit of doing things in a certain way.

Sometimes the weight of these practices can prevent us from moving forwards.

We may stay in a job, or a relationship, or a friendship, or a part of the world that no longer really serves us - but after a certain point in time it just becomes too difficult to change. And the uncertainty involved in moving, makes it infinitely easier to remain inert.

One of the challenges of this life of ours’ is that we can never know in real-time whether we are making a “good” or a “bad” decision for ourselves and those around us.

Even more confusingly, a good long term decision can feel like a bad one in the short term, and vice versa.

There are countless inspirational examples of people making huge changes to their lives that worked out amazingly well.

Vera Wang was a figure skater then journalist. But when she designed her first wedding dress at the age of 40, it was the trigger for her building a worldwide fashion house.

Ray Kroc sold “multi-mixer milkshake machines” for seventeen years before a chance encounter at the age of 52 led him to establish the first McDonald’s franchise.

Ronald Regan was a Hollywood actor, who pivoted into politics and casually ended up becoming the 40th President of the United States.

But there are just as many, if not many more, examples of people ripping it up to start again - where it didn’t work out for the best. That is life and that is just the chance we take.

The parallels with money I think are obvious. We can get “stuck” in certain habits, in thinking a certain way about money - some of these may serve us well, some may not.

What is interesting however, is that Newton also discovered that inertia becomes more powerful with mass. It takes a heck of a lot of effort to move a boulder compared to a ball.

The more successful we become financially, the more those little tokens build up over time, the more we can convince ourselves we have it cracked.

So even if a sensible, well meaning person comes along with sensible, well meaning counsel as to how we might improve our position - our natural reaction may be to full the shutters down. “That’s all great, but the way I’ve been doing it has worked just fine for me to date thanks”.

This is the adviser’s challenge. Making even minor amendments to someone’s ingrained biases and behaviours can take a lot of time and effort.

But it can be done. I always think that if any of us are trying to make changes to some aspect of our lives, it is best to start with the easy wins.

Dave Ramsay is a personal finance expert in the US, with a large following. I may not agree with all of his ideas, but one strategy I think that neatly demonstrates the power of easy wins is his “debt snowball” strategy.

If someone has built up debt across a number of credit cards, the right financial answer - the one that makes the most “spreadsheet sense”, is to pay off the card with the highest interest rate first.

Instead, Ramsay recommends that people prioritise paying off the card with the lowest balance first.

Getting this balance cleared takes comparatively less effort than tackling “the big problem” straight out of the gate, but when that first balance is cleared it creates a disproportionately high dopamine response because we have got one card cleared. The boulder is beginning to roll, slowly admittedly, but it is moving.

One strategy from my own playbook I wheel out the odd time, is when someone is not particularly used to regularly saving/investing - we start small.

In the same way you wouldn’t expect someone to dander into a gym and immediately start bench pressing their own body weight, the “savings muscle” needs time to develop and grow.

Establish the habit, enjoy the benefit and joy of progression. Give yourself somewhere to go.

If nothing changes, nothing changes. You’ll be amazed what can happen as a result of a gentle shove.

None of the above is intended to represent advice to any individual. If you have any questions regarding your specific situation, please either drop me an email at david@beechgrovefinancialplanning.co.uk, or consult with another regulated financial adviser.