The Physics of Personal Finance

by Ron Haynes


Newton StatueAs one of the most influential scientists in history, Sir Isaac Newton (1643-1727) introduced the world to his three laws of motion. These laws of physics and motion apply to objects in space, things on earth, and ironically, to our personal lives and finances.

Newton’s First Law

The more something weighs, the more energy required to move it.

How does this apply to personal finance?

Have a mountain of debt to conquer? You’ll need a lot of cash to retire it. To get that large amount of cash, you’ll need to make extra money, and/or use a savings strategy commensurate with the amount you need to accumulate.

The later you begin saving for retirement (or college, or for a home) the more you’ll need to save or the greater the interest rate you’ll need to achieve. For virtually everything in life, I recommend proceeding with caution but when it comes to saving, put the spurs to it!

Newton’s Second Law

  • Part A – Nothing moves unless something moves it.
  • Part B – Once something is moving, it keeps going until something stops it.

How does this apply to personal finance?

It applies in two ways:

  1. Nothing in your life will change unless you change it. You won’t get paid what you’re worth, you won’t learn to network or to negotiate, you won’t finish your degree, you won’t make extra money, or learn personal motivation or self discipline unless YOU do it. No one else is going to do those things for you. Not your parents, your kids, your spouse, your co-workers, your friends, or your government.
  2. Once you’ve established a habit, good or bad, you’ll keep on doing it until something replaces that habit.

Think of it this way: once an identity thief steals your identity, he will keep on using your personal information until something acts on him to stop it.

Alternately, start making regular automatic deposits into a savings account or into your retirement account and you’ll probably keep on doing it until something acts on you to stop … or you decide to retire!

Your goal is to start early doing those things that will benefit you and your family. The sooner you start, the easier it is to keep them going.

Newton’s Third Law

For every action there is an equal and opposite re-action.

How does this apply to personal finance?

Overspending today means less money for tomorrow. Going deeply into debt today just to get the thrill of having stuff in your possession means bondage and slavery tomorrow. Neglecting to purchase adequate insurance today means an increased potential for financial ruin tomorrow. Failing to create a budget today means you’ll have no idea how much money you have tomorrow.

On the other hand …

Learning how mortgages work today means you’ll be better prepared when you decide to buy a home. Talking with your spouse about your budget today means less arguments about money tomorrow. Creating an emergency fund today means you’ll be in better shape when the unexpected happens tomorrow. Saving consistently today means you’ll be better able to enjoy your tomorrows.

The Laws of Physics Apply to Personal Finance

Sir Isaac Newton was a genius, uncovering the complexities of gravity, developing differential and integral calculus, and building the first reflecting telescope. I bet he wouldn’t be surprised at all to find that we’re able to apply the principles and natural laws he wrote to our personal lives and finances.

My apologies to all the physicists out there for the way I simplified the three laws!

photo credit: Harlequeen

About the author

Ron Haynes has written 987 articles on The Wisdom Journal.


The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.