FinTekNeeks

From Minimalism To Tech

4 Financial Lessons From Sir Isaac Newton

Posted in Money

After the recent passing of Vladimir Voevodsky, we are all reminded of the importance of people who impact us in ways we may not realize and consider what lessons we can learn from them in personal finance. Sir Isaac Newton is known for mathematics, physics, astronomy, theology, and other disciplines. He’s considered by man to be the father of calculus and a host of other ideas in physics and his work extended to the British financial system – spotting counterfeiters. Sir Isaac Newton accomplishments came through many of his skills that we can apply to personal finance while enriching our life in related areas.

The Series

  1. The Poverty of Witch Hunts: Growing Character Through Biographies
  2. 4 Financial Lessons From Alexander Suvorov
  3. 4 Financial Lessons From Genghis Khan
  4. 4 Financial Lessons From John D. Rockefeller
  5. 4 Financial Lessons From Yuri Bezmenov
  6. 4 Financial Lessons From Deng Xiaoping
  7. 4 Financial Lessons From Sir Isaac Newton
  8. The Full Series

The Lessons

1. Only results create expertise. We live in a world where expertise is determined by credentials or cronyism. Sir Isaac Newton proved that expertise could only be achieved through results, even if someone was not deeply knowledgeable in the field or even if someone did not know the right people. As a simple example of Sir Isaac Newton’s brilliance, he lived in a time where people actually thought that Jesus Christ would return in that timeframe. We can all laugh at this, but imagine living in a world where 99% of people around you actually think that Jesus will return in the next 40 years. Sir Isaac Newton investigated this claim for himself by reading The Bible and concluded Jesus would not return before the year 2060 (he later revised this date). He pointed out that this date wasn’t to specify the time when the event would happen, but that the event couldn’t happen before that time. Obviously, Newton was right – Jesus didn’t come back during the 1600s-1700s.

Sir Isaac Newton’s expertise for his time came from his ability to get results. He was right for his time in that his predictions yielded results for his time (imagine all the wasted time expecting Jesus to return in those days). None of us can know what will happen after we die, so it’s pure luck if we’re right for a future time. To be right in our time, let’s measure ourselves by results, not knowledge or action, as actions and knowledge may not equate with results. When it comes to money, what is our financial vision? What are we trying to accomplish? Anything that moves us closer to our vision is a successful result; anything else is a distraction.

2. Be curious. Sir Isaac Newton helped England stop counterfeiters, who were common in his time. This is one of many skills Sir Isaac Newton had that surprises most people, yet many of his underlying skills in mathematics and physics helped him in other areas – curiousity being a major skill of Sir Isaac Newton. He found ways of interviewing people and researching the problem before proposing and working on solutions for the problem. Without an understanding of the problem, can we solve it? Sir Isaac Newton believed that we must understand the problem and that curiosity is the best way to learn.

Ask questions that deepen your understanding of a problem so that you can perfect the solution. Think about your financial problems: what is the reason for the problem and what is the underlying reason for that? For instance, suppose that you tend to spend money when you’re unhappy (emotional spending); how can you train yourself to either be less emotional about situation, or how can you train yourself to do something productive when you’re emotional, instead of spending? As you identify the problem and deepen your understanding of it, you can quickly identify solutions for the problem.

3. Relate to other people on their level. One of my favorite stories of Sir Isaac Newton involves the apple and gravity (the funnier version is that an apple hit Sir Isaac Newton on the head). Academics debate whether this ever happened and completely miss the point of the story – Sir Isaac Newton told the story of the apple because it visually relates gravity to people. While Sir Isaac Newton is generally not considered an extrovert, his understanding of relating knowledge to people on their level demonstrates that he had more social skills than people give him credit for. It’s easy to imagine an apple falling down; it’s next to impossible to imagine stars, planets and galaxies held together by gravity and its pull. Sir Isaac Newton could have used all kinds of stories, but the apple story – whether true or not – related to people on their level and helped people grasp the basics of gravity.

Find what people relate to and tell stories that relate to people. Whether a story is true or not misses the point (except in some situations); when people understand the message of a story, you’re relating to them on their level. Part of financial success involves interacting with others: whether it’s a spouse, child, or financial advisor – if people don’t relate to you and you’re not relating to them, your situation becomes more difficult. Imagine a financial advisor who does not relate to your goals – you may receive bad advice, or may miss out on good advice. All of us have different levels of engagement – no one way is superior to others.

We should also consider this when communicating our vision to ourselves – we should relate to our vision and how we communicate it. If we relate to visual images, then we should remind ourselves of our vision visually; if we’re audible people, audibly. We won’t succeed by ignoring how we and others relate to communication.

4. Little actions over time yield big results. When we look at each of Sir Isaac Newton’s individual actions, none on their own seem that big. Yet, Sir Isaac Newton is one of the most important people who ever lived and he had significant accomplishments. He proved that small steps yield big results over time. The smallest action of your day contributes to your success, as much as the biggest decision of your day.

With money, small victories build strong habits and those habits become more valuable in bigger actions. For instance, following and automating your budget may feel like a small action, especially when you’re 18 and only make $35K a year. But as you age and make more money, the habit of following and automating your budget means that you can input any income level and follow your own rules. You’re learning discipline at any income level and that carries bigger results as your income grows. Small steps on their own seem very small; aggregated they appear as huge accomplishments.

Conclusion

We should measure our actions by results while being curious about our failures and how we can grow from them. Meandering from our vision may feel good for a season, but it is lost time and lost results and even small actions toward our vision over time result in large accomplishments. Finally, part of our financial life involves other people, from spouses to childre to others, and relating to others on their level will help us and the people around us.

Seeking value investing? Sign up for the upcoming FinTekNeeks' newsletter on value investing.

© Copyright 2016-2017. All Rights Reserved. Direction Return Design by FinTek Development.