OnPlane Financial Advisors
Do Well. Be Well. Financially.

Blog | Flat Fee Financial Advisor | Washington DC

I like to write about what happens in our lives and how it can relate to our financial lives. Not always but most of the time. So keep checking in. I'm glad to have you reading along.

The Power of Compounding Interest and Inertia

I think we're all prone to inertia in some shape or fashion, be it financially or otherwise. Guilty as charged.

You wouldn't know it by looking at me but I've put on some weight this year. I don't watch my weight. I've always been thin and eat fairly well most of the time. And I've always been pretty active. Like most people, I go through phases of working out. Generally it's pretty regular and I'll take some time off here and there. This year has been a challenge for me.

I started my own firm earlier this year and that's kept me plenty busy. In addition to being a husband & father, I also coach a handful of our kids' teams. We have friends, too, and like to see them. I always figured I'd find the time again but there was no external force compelling me to change.

Until the pants started feeling a little tight in the waist…lol.




  1. A tendency to do nothing or to remain unchanged.

  2. A property of matter by which it continues in its existing state of rest or uniform motion in a straight line, unless that state is changed by an external force.

Just how important is inertia is our lives - especially in our financial lives? Think about it:

Source: behaviorgap.com

Source: behaviorgap.com

  • How hard is it to start getting up early to go the gym the first morning?

  • How hard is it start exercising (again) if you've taken an extended break?

  • How hard is it to get that garage cleaned out and organized?

  • How hard is it to find or change financial advisors?

This is inertia. Change. Is. Hard.

Most of us reading this won't do something different until we experience a trigger. And that trigger compels us to change.

Earlier this year, I met with a potential client. I haven't been able to get this sequence out of my head and I still worry and wonder about them. They showed me a laundry list of items on their agenda, things they'd either put off or haven't gotten around to tackling yet due to other financial priorities. They were seeking help with executing their agenda and getting their financial house in order. They needed financial planning.

After a successful meeting, these fine folks decided they were going to attack their financial agenda on their own and wished to seek my counsel after they've put themselves in a better financial position. I wished them good luck and even told them it's possible for them to accomplish their tasks on their own. I have no doubt they can do it - all of us can do it.

Yet, inertia.

Like I said, this particular situation has stuck with me. And I keep thinking of them and the following analogy:  

Imagine you aren't feeling well, physically. You have symptoms that tell you you're sick, and you're overweight, plus your blood pressure is elevated, your diet is out of balance, etc. You should see a doctor and/or get help, right?


Now let's imagine we attempt to treat ourselves, physically and medically, on our own. And once we've gotten ourselves healthy, then and only then will we go see the doctor.

Wait, what?!

Back to this potential client. Again, very fine folks. They have symptoms that tell me they are financially sick. They should get help. They've decided not to, and that's a choice I don't begrudge. I respect it but I still wonder. Will they actually do it? And will they execute their agenda in a manner that provides efficiency and the proper levels of execution to position them for long term financial success? I also worry about inertia and the cost to potential lifestyle and wealth.

At the end of the day, we all have goals. Financial goals, health goals, personal goals. The biggest challenge many of us face when trying to defeat these challenges is taking that first step and overcoming inertia. That feeling of everything being just fine and dandy the way it is. Sometimes inertia shows up in the form of other words like busyness, laziness, doubt, stubbornness, fear and maybe even ignorance. Who wants to be called out for those descriptions?!

So here are a few ways we can use Compounding Actions to tackle Financial Inertia:

1. Shock Therapy

Not shock therapy in the traditional sense or like Dr. Peter Venkman used in the movie Ghostbusters. About 50 years ago, Kurt Lewin introduced his three-step model for change. We can use this same model to get us moving forward, financially or otherwise. Basically, we have to shock ourselves into action. Financially, we could ask ourselves some questions like:

  • “How much money am I losing by not getting started on this?”

  • “How much could my money be growing if I were investing all the money that I’m currently losing/spending?”

  • “What would that money mean for my [insert financial goal here]?”

And of course, if we can't shock ourselves into action then it makes sense to find someone else to do it for us. Remember our doctor analogy above?

2. Create Very Short Term Goals to Create Short Term Victories

By setting short term goals that can be easily obtainable, we create momentum. And momentum is what we need to overcome financial inertia. Remember, an item in motion tends to stay in motion! So earn yourself some wins and keep on keepin' on. Maybe that's increasing your rate of savings by 1% (hint: open enrollment season is upon us!), or saving an extra $xxx per month. Cancel a service or subscription you aren't using (enough). Make it something small and easily obtainable. Small, incremental steps can lead to huge long term gains! 

3. Visualize What It Is You Want

I'm not saying go all Stuart Smalley here and build yourself up. Let's not confuse visualization with the "think it and be it" advice our friend Stuart and other self-help gurus bombard us with on Facebook. But visualization works! From sports to business, science tells us our mental thoughts can be just as powerful as action.

According to this article, "When we visualize an act, the brain generates an impulse that tells our neurons to "perform" the movement. This creates a new neural pathway -- clusters of cells in our brain that work together to create memories or learned behaviors -- that primes our body to act in a way consistent to what we imagined. All of this occurs without actually performing the physical activity, yet it achieves a similar result."

This is powerful stuff, friends! When it comes to your financial life, visualize what you need to do to get where you want to be. Maybe that's creating more sales at work to earn more money to save for a down payment on a house. Or it's visualizing your lifestyle to create the life you want and be able to spend time on the things you value.



Much as we view our investments through a long-term lens, so too must we view the changes required in the other areas of our financial lives. We've all heard about compounding interest when it comes to our investments. Overcoming inertia in our financial lives creates a different form of compounding. A compounding interest of sorts on our behavior, on our actions. Small steps, time, persistence. Focus on the factors we can control.

Then we can better harness the power of compounding in both our investments and our financial lives.