Skip to main content

Here’s to Your Wealth – The Hidden Challenges of Personal Finance Math


Here’s a controversial opinion: the math of personal finance can be more difficult to apply than the math of physics. Just look at poor Isaac Newton, a brilliant mathematician and physicist. He helped create calculus, advanced our understanding of light and refraction, and developed his three universal laws of motion. Despite his brilliant mathematical mind, in 1720 Newton lost the equivalent of £5.4 million in today’s dollars when the South Sea Company collapsed.

Newton understood mathematical concepts and physics very well. While the calculations are complex, the laws that govern them are constant. The laws of gravity work the same on Earth as they do on Mars.

Consider some of the math behind the Mars Curiosity Rover, launched on November 26, 2011. NASA predicted that the 350 million mile trip would take 254 days. It actually took 253 days when Curiosity touched down within 1.5 miles of its target. That kind of precision can only happen in the mathematical world of physics. (NASA Press Kit, 2012).

When it comes to personal finance, the math is much more challenging to apply due to ever changing variables. Imagine young adults entering the work force. How do they figure out how to pay off debt, start a family, buy a house, save for their children’s college, and assure that they have enough to retire?

While the laws of physics are straightforward and constant, the rules around personal finance are always changing. Tax laws, inflation, interest rates, and market returns are just a few of the variables that must be considered. The environment that personal finance operates within is always changing.

Another challenge is that personal finance is not governed by a standardized set of rules applicable to everyone. One person’s optimal solution to achieve his/her financial goals may not be the optimal solution for another person. Personal finance is, as they say, personal.

Finally, there is a human element in personal finance that does not exist in physics. In physics, if you jump out of an airplane, the calculation of your velocity will be the same whether you are afraid, happy, angry or sad. In personal finance, your ability to stay disciplined and true to your financial/investment strategy can be influenced by your emotions.

When it comes to personal finance, the best that we can do is focus our efforts on what we can control. I like the graphic below from

There are things we can’t control, like market returns. We have some control over where we work and the lifestyle we live. We have total control over how much we choose to save and how we respond to the world around us. Print, television, and social media focuses on all the things we can’t control. The trick, and the challenge, is to focus our energy towards the things we can control.

Every day we help our clients control the controllables by creating a unique plan for their needs. It starts by understanding their goals. Then we develop and implement a strategy to work toward those goals. We use a disciplined investment process to help grow wealth over time and navigate uncertainty. By monitoring and reviewing the plan periodically with our clients, we can keep the focus on the controllables to achieve their financial goals.

Wishing you good health and good wealth.

Controlling the controllables. (2020, April 28). Keating Wealth.
NASA Press Kit. (2012, July). Mars Science Laboratory Landing. NASA Mars Exploration.
Smith, R. (2019, July 15). Why investing is harder than physics (And what to do about it).

This material is intended for informational/educational purposes only and should not be construed as tax, legal or investment advice. We make no representation as to the completeness or accuracy of information provided at these websites. Please consult with your financial professional and/or a legal or tax professional regarding your specific situation and before making any investing decisions.

Securities and Insurance Products are:

Not FDIC InsuredNot Bank GuaranteedMay Lose ValueNot a DepositNot Insured by any Government Agency