Newton’s Law of Inertia explains that an object at rest will stay at rest unless acted upon. In other words, when you’re still, it’s much easier to fall into a state of complacency than to get yourself moving. It’s a law of nature. However, it might be holding you back, particularly when it comes to your finances. Money isn’t a place to allow for complacency.
What is Complacency?
Complacency means that you are essentially secure with the way that things are. They are “okay enough.” If you subscribe to the idea that “if it ain’t broke, don’t fix it” then you might be prone to complacency.
However, there’s a second aspect to the definition of complacency. It’s that you don’t care to better the situation. At best, this means that you just settle for what it, without seeking better opportunities. At worst, it can mean that you are blissfully unaware of potential dangers until it’s too late.
Complacency and Finances
There are many different ways that complacency can affect finances. For example, if you’re content with a just-so job then you may never strive to become more successful. As a result, you might not get the income you truly deserve or desire. Of course, there’s no rule in life that you have to constantly strive for better. Nevertheless, if you’re settling just out of complacency, then you might not actually have the financial situation that you want.
Complacency and Choosing Insurance
Your income is just one area where complacency affects finances. In fact, it often plays a bigger role in your expenses. While you might scrimp and save in certain areas, there are likely other areas that you just let be as they are. Insurance is one example. Once you choose a type of insurance that you like, you probably stop shopping around. You accept what is.
For example, think about your home insurance. How many times have you changed policies since you first got this insurance? If you’re like the average person, you’ve never bothered to change policies. What you have works well enough. You picked it for a reason, decided that it was fine, and the Law of Inertia has kept you from ever worrying about it again.
However, you may be doing yourself a great disservice by not paying more attention to the details, options, and potential benefits of getting new home insurance. You might easily be able to find a better deal. This could mean that you pay less for your home insurance. Saving money is a great reason to change plans. On the other hand, you might find that you get better benefits from a different policy. If you don’t look, then you’ll never know. House insurance is a great example of something that takes 5 minutes to save big.
How to Get Over Complacency in Finance
Sure, things are fine. But they could be better. Have you ever heard the story about the man on Craigslist who traded a red paper clip for a house? He completed a series of fourteen trades over the course of the year, constantly trading up to something better until he got the house that he wanted. It’s a good reminder for any of us who want to improve our lot in life. Starting with a paper clip, we can look at the best opportunities for trading up.
Of course, complacency prevents that. In order to overcome complacency, we have to create rituals and routines that support change. One easy tip to implement is to review all of your expenses on an annual basis, looking specifically for ways to trade up. For example, each May you might review your housing insurance to see if there is a better option that you could choose. Then in June you might review your car insurance, in August look at your investments, etc. Come next May, it’ll be time to look at your home insurance again. By making this a routine, you avoid the Law of Inertia, and you can improve your finances one step at a time.