Stoic Financial Planning

Wealth is not limited to those who have money. 

Rather

Wealth is limited to those who ascend to an excellent moral character.

An excellent moral character is necessary and sufficient for well being.

Many times, it’s common when tragedy occurs we place indifferents on the wrong side of the well-being balance scale.

If we cannot control the event, it does not have the capacity to affect our moral character or well-being.

How could this be?

The common conception of happiness is the combination of many preferred events outside our control such as wealth, good health, good reputation, good job, or an excellent life partner. 

These preferred events are supposed to outweigh much of the dispreferred events such as poverty, illness, personal tragedies, etc. 

This approach to life will never lead to wellbeing.

Why?

You’re leaving your happiness up to events that are not up to you.

Stoicism teaches us to place all external (this includes preferred and dispreferred indifferents) on the same side of the well-being scale.

Our job regarding events outside our control is not to view them as good or bad, rather, to remain un-swayed in the face of fortune or misfortune.

Viewing your wealth through a stoic lens offers unique insight into what it means to derive meaning.

You cannot control whether your wealth grows with stability at 8%/yr.

You cannot control whether you get cancer and die young.

You cannot control whether others ascent to negative value judgments of you.

You cannot control whether your life partner is not faithful to you.

BUT

You can control your desire to understand & learn.

You can control how you respond to adversity.

You can control refraining from both indulgence and abstinence.

You can control doing the right thing.

This is the essence of a Stoic worldview. 

The four virtues - wisdom, temperance, courage, justice are the only things entirely up to us. 

These virtues are more than a washing machine for cleansing our impressions and value judgements.

Rather

They are tools to align our actions with an excellent moral character. 

When applied to how we perceive and behave around money we may find ourselves less perturbed and more composed relating to our impressions, judgements and actions.

Wisdom

The chief task in life is simply this: to identify and separate matters so that I can say clearly to myself which are externals not under my control, and which have to do with the choices I actually control. Where then do I look for good and evil? Not to uncontrollable externals, but within myself to the choices that are my own
— Epictetus

Between things that matter and things you can control are what you should focus your efforts on.

Setbacks and problems are always expected.

But it’s not what impedes you that matters rather it’s how you respond to the impediment that makes the difference.

What stands in the way becomes the way.

Wisdom informs action. 

When you understand how stocks and bonds work, you’re less likely to let market volatility get the best of you.

When you understand how to optimize your savings, you’re more likely to save money on taxes.

When you understand how your beliefs around money impact your net worth, you’re less likely to limit yourself from achieving financial independence.

Between stimulus and response there is a space. In that space is our power to choose our response
— Victor Frankl

This space creates wisdom’s opportunity.

You can either recognize that space as an opportunity to act in accordance with an excellent character or you can act irrationally with impulse.

Temperance

If you seek tranquility, do less.’ Or (more accurately) do what’s essential—what the logos of a social being requires, and in the requisite way. Which brings a double satisfaction: to do less, better. Because most of what we say and do is not essential. If you can eliminate it, you’ll have more time, and more tranquility. Ask yourself at every moment, ‘Is this necessary?
— Marcus Aurelius

To have temperance is to have the wisdom of what is essential, and what is not.

You can spend countless hours looking up the best marketing strategy for your business or you can just post a piece of content today and improve over time.

You can spend countless hours researching which stock to buy or you can buy the entire global stock market.

You can worry about not saving enough or you can just start by saving what you can and adjusting it over time.

If a wealth of information creates poverty of attention then poverty of information creates a wealth of attention.

Moderation between extremes is not wanting more but desiring less.

Just as too much abundance softens the mind.

Too much scarcity hardens the soul.

But not just moderation towards material goods, but moderation in harmony and good discipline regardless of pain & pleasure or failure & triumph.

Temperance recognizes the fleeting nature of both happiness and pain and remains indifferent between the two.

Is what you're spending money on necessary?

Courage

Each person’s life is a kind of battle, and a long and varied one too. You must keep watch like a soldier and do everything commanded. . . . You have been stationed in a key post, not some lowly place, and not for a short time but for life
— Epictetus

Courage is doing what’s right in the face of adversity.

Misfortune presents the best opportunity for courage.

How can you know what you’re capable of if you’re never challenged?

Your work, spouse, school, family and friends will all challenge you.

Will you stand up after being knocked down or roll over?

Your actions speak louder than your words.

It takes courage to not party on the weekends to work on your passion project.

It takes courage to not buy the fancier car to adhere to your personal budget.

How are you displaying courage around your finances?

Justice

And a commitment to justice in your own acts. Which means: thought and action resulting in the common good. What you were born to do.
— Marcus Aurelius

How brave is your courage if only in your self-interest?

How impressive is your wisdom if only kept to yourself?

How disciplined is your moderation if only benchmarked to your standards?

Justice is honoring the interconnectedness of the whole.

With your capital, justice is conscious capitalism.

In game theory what’s best for the members is best for the whole.

On a similar note, Marus Aurelius has said, what injuries the hive injures the bee.

If you find yourself with friends you don’t like, an unhealthy family life, or lacking solid financial means, when or where you arrive doesn’t matter as much as who you are when you arrive.

Our strength of character is more important than the particular life situation we find ourselves in.

Regardless of financial means, your character is the one improvement that doesn’t cost you a dime & has endless returns.

Newsletter

Receive my curated take on financial planning strategies, seeking abundance, and becoming more capital conscious.

    Note - I dislike spam as much as you do. Unsubscribe at any time.

    Previous
    Previous

    Underrated Brokerage Tax Planning Strategies

    Next
    Next

    Origin of Stocks & Bonds (& Why Prices Behave The Way They Do)