Hold up, can ancient philosophy really help us with our personal finances?
Have you ever looked at philosophy as a subject, and wondered, “Are these even useful to a normal person?”. You might even have the impression that philosophy is deep-thinking reserved only for scholarly people to argue about boring thoughts some men in ancient history talked about. While yes there is a lot to dive into and give meaningful thought about, philosophy can very much applicable to you and I in this day and age.
Among the many branches of philosophy and their many philosophers, today let’s explore how Stoicism can have very good applications to your personal finance. In fact, you might even find that a number of these Stoic principles are musings you’ve often thought about yourself.
Contents
What is Stoicism?
Before we dive right in, let’s understand what is Stoicism at a basic level.
Stoicism is a branch of philosophy that originated in Ancient Greece in 300 BC and was popular during the Roman Empire. Its famous figures include Plato, Socrates, Seneca, and Marcus Aurelius.
According to the Stoics, virtue is the highest form of good and having virtue leads to a well-lived life. Principles such as wisdom, courage, moderation, and justice help us attain a virtuous life. Being in harmony with nature is also a fundamental principle. Meanwhile, things such as your wealth and health are viewed not as things per se but rather as opportunities to exemplify choices that show virtue.
Don’t worry if that sounds complicated. Read on to better understand how the Stoics thought and how we can easily apply their thinking in our every day lives.
#1: Luck is When Preparation Meets Opportunity
You might have heard of this before somewhere, as it’s still relevant today as it was when it was written by Seneca, a Roman statesman and philosopher who was born in 4 B.C.
While we think luck might be just luck, it has a deeper meaning according to Seneca. It doesn’t just fall on our lap. Rather, it’s something that you create through hard work and determination. In other words, we make our own luck.
In personal finances, you will need to make a lot of planning and preparations. And it is through this that we make our luck.
For example:
- Finding an ideal house in a perfect location. If you don’t have the savings (or downpayment), you will miss this opportunity. Is this bad luck or bad preparation?
- Encountering an unexpected financial emergency or unexpected accident. Thankfully, you have sufficient insurance coverage and an emergency fund. Good luck or good preparation?
#2: You Have Power Over Your Mind – Not Outside Events
When the Roman Emperor Marcus Aurelius wrote this, a lot of things were beyond his control in his empire. Rebellions, riots, political plots, you name it. He understood that the only thing he can control is his thoughts and how he responds in his duties and virtue. It’s the same with personal finances and investments.
When you invest, you will always take risk, for you cannot be 100% certain of the outcome. However, what you can control is your research and mindset.
There can always be unexpected events that affect your investments, over which you have no control. But it’s important to be patient and re-evaluate your investments from time to time.
There are several ways to act on this principle. For example:
- Having a long-term view will enable you to be disciplined, and separate the noises out.
- Consider when you are being impatient and jumping the gun, versus thoroughly analyzing your prospective investment choices.
- Think now about how you will choose to react if things do not pan out well? For it is within your control to choose your own behavior.
#3: Waste No Time Arguing What a Good Man Is – Just Be One
Sometimes, we let a lot of thoughts and things (opinions of others too) get in the way of our actions. Thinking and planning is important. But if it gets too overwhelming, we will feel paralyzed to take any actions. And that is true in personal finances too.
You might have gone to a lot of financial or investment courses, and constantly debate about what the “best” way is before you dare to commit your own plans. You second-guess yourself too much. You hold back from doing things because you want to do it right when you finally do something. Basically, you get caught up in thinking of how to do only the “best” way that the world has to offer.
However, past a certain stage, it’s important that you realize that you are good enough, your plans are good enough, you can start acting on your plan now. You have already wisely implemented in-place sufficient space and leeway to “move” and you have engaged trusted mentors and certified advisors to help review things as they come along. You are good to go. So, go!
#4: Curb Your Desire, And You Will Get What You Need
The full quote is from Seneca and it reads “Curb your desire—don’t set your heart on so many things and you will get what you need”.
In today’s world, the line between want and need is very blurred. Many of us struggle to manage and control spending on unnecessary items. The allure of getting that instant satisfaction and gratification is strong. Hence, Seneca’s advise of curbing your desire is aimed directly at identifying what you need and what you want. By doing this, you learn the importance of delaying gratification and self-control.
Now, this is not saying that you should completely suppress your desires, but rather to have better control over knowing which are the really important ones.
#5: Chase Progress, Not Perfection
You might have heard the saying, “Don’t let perfect be the enemy of good”. The Stoics have a clear view on this – progress is more important than perfection.
There is actually a deeper meaning to this. Persisting in life, and resisting the urge to take shortcuts.
In your personal finance journey, it’s more important to be consistent in saving rather than earning a lot of money. You can earn a lot, but if you don’t save, you are trapped in a never-ending cycle of needing to earn more.
Hence, there is an urge to invest in assets or products that are very risk and unlicensed to make more money. That’s where many will fall into bad spending and investing habits.
It’s important to slowly build up good personal finance habits such as saving a portion of your income every month, putting funds every month into safe investments, and avoiding shortcut investments.
#6: Watch the Stars, and See Yourself Running with Them
This is more light-hearted, from Marcus Aurelius, “Dwell in the beauty of life. Watch the stars, and see yourself running with them”.
There are always many pressure and concerns from managing finances, and thinking about the future. Your house might catch on fire. You might get into an accident or encounter an unlikely illness. And you work very hard to save up for your children’s future. Urgent things may take up all your attention that you lose sight of the important things, or of the bigger picture in your personal finance journey.
The Stoics advise that we pray for the strength to endure, but also the mind to enjoy whatever life has to offer – whether good or bad. Sometimes, you will have good months when you are able to earn more and control your spending and sometimes, no. What matters is the overall trend. Are you getting better from where you were at the start of your journey? Does making better choices feel easier? Do the tough challenges you face today promise a better you and a better tomorrow?
If you feel like beating yourself over your financial decisions, watch the stars and see yourself running with them.
Conclusion
The Stoics have said a lot of things that we can apply to our personal finance journey. This article is only a small window into how this branch of philosophy guides us to live meaningfully. If you find you agree with them, do keep these thoughts in mind as you travel your path to financial independence.
Which ones of these Stoic principles resonated with you?
Leave A Comment