Personal Finance Maintains Stoic and Fortitude in our Daily Spending

Business & Finance

Photograph by: John Lau

The underlying and hungry passion for recognition and success dictated by the standards of society rests primarily on the constant pursuit of luxurious goods in search of spiritual fulfilment. But what if one fateful day we lose everything: we lose our fortunes and wealth, washed away after years of work. For Zeno of Cyprus this was the “saddening” reality as every prize of silver, peckle of gold and cargo was lost in sea along with his ship and fortune. But Zeno, the father of stoicism, never reacted with despair, enlightened by his loss. As his stoic successors would later emphasise, life is to be lived according to nature through accepting what happens and fulfilling one's role in society.

Whether you notice it or not, as a collective society we very much experience our own mini Zeno’s, losses and upsets regardless of size. Because as humans we have no control over the swinging fate of fortunes, one day we might have capitalised on performing stocks and the next day we might be in debt because of our misfortune. However, as responsible agents of our own financial well-being and the community we interact with, it is paramount that we make ourselves as independent to those swings of fortune or fate as possible through our own personal finance and that starts with stoicism. Rooted deep in stoicism (the ability to endure hardship without any application of emotions), is the primary tenant that despite the globalised culture we live in, everything has a point of separation. Primarily, “between the way the world happens to be and our emotional response to it.” This quote in itself serves as the primary foundations of stoicism, as our financial plans can never be bulletproof if the human inside is irrational and reacts poorly to every decision under stress and unnatural circumstances. Stoicism encourages us to make ourselves indifferent and independent to the events of the world, in order to provide the necessary stability to thrive and excel.

At the centre of human greediness and self-interested agents is the careless and uncalculated human who enjoys lavish lifestyles and luxurious goods, which stoics pointed out centuries ago was a life of delusion. They explain this through the philosophical belief that “fortune is a fickle mistress. Fortune often deserts us at our highest, yet relieves us at our lowest. However, fortune is a direct contradiction to the primary stoic belief to be self-reliant and indifferent amidst the rollercoaster of the economy. The source of poor financial independence is often built on being vulnerable to fortune, such as our irresistible need to consume more and other factors that stretch our credit cards and remove our safety net when times turn vulnerable. As we over-extend our wealth, we become more vulnerable to financial repercussions. From personal misfortunes to the pandemic, the more we over-extend, the more irrationally we act. We deplete the reserves to make ourselves independent to the fickleness of fortune. This was evident during the 2007 financial crisis as companies over-extended (borrowed or lent too much) leaving a shortage of capital to fall back on and therefore elevating a fiasco into a severe crisis.

Emotions and irrationality in the stoic philosophy hold a special mantle. Stoicism is often mistaken with the suppression of emotions, rather than domesticating emotions. As the stoics put it, “If we can remain steady, if we can corral and control our emotions, no matter what happens or how much external events may fluctuate, there’s no obstacle that can undo us, no triumph that can overinflate us.” Stoicism as a whole is about bettering the human condition, preventing the responsibility that sets our finances up for failure; that most likely stems from the mindless and emotional based primitive decisions. On a global scale, the spell of the financial crisis itself could be averted as a whole. If people followed the stoic principle of rationality and patience instead of just jumping on the house buying bandwagon, when it was not necessarily a necessity. Although stoics understand emotions can never be completely blocked, they do emphasise the need to never let emotions rule us. It is about domesticating the destructive emotions that not only make ourselves, but the world worse. A more modern approach to stoicism according to financial advisor Pamela Sams is to apply the 3 disciplines:

“Discipline of Perception (how clients see and perceive the world around them); Discipline of Action (the effective action they take in response); and Discipline of Will (how clients deal with the things they cannot change).” This allows us to react with the appropriate actions to combat the possible tidal waves of disasters in our life such as when the market freezes or when we are fired.

One of the biggest premises in stoicisms is the notion of the premediation of evil or negative visualisation. The stoic practice of “premeditatio malorum'' allows us to visualise and imagine life's inevitable setbacks, preparing us in constructing preventives and reacting appropriately when the world turns on us. Investors also unknowingly practice this through scenario generations being more widely accessible as computational power grows increasingly, allowing them to understand when to hedge against disasters and when to take more risks. Premediating the future stimulates a sense of knowledge of risks we take and the portfolio we construct, breaking our unwillingness to imagine a terrorized and unfortunate future. As Seneca, a philosopher of stoicism writes, “The unexpected blows of fortune fall heaviest and most painfully, which is why the wise man thinks about them in advance.” Therefore “we can inoculate ourselves against market volatility concerns,” when it occurs. In some ways, stoicism through this article has been portrayed as a defensive mechanism within the world of financial independence, but stoicism is merely a stepping stone to our goal of being financially independent. As the stoics advise, “ To only focus on the means whilst the ends take care of themselves. “Only through consistency and perseverance can we finally reach our goal, and the best way to do that is to direct our attention to the quotidian tasks that get us there. Ultimately, to focus on what is within our control and find ourselves without being vulnerable to the storm of fortune.