The ancient philosophy of Stoicism, focusing on living simply, rationally, and in harmony with nature, holds many valuable lessons for personal finance in our modern world. Those who adopt Stoic principles tend to cultivate habits and mindsets that lead them to make wise financial decisions and enjoy long-term stability and success with money. Let’s look at seven Stoic habits that show someone with a high degree of economic intelligence.
1. Focusing On What You Can Control
Stoics teach that we should focus our time and energy only on the things in our lives that are within our power to control or influence. Financially intelligent people who practice the Stoic philosophy apply this “dichotomy of control” to their money. They don’t worry about the stock market or economy’s ups and downs but instead focus on the financial factors they can directly control, like how much they earn, save, invest, and spend.
Studies show that those who believe they influence their financial lives make better money choices. They save more, get into less debt, and are more proactive about learning how to manage their finances well. Stoic-minded people with high financial intelligence zero in on the areas of their financial lives where they can make the most impact.
2. Practicing Purposeful Frugality
Stoicism calls for living frugally and in harmony with nature rather than getting caught up in the race for material excess. But frugality in the Stoic sense isn’t about deprivation or being miserly. Instead, it means consciously spending on what matters most and cutting out waste and unnecessary purchases.
Financially astute Stoic practitioners can determine the difference between essential needs and passing wants. They allocate their money efficiently to ensure that their core needs and highest-priority goals are well funded. But they aren’t afraid to spend on things that truly add value, meaning, and contentment to their lives. Frugal living allows them to focus their financial resources where they count.
3. Appreciating What You Already Have
Instead of constantly chasing after a bigger house, newer car, or latest gadget, Stoic philosophy promotes finding satisfaction in our current circumstances and belongings. This is a powerful way to help avoid excessive consumerism and spend less.
People with solid financial intelligence who internalize this lesson are less susceptible to overspending to keep pace with friends, neighbors, or societal expectations. By appreciating the possessions and financial resources they already have, they can resist sales gimmicks and impulsive purchases. Contentment stabilizes one’s financial position.
4. Imagining Losing It All
A strange-sounding but impactful Stoic exercise is periodically visualizing losing the things, people, and circumstances we value most in life. While this sounds morose, the idea is that it helps us appreciate what we have while we have it and enhances our ability to cope if the worst happens.
Imagining losing our jobs, savings, homes, or investments from time to time has benefits for the financially intelligent. It breeds gratitude for our current financial situation and curbs the appetite to risk it on dicey schemes. However, it also builds resilience and contingency planning skills, enabling quicker recovery from unexpected financial shocks.
5. Thinking Long-Term
Stoics always consider the longer-term effects and implications of their choices. Living for today is less important than making decisions leading to a flourishing life over time. This fuels a long-term perspective on money matters.
Financially savvy people who apply Stoic thinking show the self-discipline to delay gratification in favor of future rewards. They make spending, saving, and investing decisions based on their expected long-run consequences, not just immediate benefits. With money, taking the long view enables sounder planning and stability.
6. Relying on Reason Over Emotion
Logic and rationality are core Stoic tenets. We should avoid knee-jerk decisions based on emotions like euphoria or panic. With personal finance, this means relying on facts, analysis, and sound principles to shape our choices.
Stoic-minded people with solid financial intelligence resist get-rich-quick temptations or “hot stock tips” promoted by charismatic gurus. They evaluate money decisions carefully with an eye on math and historical evidence. Keeping a cool head when investing helps them stay on course.
7. Welcoming Financial Challenges
Perhaps the most counterintuitive Stoic habit is to welcome misfortune and obstacles as opportunities to practice virtues like courage, self-control, and rational thinking. Hardships become a chance to grow and act with excellence.
Financially wise people influenced by Stoicism don’t see economic downturns or personal financial setbacks as all bad. They use them as motivation to cut wasteful spending, find innovative ways to earn, and realign their finances with their deepest values. Challenges spur creative solutions.
Case Study: Barry’s Financial Transformation Through Stoic Principles
Barry, a mid-level accountant, found himself constantly stressed about his finances despite earning a decent salary. He had a habit of impulse buying and frequently compared his lifestyle to that of his colleagues and friends. Barry’s debts were piling up, and he struggled to save for his long-term goals.
Seeking a solution, Barry discovered Stoic philosophy and began applying its principles to his financial life. He started by focusing on what he could control, such as his spending habits and saving rate, rather than worrying about market fluctuations or trying to keep up with others’ lifestyles. Barry embraced frugality, cutting unnecessary expenses and prioritizing spending on what mattered to him.
Barry also practiced the Stoic habit of periodically imagining losing his possessions and sources of income. This exercise made him appreciate what he already had and motivated him to build an emergency fund. He began making financial decisions based on their long-term consequences rather than immediate gratification, which helped him stay focused on his goals.
By applying Stoic principles, Barry transformed his relationship with money. He found contentment in his current circumstances, developed resilience against financial setbacks, and made more rational, long-term financial choices. Barry’s newfound financial intelligence, rooted in Stoic wisdom, brought him peace of mind and led him to lasting financial stability and success.
Key Takeaways
- Focusing on financial factors within your control, such as earning, saving, investing, and spending, leads to better money decisions.
- Practicing purposeful frugality by spending on what matters most and cutting out unnecessary purchases helps allocate resources efficiently.
- Appreciating your current possessions and financial situation can curb overspending and increase contentment with what you have.
- Periodically imagining losing everything you value builds gratitude for your current circumstances and resilience against potential financial setbacks.
- Basing financial decisions on their long-term consequences rather than immediate gratification enables sounder planning and stability.
- Using reason, facts, and analysis to guide money choices, instead of emotions or impulsive reactions, results in more rational financial behavior.
- Viewing financial challenges as opportunities to grow, learn, and realign your finances with your values fosters a resilient and adaptable mindset.
- Through Stoic resources, truly financially intelligent people live with freedom, meaning, and stability, not just accumulating wealth.
Conclusion
True financial intelligence, as seen through a Stoic lens, goes beyond basic money skills or net worth numbers. It’s a way of wisely and purposefully managing our resources to live with freedom, meaning, and stability. That’s the prosperity of spirit, not just bank balances.