Stoic Principles To Build Wealth And Achieve Financial Freedom
Written by Michelle Ong | July 3, 2024 | Growth
Discover how applying Stoic wisdom can foster sustainable wealth-building and guide you towards achieving financial freedom.
Are you looking to transform your financial situation? Perhaps you’ve found it difficult to stick to a budget or feel overwhelmed by debt. Maybe the idea of investing seems too complex or risky. You’re not alone—many people face these challenges. Understanding and overcoming financial barriers is crucial for success.
This article delves into the challenges of wealth building and explores integrating Stoic principles into your lifestyle and routines to foster wealth creation. We’ll explore four core Stoic principles and examine how each can be applied to build wealth effectively. Whether starting from scratch or accelerating financial growth, these insights aim to guide you towards prosperity. Let’s begin your wealth-building journey.
Phronesis
a. Clear Financial Goals
Phronesis, or prudence guides us to be thoughtful and deliberate in financial planning. It’s about making wise decisions that align with our long-term goals and values.
To achieve this, start by clearly defining your financial objectives—whether it’s building up an emergency fund for peace of mind or venturing into real estate investments for long-term growth. Break these goals into manageable steps. For example, if you’re saving for emergencies, set monthly savings targets.
Seeing your savings grow each month not only feels rewarding but also keeps you motivated to stick to your plan. Just like reaching milestones on a road trip, celebrating these achievements makes the journey to financial freedom more fulfilling.
b. Create & Stick To Your Budget
“Don’t save what is left after spending, but spend what is left after saving.”
Warren Buffett
You can apply prudence when creating a budget to manage your finances effectively. Budgeting apps are invaluable for tracking spending and identifying areas where you can save. For example, reducing dining out or canceling unused subscriptions can free up funds.
Allocate a portion of your income to savings each month to steadily progress toward your financial goals. This approach provides clarity on your spending and enables smarter financial decisions.
Automating monthly transfers to savings, treating them like essential bill payments, ensures consistent savings without requiring constant reminders.
Exercise self-control by sticking to your budget and eliminating unnecessary expenses. Evaluate subscriptions you rarely use and consider downgrading or canceling them to redirect funds toward savings and investments.
“The way to wealth is as plain as the way to market. It depends chiefly on two words, industry and frugality.”
Benjamin Franklin
Embrace a frugal lifestyle by making saving and investing a top priority with your income. Rather than dining out often, try cooking meals at home or bringing lunch to work. Steer clear of purchases made just to impress others or boost your ego.
When faced with unexpected expenses or economic challenges, resist the urge to dip into savings impulsively. Stay focused on your financial objectives and remind yourself of the bigger picture. And stay committed to your financial journey, even when obstacles arise.
c. Manage Debts
To manage debts prudently, prioritize eliminating high-interest debt like credit card balances. Minimize new debt and focus on paying off existing obligations to improve your financial standing.
Develop a systematic approach to reduce debts, starting with those carrying the highest interest rates. Achieving debt-free status frees up resources for savings and investments.
Additionally, crafting a personalized investment strategy is crucial.
Educate yourself on various investment options that align with your risk tolerance and financial objectives. Stay informed through workshops and online resources to make informed investment choices and maintain financial progress.
d. Increase Income
Diversifying income sources through side hustles, freelance work, or online businesses aligned with your skills can enhance financial stability and growth. This approach reduces risks and leverages passive income from investments like dividend stocks or rental properties.
Continuously upgrading skills through courses and seeking better job opportunities, including negotiating for raises, enhances earning potential and long-term financial security.
Integrating these strategies into your routine facilitates steady wealth accumulation and progress towards financial independence. Check out this article for strategies to build sustainable routines.
e. Smart Investing
Keep an open mind to new opportunities for growing your wealth. For example, explore investing in stocks or real estate to diversify your financial portfolio.
Think of investing like planting seeds in a garden—spread your investments across real estate, stocks, and side businesses to minimize risk and maximize returns.
Regularly tend to your investments: monitor their growth, adjust to market changes, and stay focused on your financial goals. Just like a well-tended garden, nurturing your investments over time can yield fruitful returns.
Check out my Pinterest posts below for daily inspiration.
2. Memento Mori
“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest.”
Dave Ramsey
Building wealth starts with a reminder from memento mori about life’s brevity. Although it might seem morbid, it really puts everything into perspective, prompting us to prioritize our time and resources wisely.
It helps us sort out what truly matters, prioritize needs over wants, by focusing on essentials—like covering rent or mortgage—before splurging on things like the newest gadgets or fancy clothes.
Next time you’re tempted by an impulse buy, ask yourself: Do I really need this, or is it just a passing desire? Developing this discipline ensures we prioritize meaningful goals and actions, steering clear of distractions that could derail our financial progress. Check out this article on how you can start building your self-discipline today.
Make saving and investing a regular habit. One simple way is to set up automatic transfers to your savings account every month, just like you pay your utility bills. This way, you’re consistently putting money aside without even thinking about it.
An emergency fund is vital—aim for six months’ expenses—to prepare for unforeseen events, like a medical emergency or losing your job. This helps us stay prepared to handle life’s surprises. Integrating memento mori into financial decisions fosters wise choices for long-term security and fulfillment.
3. Amor Fati
a. Handle Uncertainties
“Amor fati,” or the love of fate, teaches us to accept circumstances beyond our control, allowing us to focus on what we can influence, like diligent saving and investing.
This principle encourages us to embrace and learn from every situation, including financial setbacks like a market downturn affecting your investments. Instead of giving up, it motivates you to reassess, learn from the experience, and adjust your strategies accordingly.
It fosters resilience and perseverance. When faced with job losses or market volatility, it prompts you to explore new career opportunities or adjust your investment portfolio to align with evolving market trends.
Moreover, it encourages diversifying your income streams through side hustles or freelance work to cushion against financial uncertainties.
b. Learn Continuously
“Financial freedom is available to those who learn about it and work for it.”
Robert Kiyosaki
This principle also opens our minds to seek lifelong education, improving our critical thinking and problem-solving abilities. Adopting a growth mindset helps you view challenges as opportunities for growth and maintain a positive outlook instead of giving in to pessimism.
Check out these articles for tips on improving critical thinking and adopting beneficial mindsets.
c. Growth Mindset
Amor fati encourages developing a growth mindset, which is crucial for building wealth. It helps us stay committed, adaptable, and resilient in the face of challenges, keeping us focused on our long-term financial goals despite short-term obstacles. You may want to check out these articles on the methods and principles for setting goals that actually work.
For instance, if unexpected expenses threaten your savings plan, a growth mindset pushes you to reevaluate your budget, find alternative ways to save, and stay disciplined in your spending habits. This way, you can build a more secure future without sacrificing your present enjoyment.
Unlike a fixed mindset that views abilities as static, a growth mindset sees setbacks as opportunities for improvement. This fosters continuous learning and adaptation, essential for navigating financial growth uncertainties.
Check out my Pinterest posts below for daily inspiration.
4. Apatheia
“The goal isn’t more money. The goal is living life on your own terms.”
Chris Brogan
Apatheia, or equanimity, is about staying calm and rational, free from destructive emotions like greed. It helps us avoid making impulsive financial choices driven by greed or fear.
Greed
Greed is a major barrier to growing wealth because it can make you take unnecessary risks and lead to poor financial decisions. Chasing after more can bring problems you might struggle to handle, resulting in an endless cycle of pursuit and accumulation.
Money should be viewed as a means to an end, not an end in itself. Know what is “enough” for you—enough to fulfill your responsibilities and commitments. Have a clear idea of what it means to live a good life and learn to be content with what you have.
It’s essential not to fixate solely on accumulating wealth. Instead, aim for financial security and a comfortable lifestyle. True freedom comes when we are mentally and practically content with what we have. Keep it simple.
Adopting a mindset of sharing your wealth and success can also be fulfilling. Whether it’s donating to charity or volunteering for causes close to your heart, contributing to the community adds meaning beyond monetary gains. These actions not only benefit others but also enrich your own life with a sense of purpose and fulfillment.
You may want to read these articles on mastering contentment and Zen principles to help define your ikigai.
Fear
When you maintain emotional balance, you’re less likely to panic during market fluctuations or economic downturns.
For instance, if you see your stock investments drop suddenly, embracing equanimity encourages you to stay composed rather than rushing to sell in fear. Instead, you can evaluate the situation objectively, perhaps seeing it as a buying opportunity or a moment to hold steady.
This can also apply to job security fears. Instead of stressing about potential layoffs, it guides you to focus on what you can control, like improving your skills or building a diverse income stream.
By reducing fear, embracing equanimity helps you make thoughtful financial decisions, stay the course, and build wealth steadily without succumbing to anxiety.
Check out these articles for strategies on managing emotions and coping with stress.
Check out my Pinterest posts below for daily inspiration.
Craft Your Wealth-Building Blueprint
These principles together provide a solid framework for achieving financial success and stability. Building wealth isn’t a sprint—it’s a journey that demands dedication, smart planning, and a positive mindset.
By integrating practical strategies and cultivating good habits, you can overcome challenges more effectively and progress steadily toward achieving financial freedom within a relatively short timeframe. Embrace disciplined execution and Stoic principles to stay focused on your goals, make informed decisions, and enjoy the journey toward a stable financial future.
For practical strategies on money management, check out this article.
