What Stoicism Can Teach Us About Financial Planning

27 Jul What Stoicism Can Teach Us About Financial Planning

Many of us think of stoicism as someone who willingly endures suffering, without any display of pain or discomfort. Whilst there are some drawbacks to this philosophy, it also holds some useful insights into how someone can approach their wealth – particularly when it comes to investments.

The main principles of Stoicism can be traced back to the 2nd Century BC, and can be summarised as follows:

  • Happiness comes when we learn to accept the present moment.
  • Rather than be controlled by pain or pleasure, hold them both at a distance.
  • Use your mind to understand the world around you as much as you can.
  • Try to find out how you as an individual fit into the wider story of nature.
  • Act justly and fairly towards others.

The fact that much of this immediately resonates with many of us is testimony to how much Greek philosophy has influenced Western culture. Many of these principles can be applied, moreover, to a financial plan to help make it more successful and robust.

Let’s take a look at how the two fit together:

Accepting the present moment

The Greek Stoics taught that nothing beneficial comes from denying the realities of your present situation, ignoring them or trying to run away from them. Instead, accepting what is going on in the present moment is a key step towards the “good life”.

As a financial planner, I have seen how this shift in mentality can transform a client’s life trajectory regarding their wealth and finances.

Many people pretend that they do not face money problems, tax inefficiencies or uncontrolled spending. Instead, taking stock of where you are with your wealth is the first step towards getting your financial plan on track towards your goals.

Keep emotions at a distance

One of the difficult parts of being a financial planner is when you see people you care about making poor investment decisions, mainly because they are scared of what will happen in the markets. The Stoics taught that our emotions can be a brutal master – leading us to pursue choices which minimise pain and maximise happiness. Tragically, what usually results is a decision made which we think will benefit us in the short term, but in fact it only backfires.

When it comes to investing, it is crucial to not allow emotions to dictate what you do with your capital. Instead, pick a strategy with your financial planner which suits your investment horizon, financial goals and risk tolerance.

Then commit to it for the long term – only making adjustments to keep your portfolio in line with your chosen strategy.

Use your mind for understanding

This is another great principle from the Stoics. Those who seek to keep learning about the world around them, and their place in it, are more likely to navigate it well.

When it comes to your financial plan, the same principle applies. The more you learn about how money, markets and wealth work, the more successful you are likely to be.

You do not need to become a Financial Planner, of course. Yet building your financial education will help you avoid poor financial decisions later and open up more opportunities.

Act justly and fairly

This is another principle which is important for every individual to understand and embrace. Treating others with respect, dignity and justice is part of what makes us human.

This not only affects how we speak and act towards others – but also how we use our money and wealth. For people in 2020 who are looking to develop their financial plan with these virtues in mind, there are, fortunately, many options to choose from.

One idea might be to increase the presence of SRI (Socially responsible investing) and ESG investments (Environment, Society and Governance principles) in your portfolio.

Another might be to consider how charitable donations might feature within your estate plan – which, incidentally, might also help to mitigate your IHT bill.


There is a great quote by the Stoic, Epictetus, which nicely captures how the above principles apply to your financial plan:

“Philosophy does not promise to secure anything external for man, otherwise it would be admitting something that lies beyond its proper subject-matter. For as the material of the carpenter is wood, and that of statuary bronze, so the subject-matter of the art of living is each person’s own life.”

In other words, consider the “art of living” in your own case. Regardless of your belief system, ask yourself: are there ways that these Stoic principles might bring greater peace of mind, stability and clarity regarding your own finances?

Please do not hesitate to contact a member of the team if you would like to find out more about ethical and sustainable investing.