True wealth is not about luxury or status but more about economic security and financial freedom. True wealth means having enough assets and income that money no longer dominates our focus or our decisions and can’t steal our mental energy.
Wealth is about controlling our own days, having autonomy and the freedom to fill our lives with meaningful activities and people.
But, sometimes, folks can be their own biggest obstacle to achieving true wealth (described in the next section).
I, however, am very fortunate to work with clients who have achieved financial independence or, in the case of non-retired clients, who take the achievement of financial independence seriously and are well on their way to financial freedom.
I am very grateful to help clients on that journey as it is so rewarding, which makes my job very enjoyable.
Although I cannot make decisions for clients, I make recommendations that…
- maximize their probability of success,
- mitigate risks and threats to their financial independence,
- improve the after-tax value of their wealth through various tax planning strategies,
- give them the freedom to live their lives, travel and make meaningful gifts to family members,
- maximize the utility of their wealth by leveraging flexible spending strategies / spending guardrail analysis as opposed to simply following “rules of thumb” that leave too much on the table, etc…
But, at the end of the day, clients must be the ones to make the daily decisions that align with the financial blueprint we build together while avoiding the wealth destroyers. That’s where the stoicism described below comes in.
Stoicism
Professor Scott Galloway wrote a book titled The Algebra of Wealth in which stoicism is emphasized. ChatGPT summarized the key takeaway on stoicism as such:
Stoicism is a financial superpower
The “Stoicism” part of the formula is about controlling desires and emotions.
Wealth is often destroyed by:
- Lifestyle inflation
- Impulse purchases
- Keeping up with others
- Emotional investing
People who need less are harder to bankrupt.
I appreciate this takeaway. So often folks are their own worst enemy when it comes to building wealth.
We chase investment trends that really just amount to speculation / gambling, we try to keep up with our neighbors in the pursuit of material things, we don’t build (or stick to) a robust financial plan that drives prudent decision-making, etc…
From Professor Galloway’s own site on topic of Stoicism: https://www.profgalloway.com/the-algebra-of-wealth-3/
“Determine what you can and can’t control. You can control your reactions to temptation — a lack of discipline is the antichrist to economic security. Our society of superabundance makes this difficult. Billions of dollars are spent every year on schemes to manipulate our natural impulses into spending more money, consuming more fat, and believing everyone around us is more successful than we are. The upgrade from economy to premium to business to first class to private jet can seem like an investment in yourself — it’s not. The most powerful forward-looking indicator of your financial freedom is not how much you earn, but how much you save.
A specific activity accelerates in a bull market, conflating luck with talent and dopamine with investing. Diabetes, high blood pressure, and sharing a screenshot of your Robinhood gains are maladies of industrial production that exceed our instincts. Trading — distinct from “investing” — can feel like work and productivity. It’s not. It’s gambling, but with worse odds and no free drinks. One study found that over a 12-year period, only 5% of active retail traders made any profit at all. This time around, apps including Robinhood, with its dopamine-triggering confetti, and 24-hour-a-day, volatile crypto trading are the drugs of choice. Most day traders will be fine, suffering affordable losses … most. However, for many there are darker outcomes. Young men are especially vulnerable, as they are more risk aggressive. Between 80% and 85% of day traders are men, and 23% of men who gamble become addicted (as opposed to 7% of women). Most of us can gamble without becoming addicted, just as most of us can drink without becoming an alcoholic — but know the risks.
Stoicism is not just about remaining calm in the face of temptation. It means having good character. Succeeding in life is much easier if other people want you to succeed. We have a mental cartoon image of rich people as grasping and cruel. The reality, in my experience, is that wealthy people, in general, demonstrate strength, acumen and … kindness. Economic security is in the agency of others, and you want others to want you to win.
I spent the first 40 years of my life chasing some form of Western relevance so I could register more dopamine surges. Nothing was ever enough. More, I want fucking more … now. The pursuit always managed to distract me, and I was unable to get the engines of success and fulfillment firing on all cylinders. This stage of my life was characterized by fits of progress, getting close, but never achieving anything resembling the potential my opportunities warranted. In one moment that all changed for me: When my first son came rotating out of my girlfriend 13 years ago. In sum, shit got real. I was young enough to be selfish, but old enough to recognize it and acknowledge that I needed to change. I decided at that moment (no joke) to bring more focus and discipline into my life.”
