On having a philosophy of money
On people doing dumb shit with money
This post was more stream of consciousness than deliberately structured, but I’m publishing it to stake out a thinking space. This is a topic I intend to return to in the future.
Our ability to do stupid things is only exceeded by our ability to rationalize that stupidity.
The reason for saying this was a spectacularly dumb conversation I had with somebody about money. Now, the fact that people do dumb shit with money is not news. Reading this post about financial idiocy, you might reasonably ask, “And the sun rises in the east—what’s new?”
But once in a while you come across something so spectacularly dumb that it takes your breath away. Not in the way a great work of art or a beautiful sunset takes your breath away, but something that makes you regret life on planet earth. Something that makes you question whether humans deserve their place on this planet instead of some other, more deserving creature. Something so spectacularly dumb that if it were an art installation, it would fetch a couple of million dollars at Christie’s or Sotheby’s.
I work in finance, which means I have a front-row seat to a beautifully choreographed sequence of financial stupidity on a regular basis. Imagine a spectacular fireworks display, but for idiocy. Despite working in this industry for a decade, there are still moments of utter stupidity that blow me away, and I had one such conversation a few weeks ago.
One of the side effects of working in finance is that I’m occasionally subjected against my will to conversations about trading and investing with people who don’t know their ass from their mouth. In this case, I was forced to speak to a retiree who had ironically retired after selling financial products. He politely asked to meet me. I said, “Why?” He was hesitant, but I prodded, and he said he wanted to learn more about trading futures and options (F&O).
Mind you, this person is 65 years old and had been trading futures and options for a while. I’m 100% sure he would’ve lost money. How am I 100% sure? Because most people who trade F&O lose money. It’s mathematical certainty. This has nothing to do with my confidence or expertise—it’s numeracy. To deny that he’s losing money would be like saying the earth is shaped like a coffee saucer.
Now, I don’t want to judge this person. It’s entirely possible he just trades for thrills with small amounts. To which, again, a reasonable person with a reasonably sound mind—a person who hasn’t been watching too many reels, whose brain hasn’t shriveled into a dried husk, whose grey matter hasn’t turned to dust contained within the skull only because there’s no outlet for escape—would retort: I only do coke on the weekends for mental health reasons.
This depressing phone call got me thinking about why people do dumb shit with their money.
And of course, this isn’t a secret, and we all know why. We have tons of books, podcasts with bloviating hosts, and those idiotic personal finance books with authors standing with arms folded, grinning. The same smile that hostages held by the Taliban and ISIS put on when forced to smile for international media. We know the usual list: overconfidence, greed, illusion of control, ego, dopamine-chasing, social contagion, and a hundred biases (which I disagree with—that list of 300 biases is stupid, but nonetheless, we are “flawed”).
But here’s my theory, and it’s not a grand revelation: people do dumb shit with their money because they lack a philosophy of money.
As soon as you see the word “philosophy,” you might think, “Oh, here goes another content writer who has read way too many pop treatments of serious issues and is using the word ‘philosophy’ with the same reckless abandon that a kid who hasn’t been potty trained shits on a couch.”
I get it.
Philosophy has become a douchey word. Using “philosophy” in conversation is the surest way of getting labeled a snob. But here’s the thing: philosophy literally means “the love of wisdom.” Its original meaning was far from snobbishness. It represented a genuine desire to learn how to live a better life.
No matter how douchey you find my usage of the word, we all have a philosophy of life, whether consciously or unconsciously. I don’t mean philosophy in some grand metaphysical or ontological sense (I just wanted to use those words—I still don’t know what they mean). I use philosophy in the colloquial sense: a shorthand for our beliefs, values, ethics, morals, and frameworks.
Most people have an unconscious philosophy borrowed from others—a thin philosophy that doesn’t stand up to scrutiny. We imitate what we see in real life and movies, allowing ourselves to be shackled by the expectations of society, friends, family, and culture. As Oscar Wilde said:
“Most people are other people. Their thoughts are someone else’s opinions, their lives a mimicry, their passions a quotation.” ― Oscar Wilde, De Profundis
But some people deliberately construct a philosophy of life. Think of it as your operating system—the foundational layer running beneath all your thoughts and decisions. When you face a tricky moment, when a decision actually matters, this is what you reach for.
We all have one—whether borrowed from society or deliberately constructed. A philosophy should be a living organism, changing as we grow, as circumstances change, and as our values evolve. The same way we evolved from single-cell organisms into complex creatures capable of spending 70,000 rupees on silk underwear that retains moisture and makes your balls itch.
Here’s the paradox: people develop complex philosophies of life, but when it comes to money, they have nothing. No framework, no principles. They spend more time choosing underwear than thinking about what to do with their money.
They research the fabric, its comfort, its performance across seasons, its moisture-absorbing capabilities, and whether the antibacterial claims are real. We mentally run simulations on how the fabric would feel down south and up north—maybe northeast and northwest too. We think about its elasticity and the attendant downstream effects on certain critical organs. We think about the aerodynamics of the underwear. And if the advertisement claims antimicrobial properties, we simulate different pathways for microbes to enter our critical regions, our headquarters, running mental stress tests to see if the fabric can stand up to the invading microbial barbarians. The research we do in our heads about a particular undergarment is nothing short of taking a car for a test drive. Only in this case, it’s mental. And it’s down south.
But when it comes to money? Unless you’re born with a silver spoon, most of us spend years busting our asses to earn it. Decades in offices with miserable managers who say “synergy” and “circle back”—feeling like hostages. Then we make stupid decisions in an instant, without a second thought.
We invest because some moron recommended something. We ask what to do with our life savings on public forums filled with idiots who have the financial literacy of a potted plant. We get bullied into decisions because parents or relatives apparently know better than experts. The sheer stupidity of how we make financial decisions never ceases to amaze me.
Let me put this another way. If you have a kid, would you beat the shit out of him and break his legs? No. Why? It’s ethically wrong. We know right from wrong. But say you’re a parent who works your ass off to save for your kid’s college, their wedding, a comfortable life—whatever it is. Then, based on some misguided notion, you gamble it all away in the stock market or on a gaming app.
And don’t assume these stories aren’t common; they’re far more common than you realize.
Isn’t this the same as beating the shit out of a kid and kneecapping their future? It’s the exact same thing. But just because you don’t inflict physical violence, the act of inflicting financial violence somehow becomes reasonably acceptable. The sheer irony and the sheer absurdity of how people make money decisions are ridiculous.
And yes, one might easily retort, “Oh, it’s only uneducated people who make these mistakes.” Nothing could be farther from the truth. In my experience, there’s absolutely no correlation between financial success and formal education. Some people I consider financial role models, including my mom, have only primary school education.
Financial stupidity is also not limited by age either. Anybody is capable of doing spectacularly stupid things—whether you’re a 65-year-old retiree, a rocket scientist, or a 27-year-old working on artificial intelligence.
So what does a philosophy of money look like?
Simple: your financial philosophy should be an extension of your life philosophy. Your values about money should mirror your values about life. If you’re deliberate about life, be deliberate about money. If ethics matter to you in life, they should matter in money decisions.
Having a philosophy of money takes work because we have a tricky relationship with money. Though money is value-neutral, it gets tainted with all our hopes, fears, greed, past trauma, and childhood scarcities.
Money is never just paper or zeros and ones. It’s a container for all our emotions, hopes, fears, and desires. These emotional aspects don’t play well with logic and rationality. Realizing that is the first step toward a good financial philosophy.
Just like we carefully think about doing more good than harm in life, the same framework should apply to money. Why go out of your way to do dumb things with money just to chase cheap thrills when you wouldn’t do it with other ethical decisions? How can the same person spend days thinking about what’s right in one situation but act on pure impulse with money? The gravity of the outcomes is the same.
I know my continued use of “philosophy of money” is making this sound harder than it is. But a philosophy is just a set of rules that help you avoid the worst possible future. In fact, it can be as simple as spending less, saving more, not murdering your finances, and not murdering your future self.
Acts of financial self-sabotage surprise me because we have such high opinions of ourselves. We think we can philosophize, do great things, treat people kindly, and be magnanimous. All the stories we tell ourselves. But weirdly, none of this maps onto how we treat our own finances. This paradox bothers me—even though it’s obvious why. We’re operating in the 21st century with Stone Age brains.
I get that money is abstract. I get that it seems complicated, that some decisions are hard, that financial complexity has increased, and that there’s endless noise and ever-proliferating products. I get that with money there’s always a dance between fear and greed, and our logical faculties get compromised. But it’s the same with many aspects of life. Those forces operate everywhere. It’s just in other areas we tend to be more careful.
But ultimately, everything in finance more or less boils down to a small checklist. In fact, it boils down to just one item: spend less, save more. But I get that might seem unhelpful. So here’s a simple expanded checklist. Think of this as a basic financial philosophy. If you stick to it like grim death, you end up better than 80% of other people.
1. Think carefully about what money is to you.
This is at the heart of your financial philosophy. Just like an engine is necessary for a car to go forward, you need this to go forward.
Think carefully about how you treat money, how you spend it, how you earn it, and how it interacts with the people around you. What ideas about money are your own? What ideas about money are inherited from your friends and from your family? What are your money values?
Understand what money is to you, what you want it to be, what you want it to do for you, and where you want it to take you.
This is a bit like financial therapy for the self, where you are both the therapist and the patient.
2. Know the source.
People waste countless hours trying to maximize returns without realizing the biggest return comes from their human capital—a fancy, dehumanizing term for your future earnings potential. Your earning capacity is your biggest asset. It’s the single most important thing you need to nourish, protect, and improve.
Because the money you get from that—whether it’s a salary, your own business, or even charity work—that’s what enables you to save and invest. Protect the source. Understand the causality.
Beyond a point, any time spent trying to “optimize” and “maximize returns” is a giant waste of time better spent watching that rat eating pizza video on YouTube.
3. Learn the basics.
Benjamin Franklin said an investment in knowledge pays the best interest. Learning a bit about finance is probably one of the highest ROI investments you can make.
And to learn finance, you don’t need Greek and Latin symbols. Just pick up a decent personal finance book. Or have a good long conversation with ChatGPT and ask it to teach you the basics. But you need to know some basics. Without understanding what you’re doing, you can’t do the thing. It’s like jumping into a pool to learn swimming—it might work for one in a hundred people, but more often you’ll just drown.
The second reason: we live in a complex financial ecosystem. To judge good from bad, you need basics. Even if someone asks you to do X, how do you judge whether X is good or bad? You need some foundation.
I keep stressing “basics” because basics are all you need. You don’t need quantitative theory or modern portfolio theory. You don’t need research papers. Just the basics. A good personal finance book or a well-prompted ChatGPT session is more than enough.
Here are a few resources:
If you don’t want to learn, get a financial advisor. How do you get one? Tricky, but there are good directories with people who charge a small fee to take care of your finances. Here are a few links:
4. Pay off costly debt.
This should be your top priority. Most people forget that the interest on their loans is far higher than any potential return from the stock market. An average personal loan runs north of 15%. Credit card debt is worse—up to 49%. And there’s no fucking way you’re generating 49% returns by investing in the stock market long-term. That shit doesn’t happen.
5. Defense first, offense later.
I’m talking about insurance. Get adequate life and health insurance. Not those garbage LIC policies, ULIPs, or bank-sold insurance products. Pure term life insurance and good health insurance for you and your loved ones if you have dependents.
Term life is like bike insurance. You pay premiums. You die, someone gets the money. Otherwise you get nothing. You might think that’s a waste, but all those policies that promise both insurance and returns are scams masquerading as financial products. They give you lower returns than fixed deposits while offering horribly low coverage. You’re neither protected nor earning returns. It’s just a bad scam.
6. Set aside money for emergencies.
Life throws curveballs. Everything from a flat tire to a broken tailpipe to a friend in a pinch who needs money. Always have liquid cash set aside. Put it in a savings account, a fixed deposit, or a liquid fund. Doesn’t matter. The goal isn’t to maximize returns but to have it instantly available when emergencies strike.
How much? Whatever lets you sleep at night. Two months, six months, a year. This is a psychological number, not a mathematical one. You can even ask ChatGPT to pick a number and go with it.
7. Invest for your long term.
Know your goals. Simple rule: the shorter your financial goal, the safer your money should be. The longer your goal—like retirement—the more risk you can take. Don’t ask me to quantify risk. That’s deeply personal.
But here’s the thing: all you need are 4 to 5 funds. All of them should be index funds because there’s no point in picking actively managed mutual funds. They’ll charge you a bomb and then underperform. Active mutual funds are like a friend who talks a lot but can’t do shit. The gap between what they say they can do and what they deliver is big enough to drive a train through.
Pick simple index funds. A mix of Nifty 50 and Nifty Midcap 150 low-cost index funds is good enough. Add a government bond fund for diversification. If you think gold is a good investment, add some gold.
How much to invest in each? This is as much a psychological number as a mathematical one. You can run a mean variance optimizer, an efficient frontier, and a hundred other things. But ultimately, pick a combination between stocks, bonds, and gold that lets you sleep well at night. Start with 50-50 or 50-40-10 or 50-30-20, whatever works. Optimize later.
You’ll constantly be tempted to buy “higher yielding” products. People will constantly tell you index funds are bad, that they can generate better returns, and that they can beat Jim Simons and Warren Buffett and make them look like street dogs.
They’re trying to scam you.
8. Avoiding stupidity is more important than seeking brilliance.
Charlie Munger said this, and he’s right.
Avoiding financial disasters will generate higher returns than anything else I’ve mentioned.
What does this mean? The biggest disaster today is getting scammed—and scams can be witting or unwitting.
Witting scams: falling for stupid shit that friends, colleagues, relatives, or family tell you. You buy land and end up in litigation. You buy a scammy financial product. You join an MLM scheme. You actually think someone can generate 1-2% returns every month. You listen to your colleague, who’s supposedly a great trader who makes Jim Simons look like he just got lucky.
Unwitting scams are more insidious: crypto scams, WhatsApp group tips, and phishing links that compromise your bank account. Basically, any financial fraud.
Avoiding these generates maximum returns. Even if you keep all your money in a fixed deposit your entire life but obsessively avoid scams, you’re still ahead. I wouldn’t recommend that, but you get the point.
Your financial philosophy is not static. It’s dynamic.
Your financial philosophy isn’t static. It’s dynamic.
It has to evolve with your life circumstances. Things change constantly, and your philosophy must accommodate those shifting realities. This doesn’t mean the basics change—just that they need tweaking. Never stop learning, never stop being curious.
But most people avoid books like a smooch from a COVID patient.
Give. Give if you can. Be generous.
We’re relational creatures. We get so much from other people—time, help, kindness. It’s only ethical that we give back. Give to causes that matter to you, regardless of tax benefits. Give because it’s good for your soul. Give because it’s right.
What this looks like in practice
Let me give you one example of what a financial philosophy actually looks like.
In my case: resilience first.
I come from a typical middle-class Indian family, which means money was always a source of problems and deprivations. So for me, avoiding financial shocks carries more weight than generating “maximum returns.” Being financially bulletproof became core to my philosophy—whether I realized it or not. My first priority was always resilience rather than wealth. They might seem like the same thing, but being financially resilient means being able to absorb shocks first and foremost—to survive all the random, chaotic things life throws at you.
Jared Diamond calls this “constructive paranoia”:
“I’m paranoid. I think of everything that could go wrong, but I try to benefit from it.” That’s exactly it. Constantly thinking about the worst that could happen and being prepared for most of those inevitabilities is what makes me, ironically, peaceful.
That’s exactly it. Constantly thinking about the worst that could happen and being prepared for most of it is what makes me, ironically, peaceful.
Another core aspect of my philosophy is to “sandbox” money. In technical terms, a sandbox is an environment where you test code without worrying about damage to other systems. For me, money is a means to an end. It enables me to do things and gives me freedom to think about things other than money. It’s an enabler—not an end, but a means.
But money is like acid—corrosive. If you don’t sandbox it, if you don’t cordon it off mentally, it leaks out slowly and starts affecting other things that add enormous meaning to life.
Money is elastic. It’s not just physical—it’s imaginary, mental, and elastic. It can expand forever, shrinking the scope of everything else in your mind and occupying every waking moment if you’re not careful. What scares me most is thinking about everything important in terms of money—putting a rupee value on everything. That frankly scares the shit out of me.
Having a philosophy shrinks the scope of money in my head. It reduces the mental space money occupies and leaves room for other things that matter—things that improve the odds of thinking about what it means to be human and to live a meaningful life the way I define it.
Maybe it’s a miserable way to live. That’s fine. We never have a perfectly calibrated philosophy of life. These philosophies evolve and have to evolve. As Heraclitus said:
“No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.”
The same applies to a philosophy of money.
Your philosophy won’t look like mine. It shouldn’t. But having something—some coherent framework that extends from how you think about life to how you think about money—is what separates deliberate financial decisions from spectacularly dumb ones.
Because the alternative is what I witnessed on that phone call: a 65-year-old person gambling away years of work because he never stopped to think about what money actually means to him.
And that’s a tragedy that’s entirely preventable.
Hey Bhuvan, Like always i wait to read you thought dumps here, just got the notification and sat for 20 minutes and made me rethinking my own philosophy of money. Thanks again. Keep it coming...
i had so much fun reading this 🤣🤣 it is so important to define what money means to you. i loved the examples you used. money is just a piece of paper...it is just the meaning we assign to it.