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Wealth Virtues Journal: November 13, 2009

Achieving Wealth Through the Practice of Moderation

Filed under: Franklin's Virtues: A Way to Wealth — Tags: , — James Ward @ 9:11 am
© 2009 Poor Richard Web Press, LLC

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The 13 Virtues of Benjamin Franklin are:

  1. TEMPERANCE: Eat not to dullness, drink not to Elevation
  2. SILENCE: Speak not but what may benefit others or yourself; avoid trifling conversation
  3. ORDER: Let all your things have their places; let each part of your business have it’s time
  4. RESOLUTION: Resolve to perform what you ought; perform without fail what you resolve
  5. FRUGALITY: Make no expense but to do good to others or yourself; i.e., waste nothing
  6. INDUSTRY: Lose no time; be always employ’d in something useful; cut off all unnecessary actions
  7. SINCERITY: Use no hurtful deceit; think innocently and justly; and, if you speak, speak accordingly
  8. JUSTICE: Wrong none by doing injuries, or omitting the benefits that are your duty
  9. MODERATION: Avoid extremes; forebear resenting injuries so much as you think they deserve
  10. CLEANLINESS: Tolerate no uncleanliness in body, clothes, or habitation
  11. TRANQUILITY: Be not disturbed at trifles, or at accidents common or unavoidable
  12. CHASTITY: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation
  13. HUMILITY: Imitate Jesus and Socrates

To look deeper on how these Virtues can help you to create wealth, we take a look at the virtue of Moderation.

We often refer to the virtue of Moderation when measuring basic human behaviors, most notably our propensity for excess food and drink (though Franklin expresses Temperance in that context). There is a clear line from those behaviors to our financial well-being. Excess in either of those two areas leads to dependencies and unhealthy weight gain. Those problems then lead to increased medical or dieting costs.

Moderation is a paradoxical virtue, and thus, one of the hardest to practice. In simple terms, moderation can lead to greater savings, leading then to more disposable income. If we do not continue to practice this virtue, our excess income can be used for things we want (versus things we need), which is not necessarily a bad thing, however the danger comes when we become dependent on our “wants”. If we begin to view our “wants” as “needs”, we will soon spend more than we expected.

Some problems occur when we have used moderation to increase our savings or in rare cases get an unplanned infusion of money as a gift, through inheritance, or by some other unexpected means. In many cases, the recipient never thinks about the best way to manage money in the long term. It has been stated that roughly one third of lottery winners in the United States depletes their winnings and are in debt or bankruptcy. Just search for “lottery winner bankruptcy” online and you will see numerous stories of those who had it and lost it. Much of this was due to the setting aside of moderation as well as a few other virtues and a lack of long-term planning, financial knowledge, and the belief that they should give money to friends and family who themselves are in no dire need of help. The practice of moderation would allow you one of those lucky individuals to assess the impact of saving vs. spending, and look to make charitable donations in a more organized and useful manner.

The second part of Franklin’s explanation of Moderation is to “forebear resenting injuries so much as you think they deserve.” Moderation helps us to measure the actions we take in things we see as unjust.

The 19th Century British Prime Minister Benjamin Disraeli is quoted as saying, “Moderation has been called a virtue to limit the ambition of great men, and to console undistinguished people for their want of fortune and their lack of merit.” He is correct to a point. But Benjamin Franklin focused Moderation on “avoiding extremes” and “forebear resenting injuries” as he saw those things as a hindrance to the path of true greatness preventing a person from focusing on their goals and ambitions. Disraeli merely looked at Moderation simply as being passive.

As you invest, Moderation plays a part in helping to diversify your portfolio. A good example of the lack of Moderation in investing is with the so called “dot com” or Internet Technology bubble of the 1990s. Many people invested a large portion of their portfolio in technology and internet stocks without diligent research on individual technology companies. The fall of tech stocks began on March 10, 2000 for various reasons. Many companies engaged in undisciplined spending, others were found to have little or no product with “legs” or long-term sustainability in the market as an example of possible causes. In any case, the lack of diversification among investors that did not use Moderation to diversify their portfolio with sound companies whether they were technology-based or not, led to major losses in their investment value.

Begin to Use Moderation in Improving Wealth

  • Examine your habits to see if there are things you take to an extreme. Examples are overspending, over-saving at the expense of necessity (hording), overeating, under-eating, etc. Any form of extremism comes with a cost to your wallet, health, or reputation. It is always good to get the opinion of others as it is often difficult for us to assess our own extreme behavior – unless you use the virtue of Sincerity to help you.
  • In your savings and investments, ensure your portfolio is diverse and balanced.

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