The Latin expression "carpe diem," which can be translated as "enjoy the day," has been elevated to a main component of our culture. The most popular interpretation goes as far as recommending people to "live for the day." This advice comes often accompanied by sneering remarks about those who save for the future.
The sad story of artists and athletes who make a fortune and end up bankrupt a few years later is told by newspapers with monotonous frequency. The message seems to be that there is no other way or, even worse, that human beings are unable to learn from someone else's disgrace.
Nevertheless, an objective assessment of the problem shows that the great majority of middle-class citizens in any country never go bankrupt. This is not a coincidence, but the proof that self-discipline and common sense are widespread in society.
The horrid reports about financial irresponsibility that one sees on television represent conspicuous exceptions to the prudent mentality of millions of working men and women. This is not a new phenomenon and, without much effort, we can find traces of similar events in previous centuries.
The liquidity crisis that took place in London in the year 1826, almost two hundred years ago, was very similar to what we have experienced in the initial decade of the 21st century. Thousands of investors lost their fortune, including many famous personalities, such as the Scottish novelist Walter Scott.
You might know Walter Scott from his historical novels, such as "Ivanhoe" and "Rob Roy," which belonged to the the best-selling books of his time. If Scott had adopted the discipline of living within his income, which was considerable, he might have enjoyed longer and certainly healthier years.
Unfortunately, he overextended himself by investing in ruinous printing and publishing ventures, as well as by purchasing a large extension of land and building a majestic residence. When the businesses in which he had invested went bankrupt in 1826, he still had to face massive personal debts, that he was unable to reimburse.
During the next years, he worked frantically, trying to write more books to pay off his debts. His health deteriorated rapidly and, finally, he died in 1832, physically and financially exhausted, when he was only 61 years old. Was it worth it that he had incurred huge personal debts in order to build a mansion? These are some lessons to draw from such stories:
1. Live below your means.
2. Save some money every month, even if it is a small sum.
3. Take insurance to cover critical risks, such as major surgery or invalidity.
4. Conduct your business or profession in a prudent manner.
5. Choose slow but safe growth over wild and risky expansion.
6. Diversify your investments amongst many different assets.
7. Stay away from profligate individuals or businesses. Their tales seldom have a happy end.
The virtues of foresight and saving constitute the backbone of civilized society. Despite the negative stories presented by the media, millions of working men and women possess the habit of planning for the future. In fact, their prudent conduct and the ensuing peace of mind are what render them uniquely able to "enjoy the day."
JOHN VESPASIAN writes about rational living and is the author of the novel
”When everything fails, try this.” He has resided in New York, Madrid, Paris, and Munich. His stories reflect the values of entrepreneurship, tolerance and self-reliance. See
John Vespasian's blog about rational living.
http://johnvespasian.blogspot.com
