The ancient Stoic philosophers like Marcus Aurelius, Seneca, and Epictetus regularly conducted an exercise known as a premeditatio malorum, which translates to a “premeditation of evils.”
The goal of this exercise was to envision the negative things that could happen in life. For example, the Stoics would imagine what it would be like to lose their job and become homeless or to suffer an injury and become paralyzed or to have their reputation ruined and lose their status in society.
The Stoics believed that by imagining the worst case scenario ahead of time, they could overcome their fears of negative experiences and make better plans to prevent them. While most people were focused on how they could achieve success, the Stoics also considered how they would manage failure. What would things look like if everything went wrong tomorrow? And what does this tell us about how we should prepare today?
This way of thinking, in which you consider the opposite of what you want, is known as inversion. When I first learned of it, I didn’t realize how powerful it could be. As I have studied it more, I have begun to realize that inversion is a rare and crucial skill that nearly all great thinkers use to their advantage.
How I have applied inversion thinking to my finances
I started asking myself the following questions which bolted me to take action to prepare for worst case scenarios with my money:
1. While I was renting I wondered what I would do if I had no income. This forced me to fast track building a home for my family.
2. How will I survive during retirement? This question forced me to establish a long term pine forest project.
3. How long can I survive if I was fired from my job? This question forced me to start saving and I can currently survive for over a year comfortably.
4. What if inflation went crazy and wiped away all my savings? This question forced me to build a portfolio of real estate assets like land and houses which are not so susceptible to inflation.
5. What if I was unable to provide for my children’s education? I was forced to open up an education insurance product.
6. What if my organisation goes bankrupt and everyone is fired? This question prompted me to invest in a small manufacturing business and develop other multiple sources of income.
7. What if my home is repossessed by the bank? This question forced me to pay off all my loan obligations.
8. What if I had an emergency expenditure like a car wreck or medical illness? I was forced to invest in an emergency savings account.