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On today’s newsletter:

• Exploring Ethics in Personal Finance

• Ethics and Values, the difference

Ya know, I was thinking about business ethics this past week as I came across a dilemma someone posted online about a real estate transaction. It was something along the lines of this:

93-year-old seller of a property, and you offer them 30% of the fair market value. Fair or Foul?

As you ponder this question which I’ll revisit later, it got me thinking of how business ethics is mentioned in business all the time, through corporate leadership, college classes, etc, but never in personal finance. As someone who went to school for personal finance, we only mentioned fiduciary duty.

Fiduciary Duty can mean different things depending on the niche context, but for the sake of personal finance, it means that whoever is managing your money has your best interest in mind, and that only. They won’t sell you investments that only benefit an advisor and not you, and so forth.

But that doesn’t get us any further. What are ethics in personal finance? Are there any? We’re not exactly businesses like Jay Z…

Creating Our Own Rules (Values)

Welcome to the gray area. As with 99% of things in life, the answer is “it depends”. Turns out, there are ethical standards, values, and moral principles. Each of us gets to choose how we want to abide by the ethical/moral standards we set for ourselves — And we would call that our values.

Yes, all of society has to follow the law, can’t steal, commit tax fraud, etc. — those would be the ethical standards we all must abide by personally. They are a system of rules that blanket all of us. But the way each of us treat our money and spend it is vastly different. What works for Johnny might not work for Jim. Hence our values. I think you see what I mean here.

Your values will help you decide:

• If you want a thing and have money to buy it, you will buy it

• Spending money on important things to you

• Reaching a specific financial goal

• Making a certain amount of money, and finding out how to do it

• Your comfort level with specific levels of income and expenses.

Nothing here is ethical or unethical. It’s not able to be categorized that way. It’s just how you want it to be. Values are a much guiding light that ethics when it comes to personal finance.

Fair or Foul?

Let’s return back to the situation of buying the property off of the old man. Fair or Foul? Well, this is a business transaction. So if you have ethical standards, that would apply here. Here’s some arguments for and against going through with this.

Fair:

• The old man is capable making decisions for himself and is aware of the fact the offer is 30% below fair market value from what his property is worth.

Foul:

• If you offered this in the first place not knowing if the old man was understanding about the property, the price, or the deal, this could be considered elder abuse. The sale could be reversed according to contract law in a specific jurisdiction due to the selling party not being aware. of the terms.

Takeaway:

Yeah - it seems there’s only one small minority situation where it would make sense going through with this offer in an ethical sense, but even making this offer in the first place doesn’t seem very ethical. Our values seep into how we conduct business and let this be an example of that, good or bad. I thought this was interesting thought experiment to intersect with personal finance, hopefully you thought about your values and ethics in a new light.

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Stay Frosty My Friends,

Andrew

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