In honor of Presidents’ weekend, we took a look at the Presidents and Founding Fathers whose faces grace our currency, to see what we can learn from them about money. Interestingly enough, in the case of many of them and despite the fact that they are all respected leaders, the lessons on personal finance to be drawn are frequently more about what not to do than what to do.
George Washington ($1 Bill)
“To Contract New Debts is Not the Way to Pay Old Ones”
“There is no practice more dangerous than that of borrowing money.”
At the time of the American Revolution, George Washington was one of the richest men in the colonies due to his vast real estate holdings. Real estate was the best measure of wealth in colonial times as each acre of farmland was essentially an income producing business. Despite his vast wealth, Washington was often times cash poor as the constant maintenance of his property was a drain on his liquid resources. When investing in real estate as Washington did, consider not only the return on investment but the amount of work required to maintain that investment. And although real estate can be an important component of your financial plan, it is important to strike a balance, and it is imperative to have liquidity and emergency reserves.
Thomas Jefferson ($2 Bill)
“The modern theory of the perpetuation of debt has drenched the earth with blood and crushed its inhabitants under burdens ever accumulating.”
Thomas Jefferson was down on debt and for good reason! Jefferson was notorious for living above his means and assuming debt to pay for nonessential items. He was also famous for lending money to friends without ever collecting on those debts. He died with enormous amounts of debt that burdened his family. You cannot be successful financially, if you are spending more money than you make and are assuming debt (that you cannot pay off), especially to finance frivolous spending. Take a lesson from one of our greatest founding fathers and live below your means.
Abraham Lincoln ($5 Bill)
“You cannot escape the responsibly of tomorrow by evading it today.”
Abraham Lincoln was cautious about borrowing and spending, but mostly he is remembered for his integrity. When, as a young man, he established a business partnership with a friend and due to heavy borrowing, the business went bankrupt, Lincoln stayed in town for several years to work off all of his debts while his partner ran away. This gave Lincoln the reputation as “Honest Abe” and helped his business and political career later. In today’s world, your credit score is used to monitor your “financial integrity”. Make sure you are keeping tabs on your score and paying your bills in a timely manner. Take a lesson from “Honest Abe” …. your future self will thank you!
Alexander Hamilton ($10 Bill)
“I may have mortally wounded my prospects. But my papers are orderly! As you can see I kept a record of every check in my checkered history. Check it again against your list and see consistency.”
Hamilton tracked every penny he made and spent. He was incredibly detail oriented. This is a very valuable trait in personal finance. Budgeting is only half the battle; you must track your expenses too in order to be accountable to that budget. If tracking is difficult, use a tool that wasn’t available to Hamilton in the 18th century, Mint.com. Create budgets, easily track your expenses, and plan for your future all with the click of a mouse. I think Hamilton would be a Mint.com fan if he were alive today (considering he was the founder of the federal Mint).
Andrew Jackson ($20 Bill)
“I have always been afraid of banks.”
Andrew Jackson was very distrustful of banks and understandably so. In the early 19th century, when Jackson was President, there was no FDIC insurance. Banks would routinely go out of business leaving depositors with nothing. This cycle of bank booms and busts led to much greater volatility in the financial system and regular “bank runs” (think It’s a Wonderful Life). Today, we enjoy the security of FDIC insurance on bank deposits up to $250,000. I think, if Jackson were alive today, he would agree that a savings account in 2019 is far more secure than burying your money in the backyard.
Ulysses S Grant ($50 Bill)
“Do you think anyone would be interested in a book by me?”
Grant was not infallible either. As a young man, he got involved in many failed entrepreneurial endeavors. Despite his military prowess, he was frequently taken advantage of. Following his presidency, he fell prey to an investment scheme; losing everything. Not only did he invest money in what was essentially a Ponzi scheme, he invested all of his money in it! In fact, the significance of his quote, was that he essentially had to write a memoir to refill the family coffers. We can draw valuable lessons from Grant on the importance of prudent investing and the value of diversification (not putting all of your eggs in one basket).
Benjamin Franklin ($100 Bill)
“If you know how to spend less than you get, you have the philosopher’s stone.”
“Our necessities never equal our wants.”
“Beware of little expenses: a small leak will sink a great ship.”
“A penny saved is a penny earned”
That Benjamin Franklin graces the $100 bill is certainly poetic justice. Franklin was frugal, for the most part, and focused his life on living below his means. Franklin is also well-known for his unique estate planning strategy. Although he did leave some of his estate to family, the bulk was left in trust to the cities of Philadelphia & Boston that would pay out over 200 years. This trust funded, among other things, the Franklin Institute in Philadelphia and the Benjamin Franklin Institute of Technology in Boston. Have you put the same level of thought into your estate planning as Franklin did? Do you have a will, living will, and power of attorney established? You may not want to leave a 200-year trust, but I think we should all take a lesson from Franklin and recognize the importance of having some measure of control over our money once we leave this earth.
To learn more about investing and personal finance, check out our Comprehensive Guide to Retirement Planning in NJ.