Financial Lessons from our Founding Fathers
In 1776, our Founding Fathers signed the Declaration of Independence officially separating the original 13 colonies of the United States from Great Britain. In the spirit of one of my favorite holidays, I wanted to share some financial lessons from our Founding Fathers. I’ve put them to good use; hopefully, you will too.
“Don’t put off until tomorrow what you can do today.” –Benjamin Franklin
I agree with Ben Franklin. Procrastination challenges people and their finances. Unfortunately, it leads to plenty of unintended consequences. Some may not retire on time or have significant exposures in their financial plan. A little bit of effort can go a long way, so why wait?
“A penny saved is a penny earned.” –Benjamin Franklin
The truth is we all know about the benefits of saving. All too often, we fail to realize the power of compounding. Start saving soon, and often. Not only will your dollars accumulate quicker, but the interest earned on each dollar will magnify. I look at investing as a sprint and a marathon. The sprint is saving as much as possible now, so compounding works its magic. The marathon portion is time. It’s your best friend when it comes to investing. Saving first has an added benefit–it trains you. Think of saving as an expense and allocate 10%-20% of your income to it. It helps teach you to need less when you retire.
“Never spend your money before you have earned it.” –Thomas Jefferson
Occasionally, we all splurge. Trust me, I get it. But, my advice is to think twice if you can’t pay for it in cash. Ask yourself: Is this a need or a want? Purchasing something you can’t currently afford comes at a cost. If you treat every purchase this way, I’m certain you’ll start making better decisions. Remember, debts like credit cards come with a HEFTY interest charge that can prove difficult to dig your way out.
“As on the one hand, the necessity for borrowing in particular emergencies cannot be doubted, so on the other, it is equally evident that to be able to borrow upon good terms, it is essential that the credit of a nation be well established.” –Alexander Hamilton
Alexander Hamilton was right; borrowing is essential to any financial plan. Leveraging others’ capital is at the core of not only our country but our finances. It is how most of us can afford to go to college, purchase a home, start a business, and buy a car. Although I speak of the negatives of borrowing quite often, it is essential to acquiring the needs we have in our lives which help us succeed. However, there is constructive debt and destructive debt. It’s crucial to create good credit along the way and be knowledgeable about how to improve it. There will be a time where you’ll need to borrow large sums of money in a pinch. Having solid credit can be your saving grace. For some tips on how to improve your credit score, check out one of my older blogs on the subject: 7 Essential Ways to Boost Credit Score.
“Property is surely a right of mankind as real as liberty.” –John Adams
It’s OK to want fancy things. It brings enjoyment, a sense of satisfaction, and quite frankly you work hard to earn it. There is no need to feel bad if you accumulate lots of property, just make sure you can truly afford what you purchase.
“Remember, that time is money.” –Benjamin Franklin
Time is actually your most valuable resource. I frequently remind clients–everything has a cost. The question you must always ask yourself: is my time more valuable elsewhere? Most cases I find the answer is yes! For example, I’d rather pay someone to mow my lawn. Therefore, I can put the extra hour towards something else. Maybe it’s an extra hour at work, exercise, or most importantly, spend extra time with my family. These all remind us that time truly is our most valuable commodity. This is why I am very careful where I spend my time, so I can maximize every moment.
“Those who expect to reap the blessings of freedom, must, like men, undergo the fatigues of supporting it.” –Thomas Paine
Freedom comes with real effort. Part of that freedom is our ability to plan for our financial future. Put simply, there are very few short cuts in life. While it’s easy to quit when things get difficult, it’s the challenge which helps you achieve your financial goals. The journey may be exhausting, but I’ve found the outcome is well worth the effort.
“Born in the U.S.A, I’m a cool rocking daddy in the U.S.A.” –Bruce Springsteen
Ok, Bruce Springsteen is not a Founding Father of the United States. But, the Boss is (according to anyone from the great state of New Jersey and my father) a founding father of Rock n’ Roll! Life is short. We all have stress and responsibilities.
Thankfully, on the 4th of July we all are given the opportunity to forget life for a while. Turn up the radio and rock out! Celebrate your freedom – of life, health, and your (financial) future. Relax and enjoy the moment – it’s why we all work so hard in this great country. From this cool rocking daddy, enjoy your 4th of July holiday!