The Founding Fathers and Money

Benjamin Franklin may have coined the phrase, “A penny saved is a penny earned.” But, as it turns out, a few other founders of the United States of America had something to say on the subject of personal finance, too.

In the spirit of the Fourth of July, Kiplinger’s Personal Finance presents the timeless financial advice of our forefathers, echoed by the magazine’s own advice. Side-by-side, their suggestions and Kiplinger’s might just help you forge financial independence.

1. John Adams … On the Importance of a Financial Education:

“All the perplexities, confusion and distress in America arise not from the defects of the Constitution, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation.” – From a letter to Thomas Jefferson in 1787

Kiplinger wrote: “Isn't it amazing that so many people have barely a clue about how to handle their own money? Amazing maybe, but no mystery: Americans typically manage to navigate 12, 16 or more years of very fine formal education without ever learning how to balance a checkbook, size up
a stock or resist a fast-talking salesman of bad financial
ideas.” – From “How to Create a Budget,” July 2007

2. George Washington … On Getting Rich Quick:

“Few men have virtue to withstand the highest bidder.”

Kiplinger wrote: “With the housing market this decade, people were worried that they'd be left out, so their egos compelled them to take part in the housing boom ... I wish investors would focus more on fundamentals.” – From "How We Can Escape This Mess", June 2009

3. Thomas Jefferson … On Living Within Your Means:

“But I know nothing more important to inculcate into the minds of young people than the wisdom, the honor, and the blessed comfort of living within their income, to calculate in good time how much less pain will cost them the plainest stile of living which keeps them out of debt, than after a few years of splendor above their income, to have their property taken away for debt when they have a family growing up to maintain and provide for.” – From a letter to Martha Jefferson Randolph in 1808

Kiplinger wrote: “Budgets aren't straightjackets to keep you from spending your hard-earned money. Rather, they are the key to financial freedom... Knowing how much money you have and where it's going is liberating.” – From “The Trouble with Budgets,” May 2009

4. Benjamin Franklin … On the Magic of Compounding:

“Remember that Money is of a prolific generating Nature. Money can beget Money and its Offspring can beget more, and so on. Five Shillings turn’d, is Six: Turn’d again, ‘tis Seven and Three Pence; and so on ‘til it becomes an Hundred Pound. The more there is of it, the more it produces every Turning, so that the Profits rise quicker and quicker.” - From “Advice to a Young Tradesman, Written by an Old One,” (1748)

Kiplinger wrote: “When you save or invest, your money earns interest or appreciates. The next year, you earn interest on your original money and the interest from the first year... It's like a snowball -- roll it down a snowy hill and it'll build on itself to get bigger and bigger. Before you know it ... avalanche!” –
From “Behold the Miracle of Compounding,” November 2008

5. Alexander Hamilton … On What Constitutes a Sound Economy:

“Industry is increased; commodities are multiplied; agriculture and manufacturers flourish; and herein consists the true wealth and prosperity of a state.” – Report on Manufactures, 1790

Kiplinger wrote: “Who knows today what world-changing technologies might boost the U.S. and global economies in the next decade and beyond? Alternative fuels and vehicles? Biotech and medical devices? Desalination of water? Retrofitting an energy-wasteful world? Probably all of these and more … Prophecies of doom have always underestimated the ingenuity of humankind – our ability to meet new challenges with unforeseen solutions.” – From “Beyond the Lost Decade,” August 2009


Source: Kiplinger’s Personal Finance and Kiplinger.com.

Happy Independence Day! Again.

Mike