Ben Franklin's 8 Lessons of Personal Finance, AND YOU!
by Dan Loughin
Chapter Advisor, Reading Chapter
As an amateur historian, I am in awe of those that came before us; the men and women that helped form our country. One of these men was Benjamin Franklin, whom I’m sure you’ve heard of from the story with the kite and the key, the invention of bifocal glasses or the creator of Poor Richard's Almanac..
But there is more to Franklin than you know. He not only was once Governor of Pennsylvania, but he also served as the first Ambassador to France, the first Ambassador to Sweden, and the first Postmaster General of the United States. He was also an author, printer, political theorist, scientist, inventor, civic activist, and diplomat. He was a true everyman, that I’m sure could dunk a basketball or throw a 90 MPH fastball, had those sports been invented in the 1700’s.
As he was all of these things, he attained great wealth through his life, to the point where he was able to retire at the age of 42. As the knowledgeable man he was, he released his 8 lessons of personal finance to the general public, so that all may know how he did it. And I will share them with you now. Please keep in mind that while these were written in the late 1700’s, they are timeless, and still hold their value.
1) Understand The True Value of Things
If you’re going to go into business for yourself, or you’d be happy working in fast food all of your life, you need to understand that everything has a true value and a perceived value. The perceived value is quite easy to understand: it is what the average person would pay for something. The true value, however, is much more difficult to understand. I’m 30, and I still struggle with this on various different products and services. Just because something is priced at $20, it does not mean that said item is actually valued at $20. This is true of everything: from food to cars. Once you understand the true value of these things, you life, and financial situation, will drastically improve.
2) Be Self-Sufficient
There are plenty of us, most of the residents of this great country in fact, that work for someone else, so this point was made not to encourage running your own business (but if you do, more power to you), but to not rely on anyone else for money. Understandably, this is incredibly difficult, if not impossible, when you are 12. But when you reach your 20’s, it starts to become unattractive to anyone to beg your parents for money. By 30, it’s irresponsible. By 40, you should be reevaluating your life if you are consistently begging people for money to pay for things for you. Excluded from this, however, is if you live with your parents in your 20’s and 30’s and pay them rent. You are not free-loading off of them, as you are paying them money. This strictly means that you are financially independent of other people.
3) Invest in Yourself
Very simply, you are your best asset. You make money for yourself. You experience life for yourself. Get educated, by either going to school or learning from people who have obtained proper knowledge. Go to the doctor to keep yourself in healthy shape. Eat right. De-stress. Whatever you need to do to make sure your primary asset is protected is the best investment you can make.
Plain and simple, make sure your friends are the same “kind” of people you are. Figure out your personal values, and search out people who share them. I’m not talking about political or religious values, however; people of differing opinions in religion and politics can help a person grow as an individual. I’m talking about things like work ethic and family orientation. If you work harder than anyone you know, and one of your friends is lazy and takes advantage of you, it’s probably best that you are not friends with them.
5) Don’t Compromise Your Integrity for Money
Webster’s defines integrity as “adherence to moral and ethical principles.” In short, do sell what breaks your personal moral code, what you’ve told yourself you’d never, for an extra buck. Not only will you feel like you cheated yourself and anyone close to you, but you most likely will kill any chance of much more vast wealth down the road.
6) Steady Diligence Is the Way to Wealth
You hear the rags to riches stories, the one in a million shot that a person hit the huge jackpot at the lottery, that the person took the long-shot bet on the superfecta at the Kentucky Derby, and won over $1 Million. These are exactly what they sound like: once in a lifetime rarities that don’t happen to the average person. Franklin was saying that if you work hard, save hard. Don’t do things just to keep busy that won’t pay you (like 15 hours of video games on the weekend). If you stay on top of your work and your spending, you will eventually have financial wealth.
7) Time Is Money
Everyone has heard this phrase before, but Franklin is the first one to be attributed to the saying. Very simple, time is a finite resource. We get no more or no less than we are given when we are born. Money can grow, time cannot. If you stay diligent with your work and saving early on, then you can cash in your time on the back half of your life, and do things that really matter to you. Don’t let other people suck your time away. You are protective of your money; why not your time as well?
8) The Accumulation of Money Is a Means to an End