Franklin's Funds

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.

4) Surround Yourself with Friends Who Share Your Values
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

I’m sure you’ve heard “money isn’t everything” or “money is the root of all evil” or “money doesn’t buy happiness.”  While true at the core, these sayings are flawed.  While money isn’t everything, if you value time as money, it becomes everything.  Money is not the root of all evil, greed is.  And while MORE money doesn’t buy happiness, you’ll  need money to live, and if you live correctly, you’ll be happy.  Take stock of what you want to do and how you want to do it before you start.  You don’t want to work in your 90’s out of necessity.  Use money to be able to retire as early as possible, and enjoy what life has to offer when you’re able to.

Discipline is not evil.

PREFACE: This column first appeared on another blog called Freemason Information. I found the article very informative and asked the author for permission to reprint it here, which he granted. Enjoy!

I recently attended a training session for a nonprofit organization whereby the intention was to teach new members the policies and procedures for the organization. I was there to assist. During the course of the program, the instructor explained the protocol for conducting meetings where the public may be in attendance. In addition to “Roberts Rules of Order,” the group had supplemental procedures for recognizing and answering questions from the floor. All of it seemed rather simple and straightforward, but there were a couple of young people in attendance, whom I judged to be in their mid-20′s, who seemed to be baffled by the instructor’s explanation. The teacher patiently repeated the procedure and demonstrated with some examples. This didn’t seem to help as the students were still at a loss as to what the instructor was saying. At this point, other students chimed in to support the teacher and tried to explain the concept to them. I even threw in my two cents. After much cajoling, they finally acquiesced and claimed they understood, but I wasn’t convinced they did.

As I was driving home that night I thought about the two young students and wondered why they were having a problem comprehending what appeared to be a simple concept. Aside from being younger than myself, I judged them to be relatively well educated. “Is it possible that I am more intelligent than they are?” I thought to myself. No, I like to believe I am well rounded, but certainly not in the category of being a genius. In all likelihood, we were probably comparable in terms of intelligence. So, what was causing the problem? Then it hit me, simple discipline.

Both tended to dress rather roughly to work and it wasn’t uncommon for them not to shave. Their speech and manners also hinted of the lack of social graces. Further, after observing their work habits, I found they had a reputation for bucking the system. They were far from stupid, but their nonconformist attitudes tended to get in their way of learning and adapting.

Not long ago I wrote an article entitled, “What’s wrong with a little discipline?,” which described the efforts of Caroline Haynes, a school principal in the United Kingdom, who was raising the test scores of her students by implementing strict discipline in the classroom.

More recently, Amy Chua, a Professor at Yale’s Law School in Connecticut raised some eyebrows with the publication of her new book, “Battle Hymn of the Tiger Mother.” which is a memoir of her experiences raising two daughters using strict parenting techniques. This resulted in considerable criticism in the media and by parents who claimed Ms. Chua was too hard on her own children. Maybe she was, but you cannot argue with the end result whereby her children, who are now entering their college years, are intelligent and socially well-adjusted, not to mention excellent musicians. They excelled not because they were inherently bright, but because their mother instilled a sense of discipline in them by challenging them to think and participate.

In an age of permissiveness, where parents tend to be lax in enforcing discipline, people like Caroline Haynes and Amy Chua clearly demonstrate that discipline is not evil, but rather quite beneficial. However, as both people have discovered, there is a general perception by the public that discipline stifles the expression of individuality and creativity. Consequently, parents tend to be intolerant of such things as school uniforms and corporal punishment in public schools.

Consider this, up until the 1960′s there were dress codes in public schools. For example, boys had to wear collared shirts, slacks, and proper shoes. Blue jeans, gym shoes, T-shirts, and shorts were a taboo. Further, there were hair codes which defined length and cut. If anything was out of place, you were sent home. Likewise, girls had similar codes. Dress lengths were checked regularly and there were certain ways you couldn’t wear your hair. Excessive use of makeup was also checked. This all changed in the 70′s when kids rebelled and parents began to insist their children be given certain freedoms which resulted in a “grunge” look that remains with us to this day. Is it any small coincidence that the rebellion of school dress codes in the 70′s led to a similar change in office dress codes in the 90′s? Hardly.

It is not my intention here to make a pitch for student dress codes or the re-implementation of corporal punishment, rather to point out the far-reaching effects from the lack of discipline by parents. As evidenced by the work of Haynes and Chua, there are benefits associated with discipline such as producing a trained mind that knows how to analyze, think, and take initiative to seek the proper answer (which would have certainly helped the two young students mentioned earlier). Discipline also forces the person to assume responsibility and gives them a sense of purpose. As such, it significantly contributes to their maturity. Further, it promotes teamwork by teaching uniformity and commitment. Discipline affects our thinking patterns, speech, common courtesy and decorum, all of which contributes to making a person more socially adjusted.

When it comes to discipline, nobody likes to be pushed, least of all myself, but I have learned to push myself when necessary. As a kid though, every once and awhile I needed a good swift kick in the rear end to get my attention and point me in the right direction. Even a nudge from a caring parent or mentor, given at the right time, can work wonders. That’s what parenting is all about. Unfortunately, not enough people are doing this. Maybe if everyone was required to serve a two year hitch in the military things would be different.

Some people perceive discipline as evil, that it does nothing more than “teaches trained seals how to perform” while sacrificing their creativity and spirit in the process. Such accusations are naive and misunderstand the purpose of discipline which is how to effectively channel skills and creative energies. Discipline represents a process whereby we learn there are consequences for our actions or inaction (“cause and effect”), that there are both right ways and wrong ways for doing things. No great or important object was ever built without some form of discipline. Ask any engineer, architect, musician, inventor, scientist, manufacturer or craftsman; they will all tell you that you cannot build anything of substance without discipline.

No, discipline is certainly not evil, but you have to wonder about the people who fail to instill it. Excuses abound to rationalize why they do not do so, such as they don’t have time, or they don’t want to inhibit their children. Some are plain and simply afraid to do so in fear of the legal system. When parents fail to teach discipline it defaults to teachers, coaches, and employers to do so, which is not necessarily their responsibility and may produce undesirable results. Understand this, for every person who fails to learn some form of discipline, they become a burden on society and, accumulatively, they represent a decline in our civilization.

Keep the Faith!

Note: Reprinted with permission. All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is a writer and the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim’s columns, see:
http://www.phmainstreet.com/timbryce.htm