There are many people famous for being good with money. Bill Gates is consistently ranked in the Forbes list of the world’s wealthiest people. Warren Buffett is widely considered the most successful investor of the 20th century. Dave Ramsey’s debt-elimination programs are extremely popular amongst today’s financial community. However, if Benjamin Franklin were still alive today, he could have given all three of those men a run for their money (no pun intended).
Ben Franklin is probably most famous for being a Founding Father and scientist, but he’s also known for his evergreen financial principles. Let’s take a closer look at some money lessons Franklin can teach us today.
“Rather go to bed without dinner than to rise in debt.”
I’m sure Ben Franklin wasn’t a proponent of starving yourself in the name of preventing debt, but he does believe that slashing expenses to an extreme level is better than incurring debt.
Takeaway: Don’t live beyond your means. If you’re in debt, eliminate whatever you can to escape your debt as quickly as possible. Do you really “need” cable TV? That summer trip? Take-out lunches? Honestly evaluate your current situation and dedicate your newfound savings to paying off debt.
“If you would be wealthy, think of saving as well as getting.”
This one’s pretty simple… if you want to be financially wealthy, you can’t buy everything you want. Addiction to material possessions will kill your savings.
Takeaway: If you’re tempted to spend your earnings every time you get paid, do this first: take a set amount of money or percentage of your income and put it directly into a savings account every pay period to use only in emergencies. Eventually, you won’t even miss this money and will build up a nice emergency fund.
“Think what you do when you run in debt: you give to another power over your liberty.”
It doesn’t take a smart guy like Ben Franklin to remind us that being in debt is stressful. Anyone who has received calls from debt collectors or past-due bill reminders in the mail knows this reality. The fact is, when you’re so far in debt, your life choices are dictated by your debt and the need to pay it off. Everything else is secondary.
Takeaway: Don’t take on more debt than you can handle. For big purchases like houses, cars, or education, only take on loans that you know you’ll be able to pay off. For credit cards, shop as carefully as you do with cash. If you’re already ensnared in debt, use a tool like ReadyForZero to plan your payments and help you become free of debt as soon as possible.
“Beware of little expenses; a small leak will sink a great ship.”
Lastly, Ben Franklin stresses the importance of keeping little expenses in check. And for good reason– according to this infographic from GED Academy, the average American spends $1,092 on Starbucks and $145 on lottery tickets each year. Those $2 Powerball tickets and $4 frappuccinos may not seem like a lot as you’re buying them, but small expenses add up and can quickly derail your budget.
Takeaway: Keep an eye on your expenditures, whether it’s by writing everything down or using a program like Credit Karma to track everything for you. Huge shopping sprees are easy to diagnose and kill– it’s the smaller things that mount up and silently cause major damage.
Ben Franklin was and continues to be extremely influential in teaching generations the role of money in the economy. Keep his principles in mind and your finances will thank you. Good luck!
This post was written by Jenna Lee, who manages the social media channels and writes for Credit Karma, a free credit management website that helps more than 18 million consumers monitor their truly free credit scores.
Photo by tahnyakristina