(Hello! Today, I have an amazing guest post to share with you. Matt from DistilledDollar.com gives us some keen insight into Ben Franklin and his genius approach to financial freedom.)
As an early American entrepreneur, Ben Franklin worked hard to expand a small printing business and set himself up to ‘retire’ at 42. Before reading this fact about the American Founding Father, I didn’t even know ‘early retirement’ was a possibility.
I use quotes above because everyone has a different concept of what it means to ‘retire’.
I don’t imagine I’ll be starting up any countries when I retire, but I have since been drawn towards that same concept of “early retirement”.
In simple terms, early retirement represents more time, and I think we would all agree with Ben when he said, “Lost time is never found again.”
If you’re not familiar with Ben Franklin, then allow me to share some facts about his life after retirement.
He invented the lightning rod at the age of 44. At the time it was a revolutionary discovery that made him world famous. To some degree, Ben became the world’s first rock star.
Immanuel Kant described him as the “new Prometheus.” Harvard and Yale gave him honorary degrees. His invention was soon found in cities across the world.
I highlight this event because it was made possible by the same mindset he developed through all his years of pursuing financial independence.
When he described his discovery of electricity and lightning to a colleague, he wrote,
“It is of real use to know that china left in the air unsupported will fall and break; but how it comes to fall and why it breaks are matters of speculation. It is a pleasure indeed to know them, but we can preserve our china without it.”
The same holds true for personal finance.
Franklin was practical.
Similar to Personal Finance, we can preserve and enhance our wealth by knowing the fundamentals. We don’t need to dive deep into abstract theories filled with formulas containing Greek symbols.
A great benefit of the internet is that we don’t need to carry out our own experiments. We can learn from the attempts of others to see what works and what doesn’t work.
And what better place to learn than from the early retiree Ben Franklin? While there are a lot of lessons to draw from his life, I’ve narrowed it down to five.
Five Lessons
There’s no doubt Ben Franklin accomplished a lot in his life. There is a reason he’s on the $100 bill.
The most valuable lesson Ben Franklin taught me has been to pursue financial freedom early in my life.
The first lesson was his attitude towards building wealth. Here was a man who accumulated a vast fortune by the age of 42 but he didn’t concern himself with accumulating money for money’s sake.
“I would rather have it said,” he wrote his mother, “ ‘He lived usefully,’ than, ‘He died rich.’ ”*Quote from Walter Isaacson’s Benjamin Franklin Biography
He lived usefully, and he still was in a position to gift away his fortune throughout his life.
This leads to a second lesson from Franklin: Compound Interest.
We all have seen examples, but Franklin was able to show us by leaving an example. The man prized practicality over theory so this is one of the few examples of compound interest (that I’ve seen) that is real.
Upon his death, he gifted Philadelphia and Boston about $4,400 each in today’s terms. He requested that a full quarter of the funds, about $1,100 not be used for at least 200 years.
After one hundred years, each city took out the majority of the fund to be used, as suggested by Dr. Franklin, to fund local projects.
After two hundred years, the Philly fund was worth ~$2.0M and the Boston fund was worth about ~4.4M.
Each fund outpaced inflation, but Boston took a riskier approach to investing (via the stock market) which led to higher gains.
The third lesson I took away from Franklin was understanding taxes:
“Taxes are indeed very heavy…but we have many others, and much more grievous to some of us. We are taxed twice as much by our idleness, three times as much by our pride, and four times as much by our folly, and from these taxes the commissioners cannot ease or deliver us by allowing an abatement. ”
We all pay a certain percentage of taxes to the government, but for the vast majority of readers, that bulk of our money is ours to keep.
The fourth lesson builds on the third, in that we can all but guarantee success through our work ethic.
My favorite line from Ben embodies this lesson, “But dost thou love life, then do not squander time, for that’s the stuff life is made of.”
Franklin believed each man had a contribution to make to society and that we should eagerly approach each day as we make that daily contribution. Life embodied a community of people working together for the common good.
There’s no surprise he believed in “We the people,” or advocated that, “If we are industrious we shall never starve; for…. at the working man’s house, hunger looks in but dares not enter.”
The last lesson from the eldest Founding Father was often intertwined with his discussion of work ethic and that is Frugality.
“If you would be wealthy…think of saving as well as of getting: the Indies have not made Spain rich, because her outgoes are greater than her incomes.” Ben later went on to say by avoiding excess consumerism, we have less reason to complain about taxes or hard times.
To Ben, frugality & a strong work ethic were necessary character traits to building wealth.
Franklin rose at dawn each day and recommended going without dinner, if that meant we could pay off our debts quicker. “Rather go to bed supperless than rise in debt”
This approach might seem radical today, but it embodied his strong desire to build wealth at an early age.
Even today’s fitness world owes him as they often reiterate one of his lines, “There are no gains without pains.” This quote represented another dovetail between frugality & work ethic that leads to a powerful combination.
I hope you can see why Franklin has had such a powerful influence on me. Many of the quotes used in this post come from a 6 page essay titled, “The Way to Wealth,” written by Ben Franklin nearly ten years after he started his ‘early retirement’. This short essay is still my number one recommendation when it comes to financial advice (or general advice for that matter).
Just as Franklin, “found electricity a curiosity and left it a science,” the early retirement community online is hoping to do the same with personal finance.
Perhaps the first step towards early financial independence and the freedom to walk away from a 9-5 job is to know it is a possibility. Once we realize it has been done before, by many people across many ages, then we know we can take action.
In light of this, I’ve modified one of Franklin’s most famous quotes, “early to bed, early to rise, and early to retire, makes you healthy, wealthy, and wise.”
The way you intertwine a founding fathers and personal finance is amazing. I never would have even thought about teaching through this style. One of my favorite quotes you had was “He lived usefully.” We often get caught up with money rather than leaving our mark on the world. Think we need to live for impact more than live to reach a certain standard of wealth.
My other favorite quote was “Rather go to bed supperless than rise with debt.” It really showed his dedication to becoming debt free. Some can argue he was being cheap and it is bad for his health but he was dedicated and clearly achieved his goals. There is no right or wrong way to financial freedom and he, through yourban writing, achieved it.
“He lived usefully” is aLeo my great summary.
Financial Independence is typically a multi-year journey, so it can be easy to get wrapped up in the wrong ways. Reading about someone like Franklin constantly reminds me that FI is one step on a broader path.
Very good post, Matt. That’s very interesting to know all this about Franklin. A good role model for us all. That’s funny how he would skip dinner to pay off debt faster…extreme, yes, but a good lesson buried in there. To retire early you have to take measures that nobody else would to help build net worth, can’t just follow the herd. Good read and good history lesson. Thanks Matt.
The Green Swan
Yep, he was a bit extreme in his younger days.
It is interesting how as he got older he would splurge a bit more on food or drink. Although, the increase in spending was only possibly because he saved and invested so much at an early age.
Thanks for the kind words and I’m glad you liked the post!
He splurged quite a bit in his older days, especially in his time in France (where the ladies simply loved him). But, by then dude earned it. He was a stark contrast to Jefferson, who was constantly buying books and furniture, for himself and others, nearly driving himself to the poor house. Poor Richard’s Almanac is a great collection of Franklin’s wisdom and advice, for those who want more. (And most are under 140 characters – dude basically invented Twitter too!)
That’s an interesting case study: Thomas Jefferson died broke (perpetually spending beyond his means), while Ben was financially independent early in life.
Such a great post, Matt. I don’t know a lot about Ben J. All I know is that he was a great inventor whose face is on the paper bill. Great lesson indeed. For me, Benjamin showed that financial freedom can be achieved. Sometimes, achievement comes in the price of being cheap and practical.
The society that we live in now is different from the society he lived. Even when these two societies are different, there are still lessons that are pretty much similar. Benjamin showed the practicality is necessary to achieve financial independence. He showed the frugality is also key. He believed in the power of compounding interest (even when the term may have not been coined during his lifetime). These are just some of the lessons that were present a long time ago and are still present up to this day.
Similar lifestyles, even in different ages, can lead to the same results…the ability to build wealth early in life and have the luxury to retire early.
I will never think of Benjamin Franklin in the same way again. Of course, I was previously familiar with his discoveries and quotes on compound interest. To read about the real impact of his philanthropy was awe-inspiring.
One has to wonder if Franklin would have been as successful in his early-retirement if he had the specter of debt and the commitment of a job hanging over his head.
Part of me thinks he was a talented individual who would have gone on to do great things no matter what, but you’re right.
If he wasn’t as frugal and didn’t have such a strong work ethic in his early days, then he would have been fighting against a strong current in the later chapters of his life.
” Lost time is never found again” is one of my favorites.
Another variant which I got from my wife’s aunt is “life is not a dress rehearsal”
Too often we forget the simple elements of time, living as we chase our goals . Finding the balance is often the answer.
Great post.
That’s a great quote!
Agreed, 100%. The pursuit of financial independence, or building wealth, or becoming more frugal…each of these pursuits can get out of hand. The best way I’ve gone about it is to make sure I’m aligned in a healthy way towards reaching my goals and having an understanding that my girlfriends’ goals are equally incorporated in. Together, we’re able to make strides in a less stressful manner.
It is truly amazing how many inventions, ideas, and concepts Ben Franklin is credited with. And to think his formal education ended at the age of 10.
Yep, he didn’t receive much formal education. Also goes to show what can be accomplished if you pursue self-education.
Ben Franklin formed a, “Junto,” or community of friends who also pursued constantly learning more and they would often share books and ideas. In some ways, the modern blogging community is an online Junto!
Wiser to learn from others’ mistakes than from our own.