Money Tips We Can Learn from Our Past Presidents
The third Monday of February is set aside to celebrate Presidents’ Day, and while George Washington and Abraham Lincoln would surely appreciate the honor, for most people it’s just another long weekend or a day off from school for the kids.
Another tradition we see across this great nation of ours is “Presidents’ Day Sales.” It’s a big shopping day, and retail businesses rely on it as a big kick to the first quarter. Shoppers can save up to 50% on everything from laptops and 4K TVs to mattresses, rugs, and furniture and from online retailers like Amazon, Best Buy, Target, Wayfair, eBay and more.
But instead of rushing to our nearest outlet store, let’s take a look at some money wisdom we can learn from past presidents:
George Washington
Diversify your investments
In the 18th century Virginia, tobacco farmers were making a lot of money from growing tobacco and exporting it to Europe. But Washington decided to stop growing tobacco, which was tough on the soil and becoming less profitable. So he moved away from the “sure thing” and instead invested in farmland with diverse crops (wheat, corn, flax, etc.) that were locally needed and didn’t require overseas shipping. [1]
We can learn from this in that instead of betting on that one “sure thing,” it might be better to diversify and not be overly dependent on any single investment.
Thomas Jefferson
Don’t spend beyond your means
When we think of Thomas Jefferson, we usually think of the Declaration of Independence, and the fact that he was our third president. What we don’t think about is that despite his penchant for constantly tracking his spending and his great political successes, he lived well beyond his means, and his final years were full of financial difficulties. As a result, he died almost completely broke. [2]
What we can learn from here is that it’s not enough to just track your spending. So, you know what you’re spending, but how much are you earning to support your spending habits?
Abraham Lincoln
Save your money
The Civil War comes to mind, and the emancipation of slaves when one speaks of arguably one of our greatest presidents in history. As far as finances go, Abraham Lincoln came from a modest upbringing in a log cabin and was notoriously frugal with his spending. He also managed to save his money and amass quite a small fortune.
Apparently, Lincoln's estate grew from $15,000 in 1861 to more than $85,000 at his death. The increase came mainly from his $25,000 annual salary as president. [3] In other words, he didn’t rely on investments and other income-generating activities but rather saved his money wisely and spent frugally.
There are many things to learn from presidents of years gone by, but these are some financial lessons worth heeding.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.