American Money: What Washington Teaches Us About Personal Finance

American Money: What Washington Teaches Us About Personal Finance

American money: What Washington teaches us about personal finance

The mythos surrounding the first president of the U. S. is a formidable thing. As impressionable kids we were shown a particular version of Washington — a pillar of virtue who could not tell a lie about chopping down a cherry tree. We’re taught to revere the man who led the Colonial Army to victory and took the helm of a new nation. George Washington, we’re told, was a figure worthy of respect and emulation.

But as is often the case with historical figures, there is much we believe that is not true.

A beacon of what not to do with your money

The real Washington — both flawed and brilliant — wasn’t exactly a personal finance exemplar.

In fact, as a man prone to living beyond his means, and with much of his wealth tied up in illiquid holdings, Washington was often short of cash. Famously he had to borrow money from a friend to make the trip to New York City for his Inauguration. He also feel into considerable debt to London merchant Robert Cary, who sold Washington an endless supply of luxury goods and fancy clothes on credit.

That debt, which would come to about $150,000 in today’s money, grew at 5% a year and hung over the new president for roughly a decade. He was only able to pay it after received yet another inheritance from his wife Martha Custis’s side of the family when his stepdaughter, Patsy Custis, died in 1773.

Martha Custis was the widow of a well-to-do planter and one of the wealthiest women in Virginia. When they married, her wealth passed to Washington — a well he returned to again and again. There’s perhaps a lesson here in pooling resources, but, as far as financial planning goes, relying on your spouse’s money to cover your missteps is hardly prudent.

And yet there is still much to learn from the great men of history. So let’s look at three lessons — many of them less than heroic — the real Washington teaches us about personal finance.

1. Shake off your mistakes

Everyone knows it’s unwise to dwell on your mistakes. That’s true of careers missteps, money mistakes, bad relationships … just about every sort of mishap. But what if your mistakes were huge? What if you, single-handedly, managed to stumble so badly it led to a massacre of innocents and the start of a world war?

As screwups go, there may be no greater example than the hapless Washington in his first military campaign. Eager for glory, yet lacking in experience or training, he led a band of militiamen and Native American allies in a campaign to surround a group of French men who were traveling near Virginia during a time of heightened tensions.

Washington lost control of his men and allies, who murdered the French. One of the victims was a diplomat. The French rallied forces and attacked Washington at a small stockade called Fort Necessity. Washington again lost control of his men, who chose to get drunk rather than mount a defense.

Washington was forced to surrender. And in one last epic fail, he signed a document written in French, even though he couldn’t read the language. That document included a confession to the murder of the diplomat. Armed with that confession, the French had the justification to launch the Seven Years (or French-Indian) War.

If it were you who messed up so badly, you’d likely reconsider your interest in the military. But Washington was stubborn and convinced of his fate. He continued to plug away at militia life, accomplishing little and was eventually denied his years-long quest for a commission in the British Army.

And yet, as the American Revolution dawned, Washington presented himself as the only one of the founding fathers capable of leading a military campaign against the world’s mightiest foe. And, well, the rest is history.

2. Invest in real estate

At the time of his death, Washington was worth around $780,000. What makes that figure impressive is it represented almost one-fifth of 1% — 0.19% — of the new nation’s entire $411 million gross domestic product. Translated into today’s world, that would come to more than $25 billion.

Nearly all of Washington’s wealth came from land. As a young man, Washington became a self-taught surveyor, a valuable trade in an era where vast tracts of land were uncharted. As he surveyed the land for clients, he entered into speculation, collecting properties whenever possible. It was a habit he continued throughout his life. Washington was forever investing in land he had first seen as a young surveyor or a young militia officer in the Ohio Valley.

3. Be a ‘practical reader’

Washington was an uneducated man. His formal education ended at the age of 11 when his father died. Washington’s mother wanted her son close to home, and she refused young George’s requests that he travel to England for advanced schooling.

His lack of a formal, classical education was a great source of personal embarrassment, according to Dr. Adrienne Harrison, author of “A Powerful Mind: The Self-Education of George Washington.”

Washington went to great lengths to hide his perceived shortcoming, often avoiding conversations or interactions where his lack of education might be uncovered.

More tellingly, Washington set out to teach himself, but only on topics that would prove useful. According to Harrison, our first President had no interest in the Classics, Enlightenment Philosophy or any of the other “serious” topics that consumed the other founding fathers.

Washington, according to Harrison, was a “practical reader.” He collected an enormous number of books, manuals and pamphlets that taught him ways to succeed. His library was filled with works on surveying, military maneuvers and the management of governments and armies.

Washington, it seems, would urge us to put considerable effort into studying those things that improve our finances and careers, while paying little attention to knowledge for the sake of knowledge.

The personal-finance lessons we can learn from Washington are ones of perseverance and practicality. They are about ambition, and stubbornness, and a lack of interest in things that cannot be measured. They are, in the end, the lessons we would expect from a land surveyor who built both a fortune and a nation.

This article is the second in a series on what America’s founding fathers can teach us about managing money. You can find more American money ideas, courtesy of Ben Franklin, right here.

This article originally appeared on Policygenius.
Image: Tony Baggett

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It’s All Greek to Me: Money Lessons from Ancient Greece

It’s All Greek to Me: Money Lessons from Ancient Greece

It’s all Greek to me: Money lessons from Ancient Greece

Much of the modern world traces its roots to the city-states of Ancient Greece. Democracy, philosophy, geometry and the medical profession all descend from the land of Aristotle and Achilles. Our sports are born of the Olympics, our military owes its power to the phalanx, our movies and novels are re-imaginings of Hellenic myths and plays.

But personal finance?

What in the world might Homer, Hercules, Helen and the rest have to say about the way we should handle money in the modern era?

Quite a bit, actually.

And the best way to learn those lessons is to start at the top … by looking to the gods.

Do the hustle

When the ancient Greeks turned their attention to the gods, demigods and other deities of Mount Olympus, they saw a world much like their own — marked by rivalry, love, violence, deceit, ego, and danger. And of all the gods, only one seemed to be willing to take the side of mere mortals in the earthly battles centered on money: Hermes.

Most of us would recognize a statue of Hermes, the good-looking young male dressed in winged sandals. (The Romans called him Mercury — money lessons from them right here.) But the modern world has forgotten the lessons of the fast-moving god.

Hermes was the gods’ messenger and a noted trickster. Stories of Hermes tell the tale of a deity interested in helping humans by deceiving other gods. And humans who absorbed those lessons learned that deceit was a powerful tool endorsed by the heavens.

No Wall Street mogul would be surprised to learn the trickster was the patron god of trade and commerce. And no grifter or pickpocket would be surprised to learn that Hermes the hustler was also the patron god of thieves.

What sort of world gives birth to a mythology that unites trickery and crime with business and trade?

A place where life is never easy, and playing by the rules is a recipe for stagnation.

Ancient Greece was the birthplace of rugged individualism … and with good reason. Across the hundreds of city-states spread throughout the Greek world, most wealth was held by a small land-owning aristocracy. Prior to the rise of democracy in roughly 500 B.C., Greece was a place that was very tough on the little guy.

And the usual way of making it in ancient cultures — small-scale farming — didn’t work very well on the rocky, hard-to-farm lands of Greece.

“You couldn’t really do agriculture in Ancient Greece,” according to journalist and author Will Storr, whose book “Selfie: How We Became So Self-Obsessed and What It’s Doing to Us,” says the roots of the modern world’s striving, vain culture can be found in the lands around Olympus. “To get along and get ahead in Ancient Greece you had to be this self-starter. You had to be making olive oil and trading it or fishing and selling your fish.”

No ancient culture loved the hustle as much as Greece did. The stories of cutting corners, misleading enemies, wearing disguises, hiding true intent, sneaking around and stealing things are rampant in Greek literature and mythology.

The 12 Labors of Hercules are a series of challenges that often revolve around pilfering things of value and finding tricky and easy ways to take on difficult tasks. Homer’s The Iliad tells the tale of a city destroyed by Greek soldiers who hid inside a fake horse.

Every modern personal-finance success story that began with a person refusing to accept their financial fate can be traced to the hustler god.

Get out of debt

In the modern world, we know all too well the worst corner to cut in finance involves debt. The temptation to borrow our way out of trouble is great. And our culture of easy credit makes it painfully simple for someone to slip into debt.

The ancient Greeks found themselves on that same slippery slope. And it took a legendary leader to get them back to solvency.

In the 6th century B.C., the people of Athens found themselves in over their heads. Primitive credit markets had emerged in which people farmed the land of the rich in exchange for a share of the crop.

But under the onerous terms imposed by the aristocracy, debtors who could not pay their debts could be enslaved. In some cases, Athenians sold themselves into slavery in order to free their families from such debt.

The situation could not hold. Lives were destroyed. And revolution loomed.

But the Greeks found an unlikely hero in an Athenian administrator named Solon.

Tasked with solving the problem, Solon reorganized all of the Athenian society.

Debts were reduced, the currency was revalued, and the Athenian class system was restructured into four distinct groups in an effort to lessen the aristocracy’s chokehold on land ownership.

Ask the experts

Solon’s solutions saved Athens.

But not forever.

New crises emerged, many of them tied to the city state’s finances. And by the fourth century B.C., the people of Athens decided that direct democracy, i.e., the people vote on everything, wasn’t working for fiscal issues.

So Athens moved toward a more republican structure for finance — electing financial officers to oversee the money and decide on spending.

The new system worked well. By the middle of the third century B.C., Athens had become the richest city on the Mediterranean.

And more importantly, the professional class of finance officers ensured the city-state stayed prepared for tough times. Even during times of peace, Athens spent more of its public funds on defense than on all other public spending combined.

It’s been centuries since Greece was the center of the world. And today that nation, home to a seemingly endless debt crisis, hardly seems the place to turn to for financial wisdom.

But it would be a mistake to forget it was the ancient Greeks that taught us the three core lessons of personal finance: learn to hustle, stay out of debt and ask an expert for advice.

This article originally appeared on PolicyGenius.

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