Foundational Finances: Lessons on Money from Ben Franklin
This July 4 marks the 250th anniversary of the signing of the Declaration of Independence—a milestone big enough that it’s earned the tongue-twisting name semi quincentennial. To mark the occasion, we thought it fitting to revisit the financial wisdom of one of the document’s own drafters and signers: Benjamin Franklin.
Franklin wore many hats, including writer, scientist, statesman, diplomat, economist and publisher of both The Pennsylvania Gazette and Poor Richard's Almanack. It was in these publications that he wrote some of his most enduring, oft-quoted and practical insights on money.
Much has changed over the past 250 years. We’re in an economic environment that now includes things like the New York Stock Exchange, a federal income tax and a central bank, none of which existed at the nation’s founding. Even so, Franklin’s advice still rings remarkably true.
The Alchemy of Budgeting
“If you know how to spend less than you get, you have the Philosopher’s Stone.”
The Philosopher’s Stone is a legendary alchemical substance said to transform ordinary metals like lead into gold. Alchemists believed that the path to transformation required patience, strong method and discipline. And according to Franklin, budgeting, which follows a similar path, is just as powerful.
Carefully tracking how your money is used, spending less than you earn and harnessing your resources to meet future goals helps you transform dollars and cents into a rich and fulfilling life.
On Watching the Little Things
“Beware of little expenses; a small leak will sink a great ship.”
It's tempting to read this as a warning to skip your morning latte at the local café, but that misses the deeper point. That advice is outdated anyway. Franklin isn’t singling out any one expense; he’s cautioning against the slow accumulation of unchecked spending that quietly erodes wealth over time. A leak sinks a ship not because it's dramatic, but because it's unnoticed. It’s the reason, for instance, that we’re mindful of using low-cost funds to help keep expense ratios from taking an outsized bite out of your investment returns over time.
The Value of Ready Money
“There are three faithful friends: an old wife, an old dog and ready money.”
Franklin knew that financial security is about having resources you can count on when things go sideways. In modern terms, “ready money” is often useful. A cash cushion can help you avoid drawing income from investments if the market is down early in your retirement, for example, helping prevent your investments from taking a permanent hit.
Liquid savings in the form of an emergency fund can help you weather unexpected expenses without reaching for a credit card. Franklin wasn’t too keen on debt in general: “The borrower is slave to the lender,” he wrote. Ready cash helps you stay in control of your finances. That’s an important form of freedom.
Making Your Own Luck
“Diligence is the mother of good luck.”
When it comes to building wealth, you don’t have to rely on luck. Buying lottery tickets or taking trips to the casino rarely provides the building blocks of a sound financial future. The same is true of making overly large bets on the next hot stock. Not only is choosing a winner exceedingly difficult, but concentrating capital in a single stock also exposes you to undue risk.
What Franklin understood, and what the evidence consistently supports, is that steady, disciplined effort over time is far more reliable than trying to find the next hot investment. A long-term financial plan—one built on regular contributions, diversification and patience—is the closest thing to “good luck” that most of us will ever need.
Enough Can Be a Feast
“Who is rich? He that rejoices in his portion.”
More than once, Franklin pointed out that money alone has never made a person happy, and he was right.
Financial planning isn’t about accumulating wealth for its own sake. It’s about defining what you want your life to look like and building a plan to get there. That means setting meaningful goals, understanding what “enough” looks like for you and finding satisfaction in the progress you’re making.
We’re committed to helping you pursue a rich life in every sense of the word. Consider us your co-pilot as you navigate the intersection of money and the pursuit of happiness.
Questions? We offer a complimentary 15-minute call to discuss your concerns and explore how we can assist you.
A Weekly Perspective on Planning and Markets
Each week, we share The Week in Review — a short collection of articles on
financial planning and wealth management, along with a brief overview for context.
One email per week. No promotions, no sales – just clarity.
Stordahl Capital Management, Inc is a Registered Investment Adviser. This commentary is solely for informational purposes and reflects the personal opinions, viewpoints, and analyses of Stordahl Capital Management, Inc. and should not be regarded as a description of advisory services or performance returns of any SCM Clients. The views reflected in the commentary are subject to change at any time without notice. Nothing in this piece constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Advisory services are only offered to clients or prospective clients where Stordahl Capital Management and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Stordahl Capital Management unless a client service agreement is in place. Stordahl Capital Management, Inc provides links for your convenience to websites produced by other providers or industry-related material. Accessing websites through links directs you away from our website. Stordahl Capital Management is not responsible for errors or omissions in the material on third-party websites and does not necessarily approve of or endorse the information provided. Users who gain access to third-party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from the use of those websites. Please note that trading instructions through email, fax, or voicemail will not be taken. Your identity and timely retrieval of instructions cannot be guaranteed. Stordahl Capital Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.