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4 Financial Lessons from America’s Founding Fathers Thumbnail

4 Financial Lessons from America’s Founding Fathers

America’s Founding Fathers created the foundation of a nation like no other. Each had goals and dreams, many with high expectations of what the United States of America could become. For today’s citizens, it may be possible to look back on these men and the financial insights they used as guides for inspiration. Here are some of their insights.

#1: The Importance of a Financial Education

John Adams believed financial education and insight were critical to have. In a letter written to Thomas Jefferson, he states, “All the perplexities, confusion, and distress in America arise not from the defects of the Constitution, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.” 1

There is little doubt that all Americans need to understand financial affairs, both their own and those of their country.  

#2: Compounding

Compounding is a process that might build value over time. Suppose you have an investment that creates a positive return. Compounding may occur when you reinvest those returns to gather profits while building up value as long as you do not suffer a loss. For some, investing early in life enables you to have a longer period of potential growth.

Benjamin Franklin had this to say about the importance of compounding. “Remember that Money is of a prolific generating Nature. Money can beget Money, and its Offspring can beget more, and so on. Five Shillings turn’d, is Six: Turn’d again, ’tis Seven and Three Pence; and so on ’til it becomes an Hundred Pound. The more there is of it, the more it produces every Turning, so that the Profits rise quicker and quicker.” 2

#3: Managing Money

While there is no quote to show it, George Washington was a man who tracked his spending carefully. During the war, he accepted the position as Commander in Chief of the Continental Army but refused to take a salary. Instead, he kept track of his expenses and requested reimbursement later. He did the same for most of his life, including managing his Mount Vernon estate. He accounted for each penny he spent.3

#4: Avoiding Debt

Thomas Jefferson shared words of wisdom on financial matters when he wrote the following to his granddaughter in 1811. He stated, “Never spend your money before you have earned it.” 4 He also wrote the following, speaking of living within your means. “But I know nothing more important to inculcate into the minds of young people than the wisdom, the honor, and the blessed comfort of living within their income, to calculate in good time how much less pain will cost them the plainest stile of living which keeps them out of debt, than after a few years of splendor above their income, to have their property taken away for debt when they have a family growing up to maintain and provide for.” 5


Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess. 

LPL Tracking #1-05283802




1 To Thomas Jefferson from John Adams, 25 August 1787, National Archives, https://founders.archives.gov/documents/Jefferson/01-12-02-0064

2 Advice to a Young Tradesman, [21 July 1748], National Archives, https://founders.archives.gov/documents/Franklin/01-03-02-0130

3 Revolution and the New Nation (1754-1820s), National Archives, https://www.archives.gov/exhibits/american_originals/acctbk.html

4 “Never Spend Your Money Before You Have It,” The Jefferson Monticello, https://www.monticello.org/site/blog-and-community/posts/never-spend-your-money-you-have-it

5 Financial Advice from America’s Founding Fathers, Kiplinger,