George Washington’s Money Lessons

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The father of our country learned his dollars and sense the hard way. Here’s what he had to teach us.

George Washington said: “As a very important source of strength and security, cherish public credit. One method of preserving it is to use it as sparingly as possible.”

Those are words to live by, and the father of our country certainly did. A recent review of the first President’s Mt. Vernon household budget  ledger reveals that George Washington was a scrupulous bookkeeper – if only a bit loose with his cash.

The website Wallet Pop has the goods, with contributor Jason Cochran visiting the former home of President Washington and taking a good look at his financial documents.

Cochran discovered that George Washington was a meticulous money manager, as well as being a multi-tasking businessman who ran successful enterprises, including a whiskey distillery and a fishing operation. While he did have accountants to help tally up the books, Washington, at the end of every business day, would take the day’s ledger to his quarters and sign off on it himself.

A closer look at Washington’s attitudes toward money and debt reveal some tenets that Americans can embrace more than 200 years later. Let’s have a look at four of Washington’s top debt management tips:

1. Borrow sparingly. George Washington may have owned a good deal of land, but early on in his business career, he was often short on cash. As a result, he often had to borrow money just to balance his books. The website Who2.com, in a bio of Washington, claims he “was land-rich but often cash-poor, and had to borrow money in order to get to his first inauguration.”

2. Never lend money to friends and family. Anyone who’s ever lent money to a cousin or close friend  – and waited impatiently for it to be repaid – knows this all too well. Washington did, too. He would regularly grant interest-free loans http://www.mainstreet.com/article/real-estate/buying/lending-clubs-amp-peer-peer-loans to his staff, even if he was struggling financially himself. American Heritage cites several instances in which Washington’s altruistic nature cost him financially:

Because his loans to individuals needing help were not business deals, yet often involved considerable sums of money, Washington was commonly torn as to terms. He did not like to charge interest, and, although self-preservation often dictated insistence on some security, he could rarely bring himself to foreclose. He was happiest when he could write, as in a loan of 302 pounds sterling (about $8,000) to a French and Indian War friend, Captain Robert Stewart, that it was “to be returned or not as it suited” Stewart’s “convenience.”

3. Invest in real estate. Sure, the housing market has been in retreat during the past few years, but overall, real estate is a good investment. In his later years, Washington had accumulated enough real estate to make him, on average, one of the wealthiest presidents in U.S. history. Atlantic Magazine recently named Washington and John F. Kennedy as two of our “richest” presidents (accounting for property, savings and other income in recent dollars). Washington, who had “massive land holdings,” was worth $525 million in today’s dollars.

4. Always lead a life of thrift. Later on in life, Washington made it a point to steer those close to him toward a life of thrift. In a letter to his nephew on July 12, 1997, Washington was crystal clear about the “danger” of deep, borrowing-driven debt, preferring instead the virtue of the pay-as-you go model where items and services are purchased at “the sweat of the brow.”

Those were words coming from the father of our country, at a time when debt-riddled Americans could have used some sage advice on debt and credit.

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