The Way to Wealth was written in – believe it or not – 1758, and it still rings surprisingly true today. Benjamin Franklin was a superstar in his day; he founded a nation (the United States), penned the Declaration of Independence and came up with what can be considered the classic basics of personal financial success.
The book is about the small story of Father Abraham, a wise old codger who quotes universal truths about achieving success to a crowd of people waiting for an auction to begin. Abraham covers the gamut from rising early and developing a strong work ethic to gaining experience and taking counsel from others. It’s all still unbelievably relevant today, but the section on frugality, despite its folksy approach, packs a punch that may stun your average Canadian consumer and investor.
Take a look at a few of Father Abraham’s most famous quotes:
- “If you would be wealthy, think of saving, as well as getting.”
With recent changes to mortgage rules from the Finance Minister and the Bank of Canada sounding the alarm on rising debt levels , it seems as though Canadians may have lost sight of this kernel of wisdom. Where was Father Abraham these past 20 years as Canadians incurred mounds of debt, which now equals about 146% of their income?
- “Beware of little expenses; a small leak will sink a great ship.”
These words of wisdom relate to money management – being aware of additional charges such as bank fees and investment fees, for example. Keeping tabs on your cash flow and taking time to research the most efficient ways of managing your investments and bank accounts can save you unnecessary expenses. Also, watch for the little things that add up on a day-to-day basis. Try skipping your expensive latte habit a couple of times a week, brown bagging instead of eating lunch out or walking instead of driving to your local shops. These are just a few examples of little changes to your habits that can make a big difference to your bottom line.
- “Buy what you do not need, and soon you will sell your necessities.”
Do you ever unnecessarily eat out when you could cook at home? Buy new clothes when your old ones are fine? Or, worse yet, buy the latest electronic products when your old ones are still working? Here, Benjamin Franklin is drawing our attention to the cost of living beyond one’s means. He warns that by spending too much on luxuries, we risk not having enough for necessities, and affirms that this is foolishness at its worst.
Father Abraham continuously gives the reader timeless messages that really are the way to wealth. In this masterwork, what is old is new again, and Canadians, eager for some grounded financial advice, will be well-served to revisit this timeless gem.
Re-printed hundreds of times over the past 250 years, The Way to Wealth can be categorized as a true classic. This is the kind of small book you buy by the dozens and have on hand to give to anyone. It’s both amusing and stingingly true. The best part is that you can read it in less than an hour and, if you re-read it often, you really will learn the true and timeless not-so-secret secret of The Way to Wealth.
Some great advice from a sage individual. Mr. Franklin provides some refreshing restraint in today’s often spend-easy ways of North American investors. Unfortunately, many have not heeded this advice, and find themselves in those debt levels explained above that may get deeper if interest rates jump. A lot of highly-leveraged home owners may not remember the runaway interest rates of the early 80′s, which caused many people default and lose their property. Keep in mind that in Canada, there is no easy walk-away clause as exists in the US – if you owe more on your mortgage than the equity in your home, that is absolutely owed to the bank. Plus, bankruptcy is not like it used to be – you cannot just wish your troubles away.
I hope people learn from wise folks from the past. We all could use a little more care in our regular expenses and in our sizeable debt additions.
Thanks for bringing back this gem.
James