The 13 Virtues of Benjamin Franklin are:
- TEMPERANCE: Eat not to dullness, drink not to Elevation
- SILENCE: Speak not but what may benefit others or yourself; avoid trifling conversation
- ORDER: Let all your things have their places; let each part of your business have it’s time
- RESOLUTION: Resolve to perform what you ought; perform without fail what you resolve
- FRUGALITY: Make no expense but to do good to others or yourself; i.e., waste nothing
- INDUSTRY: Lose no time; be always employ’d in something useful; cut off all unnecessary actions
- SINCERITY: Use no hurtful deceit; think innocently and justly; and, if you speak, speak accordingly
- JUSTICE: Wrong none by doing injuries, or omitting the benefits that are your duty
- MODERATION: Avoid extremes; forebear resenting injuries so much as you think they deserve
- CLEANLINESS: Tolerate no uncleanliness in body, clothes, or habitation
- TRANQUILITY: Be not disturbed at trifles, or at accidents common or unavoidable
- CHASTITY: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation
- HUMILITY: Imitate Jesus and Socrates
To look deeper on how these Virtues can help you to create wealth, we take a look at the virtue of Resolution.
People often think that frugality means “doing without” and to deny the pleasurable things in life. Rather we need to look at it as a means of appreciating what we have, and to make the best use of our resources to accomplish goals we set for ourselves.
The means to achieve a frugal lifestyle will include the following practices:
- Reduce or eliminate costly habits, vices, and unhealthy foods.
- Reduce the amount of waste we create intentionally or unintentionally.
- Curtail the need for instant gratification by restraining ourselves from making unnecessary purchases.
- Improve efficiency by optimizing our time and streamlining the way we accomplish tasks.
- Defy the need to spend money on things just because it is popular. Some people try to “Keep up with the Jones’” without realizing that the Jones’ are currently deep in debt.
- Explore ways of getting the things you need for free or through the use of barter.
Frugality builds upon the Virtues before it. Temperance teaches us to restrain ourselves to attain a healthy lifestyle and not eat or drink to excess (care of self). Silence allows us to open our ears to ideas and solutions. Order allows us structure and a freedom from clutter allowing us to focus on our goals. Resolution is the practice of diligence allowing us to overcome short-term problems to attain long-term goals. Frugality puts to practice the lessons of the previous Virtues to gain and preserve wealth for the things we need or desire.
The book The Millionaire Next Door by Thomas J. Stanley and William D. Danko is a great study of real wealth. Buying expensive items simply for providing others the illusion that you are wealthy leads you to a cycle of depreciating assets. For example, the real value of $200 sneakers is simply the cost of materials and labor – or roughly less than twelve dollars. Once they are on your feet, you have just lost $188.00. Is that wise? Is it better to have a $40,000 Mercedes while paying over a thousand dollars a month on an item that depreciates in value (unless you can truly afford it), or a low mileage pre-owned pickup truck for $12,000 in cash? Investing the difference will allow you to buy things of real value, and save for the “want to have” items when you can afford them.
Do you think it may be too late for you? Even a person who is 44 and has little or nothing in their 401K can make enough contributions to allow for a comfortable retirement. Starting in 2009, the maximum federal 401K contribution limit for an employee is $16,500. If a person where to put away only the $16,500 for the next 20 years, with no matching employer funds and an average of 10% annual return, it is possible that this person will have $1,064,660, with an annual retirement income of $117,000 until the age of 90. Realistically, the average rate of return in the market over 30 years probably averages at around 7.4% and most employers have matching funds to add to your account.
For those of you that have 40 years left until retirement, consider maximizing your 401K contributions as well as contributions to a Roth IRA. Over 40 years, the potential results (depending on your personal risk tolerance, diversification, and market timing) could put you well over $10 Million in retirement savings.
Begin to Use Frugality in Improving Wealth
- From the list you created under Order listing all your expenses, determine all unnecessary expenses.
- Develop methods to help prevent you from unnecessary spending. Use the 30 day rule – if you want to buy something you want (not need) do not buy until after waiting 30 days to determine if it is really a purchase that is either necessary or you can afford without going into additional debt.
- Look for low cost ways to service and maintain your automobile and things in your home yourself.
- Put all available money into savings and retirement after your necessary expenses. Money left over can be used for your “wants”