To say I’m a fan of the musical Hamilton may be an understatement. I’ve listened to the soundtrack more times than I can count and I’ve been known to quote lines in everyday conversations from time to time. I was even lucky enough to see Hamilton on Broadway recently. For those of you who might not be familiar with the musical, stop reading now and go listen to it. It’s okay I’ll wait.
While Hamilton doesn’t solely focus on financial matters, having listened to the soundtrack enough times, I started to realize that many of the themes contain some pretty good financial advice. So here are 10 lessons that Hamilton teaches you about your finances.
1. Take the time to review your finances
In the song My Shot, Alexander Hamilton claims that America needs to “handle our financial situation” and asks “what’s the state of our nation?” He is asking this at a time when America is in the middle of a war for independence that it is struggling to pay for it. However, this sentiment can apply to your everyday life as well. Life can be hectic and it can be easy to forget about your finances, but it’s still important to remember to take a step back occasionally and really take a good look at your financial situation. I review my expenses on a weekly basis to make sure I’m staying on budget, but even a monthly review is a good start. By frequently taking account of your overall financial plan it becomes easier to track your goals, allowing you to adjust sooner and get back on track if needed.
2. Think long term
Sticking with My Shot, Hamilton also claims that “for the first time I’m thinking past tomorrow.” When it comes to personal finances, it’s easy to focus on the next paycheck or next month’s rent, but in doing so, don’t lose sight of long term goals. Retirement may be 20-30 years down the road, but if you ignore it until it’s only a few years away, then chances are you won’t be adequately prepared for it.
If you have a difficult time working towards goals that are 20+ years away, try breaking them down into smaller, more manageable goals. Say you want to save $100,000 in 20 years. Instead of focusing on the end goal, break the $100,000 down into smaller, more manageable targets. You could look at saving $5,000 every year or $10,000 every two years. This way you can see if you are still on track every few years and can adjust, if needed, much sooner.
3. Don’t let one failure hold you back
When it comes to your personal finances, it can be easy to feel like you failed somehow. Maybe you made a bad investment decision (I know I sure have) or you lost your job and now struggle to cover your monthly expenses. Just remember that failure isn’t permanent and that you can work your way back to better financial ground. One of the main stories in Hamilton is Alexander Hamilton’s journey from being a poor child in the Caribbean to living in New York City where he becomes a Founding Father. In fact, when Hamilton was younger, a hurricane ravaged the Caribbean, destroying much of his livelihood.
However, Hamilton did not let this failure hold him back. Instead he focused on his writing until the community took notice and raised enough money for him to “book passage on a ship that was New York bound.” Even once he got to New York, Hamilton had his fair share of setbacks, but he didn’t let it stop him. He realized early on that setbacks were temporary and that by working hard you could overcome them. Had he not forged on, America would be a vastly different place today. So if you have a setback in your financial plan, it’s important to remember that not all is lost.
4. The importance of education
Alexander Hamilton knew the importance of getting an education. Continuing your education can greatly impact your finances. According to a 2013 study done by the US Census Bureau the household net worth of people with a Bachelor’s Degree was $147,578 vs. $66,943 for those with only an Associate’s Degree and $36,795 for those with only a High School Diploma. While these are just averages and it is possible to be financially successful without a college degree, these statistics highlight the importance of continuing your education. By furthering your education, you open yourself up to greater career prospects and therefore higher lifetime earnings. Even if you didn’t go to college, there are still plenty of ways to continue learning. Sites like Udemy or even YouTube offer excellent learning opportunities, so there’s no reason to ever stop learning something new.
5. Surround yourself with good people
Alexander Hamilton was friends with a lot of people that were key in creating America, most notably George Washington. Ultimately having this network helped Hamilton achieve many of his goals, like establishing a national bank. Just think, what would have happened if Hamilton had befriended the British army when he came to America? He most likely would not be remembered as the “ten dollar founding father.”
In your own life, it’s just as important to be careful with who you surround yourself with. It’s too easy to pick up bad financial habits from friends that aren’t as focused on their finances as they should be. Maybe your friends like going out to eat and always order drinks and dessert. You may be tempted to follow suit, but these extras can add up fast. While I’m not suggesting not to go out with your friends, I am saying it’s important to be aware of how your friends impact your personal financial goals. Next time you go out, order water instead or skip that piece of chocolate cake. And if you can’t afford to go out one night, be honest with them, they will understand. Maybe you will even get them to start thinking about their own spending habits.
6. Debt isn’t always bad
Hamilton’s justification for taking on national debt was that the “union gets a boost” by the inflow of additional money. When managed responsibly, debt can be helpful in personal finance as well. Just think about it, without debt you probably wouldn’t be able to buy the car you drive or the house you live in. Debt allows you to make larger purchases than you typically could if you had to pay the entire amount up front. Often people want to make extra payments to quickly eliminate debt, but if it is properly managed, then you may be better off just making the regular payments.
If you can comfortably make the monthly payments and after all your other expenses are paid still have money for savings, by keeping the debt you may be able to boost your total net worth by investing the funds that would have gone towards debt prepayments. If you can earn more than the interest rate you are paying for the debt, you will make more by investing that money instead of using it to prepay the debt. By doing so you are leveraging the debt to help increase your overall net worth. Just remember this only makes sense if you haven’t already overextended yourself and if you can earn more in investments than what you pay in interest, otherwise you would be better served prepaying your loan balances.
7. Success doesn’t happen overnight
Aaron Burr sings an entire song on this subject. In Wait for It he talks about how he believes he is destined for something greater and that he is willing to wait in order to achieve it. This is a powerful idea in today’s age of instant gratification. Too many times, it is easy to become discouraged if something doesn’t work out immediately. Instead of giving up, remember that Rome wasn’t built in a day (I have a sign on my fridge to remind myself of this every day).
Again, this goes back to the idea of achieving a long-term goal, like paying off a mortgage or saving for retirement. Both things take years of focus and dedication and in that time, there is going to be some ups and downs. Don’t get distracted by these short-term roadblocks. Just remember that success comes from persistence and that you aren’t going to achieve everything overnight.
8. Find your passion
Hamilton was passionate about providing America the best opportunity to succeed as a new nation. This passion led him to create a national bank, the Coast Guard and the New York Post newspaper. Passion is what drove Hamilton and it is what helped him become successful. That’s why it’s important to find what you are passionate about in life. Maybe it’s not your current job, but everyone has a hobby or interest that they’re passionate about. Finding and pursuing that passion is important. While ultimately that interest may not make you more money, pursuing it will lead you to a happier and more enriched life, which can be just as important as financial security. And who knows, maybe that passion project will lead to even better career opportunities.
9. Take a break
The number of unused vacation days for the average worker has reached an all time high. Constantly focusing on your work is unhealthy. As humans, we need time to relax and decompress from the daily grind otherwise stress and stress-related health issues can arise. Sometimes it can be hard to see what working so much is doing to you, but you need to remember that every now and then it’s essential to take a break and reassess what’s important in your life. I personally like to meditate every day. It helps me clear my mind and step away from all the distractions for a few minutes.
Hamilton would work “Non-stop”. He focused so much on his work that it caused the demise of many personal relationships and almost his marriage. Remember nothing is so important, whether it be work or your finances, that you need to constantly focus on or worry about them.
10. Don’t be afraid to take action
In the second half of the musical, as Hamilton is negotiating to establish the national bank he tells Burr, “You don’t get a win unless you play in the game,” Hamilton realizes that you can’t succeed unless you try. Simply sitting on the sidelines your whole life waiting for something great to happen will never make you successful. Sure, putting yourself out into the world for something you believe in can be scary, but it’s necessary if you want to achieve your life goals. Hamilton was aware that some of his positions were controversial, but he continued to stay in the public eye because he truly believed in his work. So, if you are passionate about something or want to achieve a goal, then stop waiting for the perfect moment because there’s no better moment than right now!
Any other Hamilton fans out there? Let me know how the musical has inspired you or just what your favorite song is!