9 Tips on Getting Rich From the Greatest Showman of All Time


P.T. Barnum knew how to make money. By the middle of the 19th century, the master showman had become America's second millionaire, and his estate was valued at over $10,000,000 prior to his death in 1891.

Fortunately for us, Barnum – who is still remembered today for his "greatest show on earth" -- shared his secrets for getting rich. In the short work "The Art of Money Getting" published in 1880, he laid out his rules for creating wealth. After reading them, I was struck by how applicable they remain today. Here are nine golden rules for making money, according to Barnum.

1. Spend less than you earn. Barnum writes that the key to wealth is quite simple: "it consists simply in spending less than we earn." Despite the simplicity of this maxim, he notes, "more cases of failure arise from mistakes on this point than almost any other."

The problem is that we need to be focused on both our expenditures and our income. Barnum shares an instructive story about a woman who cut her expenses by refusing to burn candles in the evening. She may have saved five or ten dollars by doing so, but she lost out on the knowledge she would have gained by reading during those hours. That benefit would have outweighed "a ton of candles." The bottom line for Barnum is that "true economy consists in always making the income exceed the out-go." 

2. Take care of your health. Good health is the foundation of success in life and is also the basis of happiness, according to Barnum. Without good health, a person is very unlikely to accumulate a fortune – he'll have "no ambition; no incentive; no force." He recommends avoiding alcohol and tobacco, while also making other healthy choices when possible.

Barnum was ahead of his time on this important issue. Health is a key component of personal finance. A University of Michigan health and retirement study in 2002 supports that view: it found that the mean household wealth of married couples reporting excellent health was approximately three times that of married couples reporting poor health (an average of $500,000 compared with $164,000). Living a healthier life is one of the easiest steps we can take on the road to building our wealth.

3. Persevere. To illustrate this rule, Barnum shares a line from Davy Crockett, "This thing remember: when I am dead: Be sure you are right, then go ahead."

Everyone must actively cultivate a sense of "go-aheaditiveness," according to Barnum, and must not become overwhelmed by the "horrors" or "blues." He found during his business career that many men gave up right before they would have reached their goal. Everyone will encounter difficulties and challenges – it's how you respond that determines whether you'll succeed or not.

4. Be cautious and bold. This one appears to be a paradox, but it is not, writes Barnum. He believes "you must exercise caution in laying out your plans, but be bold in carrying them out." A man who is all caution won't take on the risks necessary for success, while a man who is "all boldness, is merely reckless, and must eventually fail."

This rule is particularly relevant for the investing world. The very act of investing in stocks is a risky endeavor, as anyone who lived through the recent financial crisis of 2008-2009 knows all too well. And yet, stocks have delivered great returns for investors over the long term, and have been a tremendous way for ordinary people to create wealth for their families.

5. Use the best tools. Barnum believes that workers must always have the very best tools to do their work. As a businessman, he feels there is no tool he should be, "so particular about as living tools." When looking for employees, therefore, one "should be careful to get the best."

Barnum observes that good employees get more and more valuable each year, and that retaining them should be a priority. Recognizing the importance of your human assets – which Costco (NASDAQ: COST  ) and Starbucks (NASDAQ: SBUX  ) , for example, certainly do in today's marketplace – is an often overlooked strategy for creating long-term value.

6. Be focused. Barnum urges the aspiring entrepreneur to focus on "one kind of business only, and stick to it faithfully until you succeed, or until your experience shows that you should abandon it."

This rule is related to persistence in that sometimes we have to keep at just one thing until we're successful. Barnum warns that "many a fortune has slipped through a man's fingers because he was engaged in too many occupations at a time." As Steve Jobs realized, focus sometimes means "saying no to the hundred other good ideas that there are."

7. Advertise your business. Barnum was a remarkable pioneer in the field of advertising. For one of his promotions, he was able to transform a five-year-old dwarf named Charles Sherwood Stratton into "General Tom Thumb, Man in Miniature." Tom Thumb eventually became a gigantic hit in Europe, and was received by Queen Victoria and numerous other crowned heads-of-state.

Barnum with General Tom Thumb

Barnum believed strongly that you had to let the public know if you have something that will please potential customers. Without promotion, you will receive no return, even if the item in question is potentially quite valuable. When it came to advertising, Barnum was always willing to invest heavily upfront whenever he knew he had something people would enjoy. Nowadays, each of us should be willing to invest in ourselves or our business whenever we believe doing so will deliver larger rewards down the road.

8. Be polite and kind to your customers. P.T. Barnum actually never said "there's a sucker born every minute." Instead, he had great respect for his customers. He writes, "the man who gives the greatest amount of goods of a corresponding quality for the least sum (still reserving for himself a profit) will generally succeed in the long run."

He didn't think you could get away with not providing quality and value to customers, saying "people don't like to pay and get kicked also." Instead of thinking his customers were suckers, he thought they were deserving of respect and tolerance, since the customer is the man "who pays, while we receive."

9. Preserve your integrity. Barnum concludes his work by saying to all men and women, "make money honestly." He sincerely believed that the desire for wealth is laudable as long as the "possessor of it accepts its responsibilities, and uses it as a friend to humanity."

This final rule, in relation to Barnum's career, requires some context. In a lot of his promotions, he was known to bend the truth somewhat, so "integrity" might not have been the first word that came to the mind of his contemporaries. For example, he once exhibited an African-American woman who was supposedly 161 years old, and was formerly George Washington's nurse. When challenged about the truth of this promotion, he replied, "the story seemed plausible."

Despite Barnum's occasional "humbug," Brenda Wineapple, author of Ecstatic Nation: Confidence, Crisis, and Compromise, 1848-1877, points out that he had a keen sense of civic duty, and truly wanted to educate and delight his customers. In the end, Barnum believed that "money-getters" were benefactors for mankind. In his particular case, I think he was right.

 

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Read/Post Comments (6) | Recommend This Article (31)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 08, 2014, at 4:28 PM, commoncents wrote:

    He certainly seemed to be an interesting character. You might also enjoy reading Topsy by Michael Daly if you haven't already. I learned a lot about circus elephants, PT Barnum , and the current war between Edison and Westinghouse.

  • Report this Comment On February 08, 2014, at 5:59 PM, TMFBane wrote:

    Thanks for the book recommendation! It sounds really interesting. Barnum is a fascinating character. In many ways, he's a pioneer of modern business practices, particularly in the field of advertising.

    Best,

    John Reeves

  • Report this Comment On February 08, 2014, at 11:19 PM, Bujutsu wrote:

    Did someone say Michigan? Go Blue!

  • Report this Comment On February 09, 2014, at 3:15 PM, Risky88 wrote:

    I think more businesses could use this advice than investors.

    So many out there that only care about the bottom line and whats going on next week instead of the next 10 years.

  • Report this Comment On February 10, 2014, at 9:03 PM, bolshojdurak wrote:

    Somehow, it's amazing to me that these simple truths were known even more than 100 years ago. Why do so many fail today?

  • Report this Comment On June 03, 2014, at 2:20 PM, PennLin wrote:

    The top 5 investing and financial planning recommendations that work for just about everyone:

    1. Invest in low cost funds like Vanguard Index Funds.

    2.. Get rid of financial advisors who do not bring you any value. The 1% a year they cost adds up to enormous sums over a lifetime.

    3. Do what Suzey Orman recommends and trade in expensive whole life policies for Term life. Mine from LifeAnt costs $19 a month and I can sleep at night knowing my family is secure if anything happens to me. (you need life insurance if you don't have any).

    4. Diversify across equity classes, and between equity and fixed income funds of different average terms. Match your allocations to your age and risk profile, 70/30 equities/bonds is a good starting point for most people.

    5. Don't be afraid of alternative investments, a small business for instance, or real estate partnerships. There is a trap in thinking that our choices are so limited when there are many other options.

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