How U.S. Presidents Manage Money

Megan Gorman is the author of All the Presidents’ Money: How the Men Who Governed America Governed Their Money. Gorman is also the founding partner of Chequers Financial Management.

In this podcast, Motley Fool personal finance expert Robert Brokamp caught up with Gorman for a conversation about:

• What FDR, a “bit of a trust fund kid,” did if he needed money.
• How Ronald Reagan’s humble beginnings impacted his finances.
• Why a Great Depression president was a great investor.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on July 06, 2024.

Megan Gorman: If FDR needed money, he simply wrote mother. So when you look at the correspondence between him and his mom, there’s always talk about money. Hi, I need this money for this or this money for that. He also was a bit of a trust fund kid, so, I love the fact that when you go into his stories, he used to do what we would call today angel investing.

Mary Long: I’m Mary Long, and that’s Megan Gorman, the founding partner of Chequers Financial Management. A fee-only financial planning firm in San Francisco, California. She’s also the author of the upcoming book, All the President’s Money: How the Men Who Governed America Governed Their Money. It comes out this September. Robert Brokamp caught up with Gorman to learn about how Jefferson, FDR, and Reagan, managed their finances, which president was the best investor, and the financial costs of being Commander in Chief.

Robert Brokamp: Let’s start with the history and the current financial benefits of being president. What salaries have they earned, what expenses were covered, and what did they have to pay for out of their own pockets?

Megan Gorman: Robert, it’s interesting because we’ve really only had six different salaries for the presidents. So today, our president is Joe Biden. He is getting $400,000 a year. Now, what’s really interesting is, if we go all the way back to when we had our first President, George Washington, from Washington to Ulysses S. Grant, they made about 25,000 a year. Then they got a pay increase to about 50,000, and that was from Grant to Theodore Roosevelt. Then when President Taft took over, he got another pay increase to 75,000. That 75,000 went until Harry Truman. In 1949, they gave Truman a raise, which is really important to his money story, which we’ll get to in a bit, and Truman started to make $100,000 a year so we paid presidents $100,000 a year through LBJ. Then in 1969 with Richard Nixon, we raised it to 200,000, and that salary went all the way through to Bill Clinton. Then starting with George W. Bush, they moved it up to 400,000. It’s been a nice salary, but you have to remember the presidents are responsible for a lot of things on the personal front. Don’t laugh, but they are responsible for all the food that is served at the White House. If you actually read or listen to some of the things that the presidents and the First Lady say, this is something that drives them crazy because it is incredibly expensive. You hear stories of John F. Kennedy just going absolutely bonkers with his team when they would have cocktail parties, and he would tell the White House butlers, “Don’t fill the champagne glasses up until they drank the whole glass” because he didn’t want to overspend on the expenses. Other things that they’re in charge of is gifts for other heads of state, dry cleaning, clothing, private events, so it’s actually not the best financial move to be the president if you’re just doing it for the salary, because there’s a lot of expenses tied in. However, it is really good today in our modern era to be the president, because the post-presidential life is incredibly lucrative.

Robert Brokamp: Very interesting. Your book features all kinds of triumphs and travails of most of the presidents. I asked you to choose three that you felt had particularly interesting or enlightening stories. Your first choice was our third president, Thomas Jefferson, who was in office from 1801 to 1809 and, of course, the primary author of the Declaration of Independence. Regularly ranked by presidential experts as among the 10 best presidents, but he wasn’t nearly as good with his personal finances. Tell us about how Jefferson managed his money.

Megan Gorman: Jefferson is a great case of what not to do. In fact, I always feel like Jefferson’s on a pedestal, this brings him down to be a mere mortal, like the rest of Americans. Jefferson grew up on a plantation, and he actually inherited his share of his father’s estate, about 5,000 acres, including Monticello, when he was 14 years old.

He just was far more focused on things like going to college and so on, and in fact, when he went to college, he was known to be a bit of a partier and spend a lot. He never really focused on some of the basic nuts and bolts of finance that we focus on. He really didn’t focus on learning how to budget, and he didn’t really learn how to manage illiquidity.

Illiquidity is one of those sneaky little things that can come back and really bite you. Jefferson started to engage in a little bit of borrowing today with the hopes to pay it back tomorrow. Of course, as we all know, historically, he gets caught up in all of the great moments of his day, including getting sent to France, where he gains an even greater appreciation for the good life. Robert, I know you’re a CFP, and when we think about people who often have issues with money, what we often find is that they’re not good with connecting to their future self. When I work with clients, what do we often ask? We say, where would you see yourself 10, 20, 30 years from now? Most clients would say, I want to be retired and have my mortgage paid off. Jefferson probably didn’t have that ability to do it, and I think some of it was due to the fact that most of the time during that time period, people didn’t live a long time. His wife died fairly young, his father died fairly young, so the idea of connecting with an 80-year-old self is very challenging. What happens over the course of Jefferson’s life is he keeps pushing things forward. He’ll figure out a way to pay for it the next day.

We get to the end of his life, and he has so much debt. The equivalent of probably close to two million dollars in today’s dollars in debt that he has to reckon with, potentially selling his prize possession Monticello. He engages in what they often did back then, he decides to put it up as an auction and sell lottery tickets. The lottery tickets and the auction appears in the newspaper. You got to think about it, this is someone, it’s probably 40 years since the Declaration of Independence, President for two terms, people revere him, and now he’s trying to have an auction. People are horrified.

A group of people come back to him and they say, look, this probably isn’t the best thing, let us try to raise money for you. They stop the auction but they never really raise enough money for Jefferson. The great tragedy is Jefferson dies, still in debt, and his family inherits these assets that are covered in debt, and they have to start selling things off. There’s testimony from slaves who were part of the Monticello Plantation, who were sold off to other plantations and split apart from their families because he couldn’t manage debt. I bring him up because I think there’s something so human about this with him and something that makes him like a lot of us. It’s really hard today to manage expenses, and I think the modern American, as we sit here today in 2024, struggles with affordability. We might call it inflation, but it’s really affordability that we’re struggling with.

Robert Brokamp: Let’s move on to the second president that you chose. It was Franklin Delano Roosevelt, the 32nd president. Office from 1933-1945. Often ranked among the top three presidents, along with Washington and Lincoln. He was born into a wealthy family, and for good measure, he married another Roosevelt, Eleanor Roosevelt, who was his fifth cousin and Teddy Roosevelt’s niece. What was FDR’s relationship with money like?

Megan Gorman: FDR is a really interesting character. He’s one of those presidents that we all feel we know, but when you actually try to get to know him, he’s hard to get to know. But his letters give you a lot of insight into money. One thing you have to remember with FDR is we focus on the Roosevelt money, but the real money that FDR had came from the Delano money, his mother’s money. His grandfather was involved in the opium trade in China, and actually built a fortune, lost it, and built it again, so the trusts he inherited from his mother’s side were larger than even the trust he inherited from his father’s side. His father was an older man, so his father died fairly early in his life, and his mother was the trustee of his trust. Just think about this dynamic there.

This is a very educated man who growing up, didn’t spend a lot of time with his peers, was always with adults, but he always has to be asking mother for money, and so he doesn’t have a lot of those formative experiences, like having a first job and having to budget, and thinking about saving. If FDR needed money, he simply wrote mother. When you look at the correspondence between him and his mom, there’s always talk about money. Hi, I need this money for this or this money for that. He also was a bit of a trust fund kid. I love the fact that when you go into his stories, he used to do what we would call today angel investing.

He invested in dirigibles, like Goodyear blimps. He invested in early technology in that, lost all his money. He also invested in this crazy lobster thing where he wanted everybody in America to eat fresh lobster. Which is crazy to think about because lobster is a very wealthy person’s food, but he wanted to have it shipped all over the country. Invested in this lobster company in Maine. At the end of the day, the company was not run the right way, and he put more money in it after more money in it, and finally, he said, that’s it, I’m out. He probably lost a couple of hundred thousand on that. He just wasn’t into the nuts and bolts. But what he did that was amazing with money is despite the fact that I wouldn’t put him as a great money manager, when he gets stricken with polio, he becomes focused on curing polio. It’s hard Robert for you and I to probably relate to this today, but in 1921 when he was stricken, polio frightened Americans. It could have been a lifetime and an iron lung.

When you read his correspondence during this time period, he’s looking for a cure, and he finds these springs, he’s actually introduced to springs down in Georgia, they’re called the Warm Springs, and he goes there in 1924, he goes into the springs, and for the first time in three years, he can move his legs, and it’s amazing. They actually have video of him, which is amazing to see him doing this. He decides, this is it. He’s going to cure polio. He’s going to find a way forward. He takes two-thirds of his trust fund, and he buys this spring that’s attached to this inn that is falling apart. It’s basically bleeding money. In fact, his business partner, Basil O’Connor, basically goes down there and says, look, let me try to help you with this, because FDR thought, oh, I’ll run this, and wealthy people can come here and use the springs, people with polio can come here and use the springs.

But wealthy people didn’t want to use the springs with people with polio. What’s amazing with FDR here, and this is important for people to understand this, he knew he could not build it up. He was busy on running for office and so on, so he found in Basil O’Connor, a great partner, a great steward to help him manage this. It managed it to such a point that first, they were a Warm Springs Foundation, then they became the National Infantile Paralysis Foundation that found the vaccine for polio.

But what FDR understood was that he couldn’t do it himself, so when you’re sitting there and you’re trying to figure out, how do I manage money? How do I make myself financially successful? I would really tell you, be like FDR and find a good steward. Find a great CFP or financial advisor or tax advisor who can really help you navigate the complexity. Of course, as we all know, FDR does help us find a vaccine for polio, although it occurred 10 years after he dies. But a really inspirational story.

Robert Brokamp: He had trouble funding after the Great Depression, so someone came up with the idea of having basically birthday balls where people would send in dimes, which was the foundation of the March of Dimes, which funded the polio vaccine.

Megan Gorman: It’s amazing. Could you imagine a president today getting every American to send in a dime? There’s no way. But he had this way with people. He knew he couldn’t manage the dimes when they got to him. He had someone who’s going to manage the dimes. But he had everybody send dimes in and he transformed charity because before this, charity was just something that the wealthy did. After this, charity was something that all of us could do, and that polio vaccine was something all Americans created. Each of these birthday balls he had generated about a million dollars for him from the charity.

Robert Brokamp: Wow.

Megan Gorman: Which is unbelievable. He really created something unbelievably unique in charity. I think we can still tip our hats to him today for transforming how this all works. Every time you’re doing things like biking for a cause or walking in the Susan G. Komen Foundation’s events, that’s a little bit of FDR coming forward with us.

Robert Brokamp: Very interesting. For our third financial biography, you chose our 40th president, Ronald Reagan. In office from 1981-1989. Unlike Jefferson and Roosevelt, Reagan was not born into wealth or even a particularly stable family, so tell us about how his humble beginnings and maybe somewhat troubling childhood affected how he managed money.

Megan Gorman: Reagan was actually interesting to explore. I’m born in the 70s, I remember Reagan as president, and he always looked so polish, so wealthy. But Reagan grew up in Illinois in a small town, and his father was a shoe salesman at a department store. If you go into the history of the United States, department stores transformed America. But his father was an alcoholic, and Reagan to his credit, never saw it as anything more than a disease, which I think was wonderful. But his father would get paid, and as his father would walk home, he would go into all the bars, and by the time he got home, all the money was gone. His mother was a very church woman, very strict, and she would try to keep them meeting ends until ultimately, what would happen here is that they would have to leave town to find a new place to rent because they didn’t have money.

But Reagan absorbed these experiences in a very unique way. He learned from watching what happened with his father and how his mother budgeted that if he worked he would be able to budget. Of course, we all know he was a lifeguard. That’s a famous story of his. But when he got to college, which actually he wasn’t supposed to go to college, because he didn’t have money, but he went with his girlfriend on the day she moves into college, and the football coach gets one look at Reagan. He’s basically a big, tall, broad guy. Looks like an amazing football player, and they create a football scholarship on the spot for him, which is unbelievable. Reagan also worked while he was in college. He worked at a fraternity and helped out.

But Reagan was really good at building and creating stepping stones, so he would look to build relationships with men who understood more than he did. This was really important. One of his earliest guides and mentors was his girlfriend’s father who impressed upon him the ability to save. Then, of course, Reagan makes his way to Hollywood, and as he gets into Hollywood, he learns how to negotiate contracts. He gets his first contract, where he’s making about $10,000 a year in 1937. As he makes his way along, he learns through relationships to meet people who end up getting him to be in position to become the president of the Screen Actors Guild. From that, he connects with a gentleman named Lew Wasserman, who was a big agent of the time.

Lew Wasserman has a client called GE, and GE wants to put on this weekly show in the 50s, where it would be a television show with different plays, musicals, variety acts. He convinces GE to hire Reagan, and Reagan gets paid $125,000 a year to do this show. He does the show, and he also travels the country speaking to GE employees. He really starts to build wealth here. That was the amazing thing, when Reagan had the ability to make money, he would budget like nobody’s business. In fact, it was almost too frugal at times. When he and Nancy Reagan bought their first home he had budgeted such that he said, Nancy, look, we can buy the house, but we’re not going to have furniture for a while, and Nancy was fine with it. That’s what’s so amazing, Reagan is a good example of finding a spouse who you can connect with. Ronald Reagan and Nancy Reagan were very well aligned when it came to money. You can see today when you go to the Reagan Library, the fruits of all of his labor. He was amazing with money, and he didn’t let having an alcoholic father impede him at all from that.

Robert Brokamp: Truly, a great rags-to-riches story. Let’s move on to a lightning round here in which I give you a series of quick questions about presidents and their money. You ready?

Megan Gorman: Yeah I’m ready. Let’s do it.

Robert Brokamp: Which president was the best investor?

Megan Gorman: This is easy. Herbert Hoover. Now, Herbert Hoover ranks as one of our worst presidents. He was our president in 1928 to 1932 during the Great Depression. Hoover, however, when it comes to money, unbelievable. Grew up in Iowa. His parents were actually middle class, but they both died and left him an orphan. His mother actually had life insurance on her. Hoover was a Quaker, and so what the Quakers did was really unique. He had a guardian his uncle, and then the Quakers had a financial guardian for him and a senior elder. When Hoover needed money for school clothes, food, he would have to budget it out with his guardian, and they would submit it to the financial guardian to get money. Hoover learns really early on how to budget. This skill propels him because he continues to grow on it. We get it into the book. He goes to Stanford. He becomes a geologist during his time at Stanford. But when he gets out of school, he can’t find work, so what does he do? He goes to the Sierra Nevadas, and he actually goes into the mines and learns mining literally from the ground up, so that when he gets a job with an engineering company and they send him to Australia, he’s going around on camels in Australia, and he sees terrain, and he says, there’s gold here. There’s something here.

He writes back his bosses in London and says, this is where we should really mine because I think there’s something here. Basically, they go into the mine, and he’s right, and he becomes an owner, and he ends up over the course of his life owning mines all over the world. I think his most prosperous mines were in what was Burma back then today, Myanmar. But what’s interesting in this lightning round really quickly is, Hoover was also very charitable. He used these skills to always give money to friends, families, institutions. His budgeting skills were so strong, he used them after World War I and World War II to help fight off the starvation that was going off in Europe. He worked with Truman and Coolidge to help them on those things.

Robert Brokamp: We talk about Reagan as a good rags-to-riches story. Is there another one that stands out to you?

Megan Gorman: Lincoln’s obviously the obvious one. Grew up, Log Cabin. But there’s actually another person that was actually just as poor as Lincoln was, and arguably even poorer, but he’s not as known, is Millard Fillmore. When historians talk about his childhood, they consistently say incredibly deprived, really poor. Hence he ends up getting an apprenticeship at a mill, and he hates it. But it gives his family money because they didn’t have much money, and it gives him a little bit of money to take part in this traveling library, and the traveling library lets him learn enough that he ends up clerking and becoming an attorney. Over the course of his life, he is pretty much upper middle class, but after his presidency, his wife dies, and his second wife is wealthy. Millard Fillmore does what a lot of presidents did, and that is they married up, and so his wife was wealthier and he finished his days in Buffalo, New York, one of the wealthiest men in town.

Robert Brokamp: Which first lady and president did the best job of managing money as a couple?

Megan Gorman: A lot of them did great jobs. You can’t lose sight of that. I just mentioned Ronald and Nancy Reagan, but I always love LBJ and Lady Bird. Like Millard Fillmore, LBJ married up. Lady Bird came from money. In fact, her mother died when she was young, and Lady Bird had a pretty significant inheritance that her father and uncle had taught her to manage. They worked really well together. She was very grounded, and LBJ was that aggressive, intense, passionate idea person. Those two skills kept them in check. I would probably tell you them. I would also briefly tell you John and Abigail Adams had a little habit that they did with each other that I think helped them with money discussions. They always wrote their letters to each other, to my dearest friend. They were talking about money in their letters, but when you couch it to my dearest friend, you can’t really be like, why did you spend that, my dearest friend?

Robert Brokamp: [laughs].

Megan Gorman: You tend to be nicer about it, and I think that’s a good trait to have.

Robert Brokamp: A good story you tell in the book about LBJ and Lady Bird is that they bought a struggling radio station in Austin. I’m thinking maybe it was in the ’30s or something like that, but basically, it stayed in the family up until 2003, and the family sold it for over $105 million. Quite a success story there.

Megan Gorman: Complete success story. What’s interesting with the presidents is sometimes just the normal stuff that happens. From a political lens, they can build a lot of craziness into it. LBJ gets criticized for this radio station over the course of his career. But truth be told, they did run it. They worked hard at it. They took risk to do it and build it, and it’s a great story.

Robert Brokamp: What fact about a president or his money do you think most people would find most surprising?

Megan Gorman: I think that most people would find surprising is that up until Ford, if you were president and after you left the White House, there was no guarantee you were going to have money. A lot of our presidents went back to work after the presidency, or they simply died. It was one or the other. Jerry Ford was the president who changed this. When he finished the presidency, he was very clear, he was like, look, I’m young, I’m in my early 60s, and I’m a capitalist, and I’m going to go make money, and he does. He gives speeches, he joins boards, he writes a book. He and Betty have the first joint book deal of any president and first lady. He’s the one who really transformed it, so every president from Ford on, they really should tip their hat to Jerry Ford and the fact that he changed the optics of presidents making money.

Mary Long: One of the things he did was basically be a spokesperson or an ads person for The Franklin Mint, which some people thought, I think they used the word tacky.

Megan Gorman: [laughs].

Robert Brokamp: But it didn’t seem to bother him too much.

Megan Gorman: I look back at some of the stuff I found when people were critiquing him for doing these medals with the Franklin Mint, and I think, oh God, we were so pure back then. Today, that would barely garner a notice based on what presidents are doing. Michelle and Barack Obama have a production company. Donald Trump has new golf courses all around the world and a wine. It’s very different today with how we view modern presidents.

Robert Brokamp: Let’s wrap up with another question or so. What lessons do you hope people will take away from reading about presidents and their money?

Megan Gorman: Look, here’s the thing. The presidents are really a vehicle to talk about the skills and the traits you really need to cultivate, to be successful with money. To be what we would call financially resilient. In reading the stories and learning the stories of the presidents, what you come to a realization is the American dream is still alive. But it is much harder today than it was 50, 100, 150 years ago. They all struggle with the same things we struggle with today. Paying the bills, paying college tuition, all of that, buying a house, all of those same issues are there, but it’s just harder today because we’re struggling with affordability. I want people to really think about that in terms of how they manage their finances, and give themselves a little bit of gentleness because it was much easier to be Richard Nixon in the ’30s paying $280 a year for college than it is today if you go to NYU and pay 90,000. It’s a harder world today.

Robert Brokamp: Well, Megan, this has been a fascinating discussion. Thanks so much for joining us.

Megan Gorman: Robert, thanks for having me on.

Mary Long: As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. I’m Mary Long. Thanks for listening. We’ll see you tomorrow