Historian says 'timeless' money advice is often newer than it appears

Historian Joseph Moore, author of "How to Get Rich in American History," published in April, says many personal finance lessons presented as timeless are actually recent inventions — and that some problems treated as unprecedented, such as today's housing shortage, have recurred throughout American history.

"Is there timeless wisdom of money that we should all be following, from Ben Franklin to now? The answer is no," Moore says. "It turns out, what 'always' worked is always changing."

Housing: bad, but not the worst

Moore acknowledges the current housing crisis is driven by a shortage, but says it is "neither the first nor the worst." He points to 1948, when the ratio of people who wanted to buy a house to available inventory was about double what it is now, and to 1981, when the median new mortgage consumed more than half of median household income.

That does not mean the current shortage isn't real, he says. Historically, people solved housing problems individually rather than politically. Two common approaches were moving more often and sharing space.

For most of the country's history, between 1 in 3 and 1 in 5 Americans moved every year, according to research by historian and journalist Yoni Appelbaum that Moore cites; now the figure is closer to 1 in 13. In 19th-century America, homeowners often rented out rooms to help pay the mortgage.

"It's a shortage of space, so you have to monetize space," Moore says.

Compounding wasn't always the path

Moore argues that compound interest, now treated as the core of long-term wealth building, is a comparatively new route. Index funds and fractional shares did not exist for most of American history, and owning every stock in an index would have required the money to buy each share plus broker fees.

"For most of American history, less than 10% of Americans owned stocks at all," he says. "They got wealthy by concentrating most of their efforts in small businesses and careers, real estate and job tools."

Moore says investors should still take advantage of low-cost, diversified portfolios — they should just remember there is more than one way to build wealth.

Budgeting is recent too

The household spending spreadsheet is also a relatively new phenomenon, Moore says. "Nobody in the 1800s budgeted the way we talk about budgeting," he says. Instead, families divided money into broad buckets, such as a husband's and wife's income, or survival needs versus whatever was left over.

More elaborate budgeting schemes gained popularity in the early 20th century, when financial guides promoted savings from cutting alcohol and tobacco. Moore says there is no single right way to manage money, and that finding budgeting tedious puts you in line with generations of Americans who paid their bills, set money aside for goals and spent the rest as they saw fit.

Source: CNBC Top News.