Since the publication of Charles Dickens’ A Christmas Carol 180 years ago in 1843, the name Ebenezer Scrooge has become synonymous with miserly and mean behaviour.
If you’ve read the book or seen one of the many film adaptions of the tale, you’ll know he rejects all forms of kindness in his continual efforts to hoard money.
Given Dickens’ extraordinarily scathing description of Scrooge as a “squeezing, wrenching, grasping, scraping, clutching, covetous, old sinner,” you may be surprised to learn that there are some useful financial lessons you can learn from Scrooge and his story. Here are five of them.
1. You can learn lessons from your past
The Ghost of Christmas Past forces Scrooge to confront scenes from previous Christmases in a bid to highlight why he should look to change his ways.
It’s worth remembering that in those scenes, Scrooge was not always the miser he later turned into.
Indeed, he had even enjoyed happiness in a relationship with a woman, which ended when she objected to him becoming totally consumed by money.
A clear message you can take from that encounter with the Ghost of Christmas Past is that it is always possible to learn from past mistakes and draw lessons that could help you in the future.
With Christmas often a time for looking back, you could review previous financial decisions to see what has worked well for you and what hasn’t.
In this way, you can use your past to help guide you towards making changes to secure your financial future.
Along the same lines, don’t forget that the Ghost of Christmas Future visits Scrooge later in the story and shows him depressing scenes from his future to demonstrate the need for him to make changes now.
Although you’re highly unlikely to be prompted by a ghostly visitation, looking ahead could also help you to plan and adapt your financial arrangements going forward.
2. The advantages of altruism
The second ghost to visit Scrooge in A Christmas Carol is that of Christmas Present.
This ghost takes Scrooge on a journey to look at various Christmas scenes happening in the current, highlighting how much less fortunate some people were compared to himself.
Many commentators have seen this as a clear sign of the importance of altruistic behaviour and charitable donations.
A report from the Mental Health Foundation confirms that helping others doesn’t only support those who are struggling but can also benefit your own mental wellbeing, reducing stress and improving your self-esteem.
By making the most of your time and personal skills in helping local charity organisations, you are likely to be improving your own quality of life as well as that of others.
Furthermore, a study by Mind suggests that good mental health can often lead to more effective management of your finances, and creates a situation where you make better financial decisions.
3. Saving money is a positive trait
Clearly, Scrooge takes his stinginess way too far by choosing to live in the dark, read by the light of a single candle, and eat simple food straight from the pan to remove the need for plates and bowls.
However, the overarching idea of not living beyond your means, and saving rather than spending money, while taken to extremes by Scrooge, is a positive one.
It makes sound financial sense to save money. This can be for both long-term commitments, such as your eventual retirement, but also short-term spending, like holidays and buying a new car.
While secured lending, like a mortgage for house purchase, is clearly necessary when it comes to substantial financial commitments, excessive borrowing, such as unsecured debt on credit cards, can be expensive and could create problems if you let it spiral out of control.
Unlike Scrooge, however, it’s sensible to take steps to get the maximum return on the money you save rather, than keeping it hidden in your house!
4. Monitor your finances
As a means to control his spending, and a demonstration of a love of hoarding, Scrooge obsessively tracks his finances, knowing to the last farthing how much money he has.
While you won’t want to take this to the extremes he does of accounting for every last penny, having a clear idea of your income and expenditure, and maintaining accurate financial records is a good trait to adopt.
It’s much easier to keep control of your money and ensure you’re able to save enough to secure your long-term financial future if you have an accurate idea of how your earnings balance up against your outgoings.
Regular overspending can easily result in you building up excessive levels of debt. Not only might this inhibit your ability to plan ahead, but it may also have a negative effect on other aspects of your life, such as your mental health and wellbeing.
As an aside, there’s a lesson to be learned from another Dickens character here. Micawber from David Copperfield came up with one of the best-known adages about personal finance:
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
5. It’s never too late to change your ways
The final ghost to visit Scrooge is the Ghost of Christmases Yet to Come, who demonstrates what the future holds for the miserly old man if he continues to live his life the way he is.
Scrooge gets the message that his future happiness is dependent on him changing his ways.
In the same way, you should always take time to think about your future and the kind of life you want in retirement so you can plan accordingly.
Most importantly, if you feel you aren’t on track for the life you want to live once you stop working, it’s never too late to change your habits.
At the end of A Christmas Carol, after being visited by the three ghosts, Scrooge pledges not to “shut out the lessons that they teach” and changes his ways.
In the same way, as you approach a new year, a resolution to heed the same lessons should stand you in good stead for your own future.
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Please note
The value of your investments can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances. All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.
