What Dickens and Scrooge teach us about money

The Charles Dickens classic A Christmas Carol has always been a seasonal favourite among local theatres as a tale which speaks to hard times.

As the pandemic continues and living costs soar, it remains popular for Christmas 2021. Productions are appearing around the country, from London’s Old Vic to Cornwall’s Minack Theatre.

A Christmas Carol offers audiences spooky ghosts, comic moments, high drama and the unforgettable figure of Scrooge, the wealthy skinflint who sees the errors of his ways only a moment before it is too late.

The story is also a memorable lesson in money, its uses and abuses — a lesson which rings as true today as in Dickens’ time.

This year’s inflation worries are likely to be nurturing our inner Scrooge rather more than in the past few years, with the ghost of Christmas future looking more expensive by the day.

So it’s a good moment to focus on the old miser’s belated realisation that his hoarded money is useless to him and the world around him. The ghost of his dead partner Marley convinces Scrooge that wealth has no value beyond the grave. For the first time in his life he expresses regret for his lack of generosity.

Dickens’ message is that accumulating wealth for its own sake is not what money is for. Don’t save up too much during life, he tells us. Tread the fine line between accumulating enough and spending your money — enjoying it or helping our favourite people during our lifetimes.

But A Christmas Carol has other more subtle lessons for our savings and investments. The tale highlights that we have ingrained patterns of behaviour in relation to money. It’s not just Scrooge who finds it hard to change, having locked himself into his own world. Bob Cratchit, his long-suffering clerk, stays with his master through misplaced loyalty, despite being grossly underpaid. So while Cratchit and his impoverished family engender sympathy, he is hardly a role model.

We should rather take note of Scrooge’s mentor as a money lender, the jolly Mr Fezziwig. He ran a profitable business, while acting with generosity to his employees, as even Scrooge acknowledges: “The happiness he gives, is quite as great as if it cost a fortune.”

In the modern world, it’s not just a matter of being kind and philanthropic. Fezziwig is surely a good example of running a business, or a portfolio, on principled lines. Early ESG if you like.

The strong money theme running through A Christmas Carol and other Dickens novels was inspired by the author’s own precarious financial situation. He struggled at times with his own debts, and those of his father. A Christmas Carol bailed Dickens out of a financial crisis — as is eloquently captured in the excellent 2017 family film The Man Who Invented Christmas.

Not surprisingly, other Dickens novels are a treasure trove of money quotes. Mr Micawber, who memorably opines on money in David Copperfield, operates on the highly suspect principle of “something will turn up”.

Not a rule to rely on in Victorian times, when creditors could throw a debtor into prison (as they did with Dickens’ father). Nor today, despite our social security system, if you want financial security.

Mr Micawber’s recipe for happiness is perhaps the most-cited money quote from Dickens’ works: “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.”

But this recipe is incomplete: it’s all about the here and now. It won’t secure a comfortable retirement: there’s no savings or inflation-proofing built in. And to be truly financially safe, you also need an emergency cash fund of perhaps six months’ salary.

Mr Micawber isn’t the only financial expert in David Copperfield. There is the stagecoach driver Mr Barkis, who is less articulate than Mr Micawber but no less sharp. “It was as true . . . as turnips is. It was as true . . . as taxes is. And nothing’s truer than them.”

Dickens would surely have been aware that these lines echo Benjamin Franklin’s famous gloomy observation: “Nothing is certain except death and taxes.”

This isn’t entirely true: taxes were not fixed in stone in the 19th century, as Dickens knew well since, alongside his literary achievements, he was a prominent tax reformer.

Don’t spend too much time worrying about HM Revenue & Customs this Christmas. You might risk following Scrooge with his obsessions

Nor is it true today. We have the advantage of the tax-efficient wrappers of individual savings accounts (Isas) and self-invested personal pensions (Sipps), as well as annual capital gains allowances. Use them to the full, I say, and do so now, as you never know when the rules might change.

But don’t spend too much time worrying about HM Revenue & Customs this Christmas. You might risk following Scrooge with his obsessions. Put aside your statements and your calculator and look for inspiration to Scrooge’s nephew Fred, an unfailingly cheerful man who never gives up on his uncle, inviting him for Christmas, despite the older man’s repeated rejections.

It is Fred who says: “And therefore, uncle, though it has never put a scrap of gold or silver in my pocket, I believe that Christmas has done me good, and will do me good; and I say, God bless it!”

Moira O’Neill is head of personal finance at Interactive Investor