Dickens Teaches Us a Thing or Two About Budgeting

Lately I’ve been reading Dickens’ classic tale, David Copperfield. Like most Dickens novels, David Copperfield has orphans, urchins, child labor, mean adults and people who dress in way too complicated a manner for daily life.

But David Copperfield has a very important character whose way of living and resulting insight is still relevant today. That character is Mr. Micawber, a man of little means who has grandiose ideas. Mr. Micawber constantly dreams of the things he will do if he should come into a large sum of money. In the mean time, he owes money to the butcher, the baker, the tailor, the cobbler, and just about everyone else in London. His wife sells some of the jewelry and dinnerware that she inherited from her parents, but instead of applying some of that money to their debts—they spend it on food that is more expensive than they can afford. Lamb chops, veal and other expensive food and drink are common on their table—at least once just hours after a bill collector comes to their home to ask them for money, which he does not receive.

So, why I am I telling you about this book and this character? Because before ending up in debtor's prison, Mr. Micawber says one thing in the book that, while overly simplified by today’s world, is true and holds water. He says, “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

Of course these days we have a bit more to plan for than they may have in 19th century England. Saving just a few dollars of our annual salary each year won’t protect us from the expenses of college, retirement, loss of a spouse or parent, damage to your home or an unexpected illness. But when you buy the right insurance (life insurance, auto insurance, homeowners insurance, long term care insurance, health insurance), when you save money for retirement and college, when you don’t put material things that you can live without on a credit card, when you buy groceries you can afford, when you work toward paying down debt, and when you spend less money each month than you make…well…then you are living Mr. Micawber’s dream and will enjoy the result of happiness.