Who Was Micawber and What is His Principle?
In the book David Copperfield, written in 1850 by Charles Dickens, the orphaned title character is sent to work in a factory in another town. Arrangements are made for young David to rent a room in the home of Wilkins Micawber. Mr. Micawber is fond of offering advice to David and not long after he moves in Mr. Micawber confidently states:
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.
Although impressed with this sound financial advice it soon becomes obvious to David that Mr. Micawber is completely unable to follow it, as he faces one financial crisis after another. Mr. Micawber becomes a father figure to David (it is widely thought the character is based on Dickens’ own father, who also had severe financial troubles) and David is able to observe firsthand the negative consequences of living beyond your means. Mr. Micawber’s financial advice, in spite of his inability to live it, has resonated over the years and has come to be known as The Micawber Principle.
There you have it. In two short, simple sentences Charles Dickens stated the fundamental law of personal finance in an unforgettable way. Spending less than you earn – consistently, over time – will lead to at least some degree of financial success. Spending more than you earn will lead to financial misery, which is likely to negatively affect other areas of your life. It really is that simple. If you can’t live The Micawber Principle no other financial advice matters. It is the foundation of personal financial success.
Of course, we need to acknowledge that while the principle is simple, putting it in practice, as Wilkins Micawber illustrates, is difficult. That is because it requires disciplining ourselves, which is never an easy thing to do.
What We Learn from the Micawber Principle
Although The Micawber Principle is short and simple it communicates several important truths about personal finance. Among these are:
- Spending is More Important than Income – The difference between financial happiness and misery isn’t how much you make (annual income is twenty pounds in both scenarios) but in spending less than you make. I think we can all agree that more income is better than less, but if we use our income as an excuse for not living the Micawber Principle we will likely find we cannot live it no matter how much we make. The key is to discipline ourselves to live within our means now and then widen the gap between income and spending as we make more.
- Little Things Matter – The difference between financial success and financial difficulty is often small in the short term, but is magnified over time. This leads to the inescapable conclusion that to win we have to keep score. If we don’t know whether we are winning or losing we are more likely to let questionable financial decisions become habits, and before we know it we are in real trouble.
- Direction is More Important than Speed – The Micawber Principle could be described as a Get Rich Slow Scheme. Small financial wins give us hope and build momentum for greater wins in the future.
- There are Consequences to Financial Decisions – The Micawber Principle clearly illustrates the universal law that there are consequences to our actions. We can choose our actions, but not the consequences.
What Becomes of Wilkins Micawber?
When we left Mr. Micawber he was bumbling through life completely unable to follow his own financial advice. At the end of the story Mr. Micawber and his family emigrate from England to Australia. Mr. Micawber makes the most of his fresh start and becomes a respected lawyer, achieves financial success, and continues teaching the principle that bears his name (now both by word and example). The happy ending should give all of us hope that, regardless of the past, it is never too late to change our financial habits and fortunes. Your new beginning starts now, and you don’t even have to move to Australia.