Charles Dickens is one of my favorite authors. In fact, The Micawber Principle, after which this blog is named, comes from one of his books.
Perhaps Dickens’ most famous book is A Christmas Carol, the classic tale of the transformation and redemption of Ebenezer Scrooge. I have always enjoyed A Christmas Carol but never thought of it as having anything to do with personal finance. Nevertheless, I was intrigued with the title of a book I ran across recently called The Financial Wisdom of Ebenezer Scrooge: Transforming Your Relationship with Money, by Ted Klontz, Rick Kahler, and Brad Klontz. I decided to give the book a try, which turned out to be a wise decision.
A New Way of Looking at Scrooge
The theme of the book is that all of us hold certain beliefs about money (the book calls these money scripts) most of which we developed in our childhood or youth. These money scripts become part of us. We don’t often think about them but they can affect our behavior in profound ways.
Some of Scrooge’s money scripts were:• You can never have enough money • Money makes you important • You can’t trust anyone with your money • Money is meant to be had, not used • Giving to the poor encourages laziness
Given these money scripts Scrooge’s behavior at the start of the book was perfectly logical. Scrooge couldn’t change his behavior without first changing his beliefs.
Dickens used ghosts to help Scrooge change his beliefs. The Ghost of Christmas Past took Scrooge back to his childhood and showed him how he came to believe the things he did about money. The Ghost of Christmas Present showed Scrooge the current result of these believes. Most terrifying of all to Scrooge was the Ghost of Christmas Yet to Come, which showed him what the future held if he didn’t change his ways
After being taught by the ghosts Scrooge was a changed man. His behavior changed because he had changed. He didn’t change because he was forced to, or because he “should”, but because he wanted to.
How the Lessons of Scrooge Apply to Us
The power of A Christmas Carol is that it establishes a pattern for how we can change our behavior – a pattern that has been confirmed by behavioral science. To change unhealthy money scripts we must first think back to when the beliefs were developed. We must then examine where these beliefs have taken us. Finally, we must project to the future. If we continue on the path we are currently on, where will it lead us? This is called the “default future”, and the more vividly we can imagine it, the more powerful it is.
This book will have you thinking deeply on the things you believe about money. For example, I remember being asked in elementary school what I would do if I had a million dollars.
This was during the 1970s and interest rates were extremely high. At the time Certificates of Deposit (CDs) at banks were paying over 10 percent interest. My answer was that I would put the money in the bank and have a $100,000 a year (a lot of money in those days) to live off without ever touching the million. I couldn’t understand why anyone would want to do anything different. I didn’t understand a lot about investing but my mind-set at a young age was to work towards financial independence. This money script has served me well, but I have others that have been harmful.
For example, I have struggled with self-esteem. I consider myself fairly average, and came to the conclusion a long time ago that I should never expect to earn more than an average amount of money. This belief has undoubtedly held me back from reaching my potential, not just financially, but personally.
Your Story of Transformation
A Christmas Carol is the story of the transformation of Ebenezer Scrooge. The Financial Wisdom of Ebenezer Scrooge explains how you can transform yourself in a similar manner – minus the ghosts.
It is a short, entertaining, and powerful book. Even if you don’t read the book reflecting on your personal money scripts is a powerful exercise. The book doesn’t offer a lot of practical advice, but it will get you pondering your relationship with money. If you can change your money scripts, your behavior, like Scrooge’s, will practically change itself. This would be a great book to read as you enjoy the Christmas season and prepare for a new year. I highly recommend it.