What Can You Learn About Personal Finance From Ebenezer Scrooge?

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.




  3 comments for “What Can You Learn About Personal Finance From Ebenezer Scrooge?

  1. Anonymous
    December 23, 2013 at 8:45 pm

    Brent, I agree with the principle that we must spend less money than we take in and I agree we must save for a rainy day. But I don’t think an economy can survive with people ‘living off the interest’.First, if everyone did that then who would produce the goods and services we need to survive? Second, the very idea that our money can make money is dangerous in that it breeds the hoarding mentality that was Scrooge’s downfall. Third, the twentyeth century experiment of retirement for all is founded on a mathematical impossibilty that our money will grow and still maintain its purchasing power. Just as debt is bondage to an individual so is debt at corporate and government levels. It has and continues to kill our economy. So there goes the value of those interest payments. Also, expecting large returns on investment does nothing more than create price bubbles. Our money creation process is destroying savings. Dave Madsen

    • Brent Esplin
      December 23, 2013 at 9:36 pm

      Thanks for the contribution, Dave. You make some good points. There is no doubt that my understanding of investing and the economy was not well developed when I was in elementary school. I had no concept of how inflation would eat away at the principal, and since I had only known high interest rates I naively assumed they would always be high. One of the exercises suggested in the book is to try and think of some of your earliest money experiences, and this was an interesting one that I came up with. Our money scripts can affect us in positive and negative ways, and I was merely pointing out that this one, for the most part, has served me well. I also agree that we need to come to a balance between using our money wisely now and investing for the future. Thanks again for your comments.

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