It’s that season again. The shopping malls are decorated with ivy, fake snow and Christmas trees. The sounds of Christmas carols are all around and Santa Claus has dusted off his costume and is busy entertaining the kids. Today, we look at the financial lessons that we can learn from one of the most popular stories of the season.
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Popular songs, stories and plays are presented as part of the celebrations during the Christmas festivities. Charles Dickens’s “A Christmas Carol” is one such story. It tells of the tribulations of a mean old businessman, Ebenezer Scrooge as he is tormented by spirits because of his meanness and lack of charity and kindness. Scrooge’s character is contrasted by that of his employee, Bob Cratchit. Bob is a poor man with a large family that just gets by while Scrooge is a rich and lonely workaholic whose meanness is portrayed as the cause of Bob Cratchit’s financial woes. But could Ebenezer Scrooge have been wrongly vilified? Could Bob Cratchit be the author of his own problems?
Bob may be poor, but he is not poorly paid. With a salary of fifteen Shillings a week, he is at par with a metropolitan police officer, a well paid public servant in those days. The cause of his poverty and subsequent inability to provide even proper medical care for his family is his money management. Bob is a spendthrift, who spends money as if it were going out of style. Like many spendthrifts, Bob is a pleasant, outgoing fellow who demonstrates his friendliness by buying things for other people. Not just as Christmas gifts for family and friends but unending rounds of drinks for people who don’t even know him, and won’t remember him, and overly generous tips to anybody who serves him in effect, he buys affection. A side note to you – this Christmas, buy gifts as a sign of love, affection and appreciation, do not buy to buy people. It really is the thought that counts, not the price tag.
One sign of a spendthrift is aversion for any kind of budget. Bob loves to live for the moment, equating any attempt to control expenditure as depriving oneself. He will splurge on things like clothing, household goods and even a Christmas goose that costs over half a month’s salary because he values appearances and the good life. But because he does not maintain records of the expenditure and prepare for important family needs, he often finds himself unable to provide his family with really important needs such as medical attention. Of course he blames his financial inadequacies squarely on his employer, Ebenezer Scrooge.
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Ebenezer Scrooge who spends Christmas eve reviewing his banker’s book. No matter what character defects he may have, Scrooge’s financial life is in order and Bob and his family would be well served by adopting some of Scrooge’s financial habits. The most important being to prepare a budget that will help control their spending. A budget would enable Bob allocate money deliberately to the important things in their life. Once the budget is in place, Bob should then monitor daily expenditure to ensure that the budget is being followed and make adjustment as changing circumstances demand. When one operates on a budget, they can spend without guilt as they know they are not digging a financial hole. Spouses with a budget have fewer money arguments and they avoid unnecessary debt while increasing their peace of mind.
Since memory is a fickle thing, one must have a recorded budget and ongoing monitoring of actual expenses versus budgeted amounts. Manual recording and maintaining this money management is tedious and time consuming and most people are not liable to keep it up for long. Fortunately there are apps available that can make this exercise a breeze. So download an app, take charge of your finances and give yourself and your family the best Christmas gift one could wish for, a secure financial future with less financial stress. Do not be like Bob Cratchit this Christmas, take charge of your finances.
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