Money lessons with Dick­ens

Kapi-Mana News - - CONVERSATIONS -

Vic­to­rian English nov­el­ist Charles Dick­ens is help­ing me cut my spend­ing this year. He’s also been re­mind­ing me of a few fun­da­men­tals of money man­age­ment.

I am read­ing Dick­ens’ nov­els be­cause ear­lier this year I vowed to stop buy­ing books un­til I had made my way through the many un­read ones on my book­shelves.

The vow was an act of po­lit­i­cal protest. Each year Auck­land Coun­cil de­liv­ers me an­other eye-wa­ter­ing rates rise. And each year, I try to find a way of trim­ming my spend­ing to limit its im­pact on my bank bal­ance.

I have largely stuck to my pledge to cur­tail my book-buy­ing habit with the ex­cep­tion of be­ing per­suaded to buy Harry Pot­ter and the Cursed Child for my res­i­dent 10-year-old Pot­terite and a copy of A His­tory of the World in 100 Ob­jects, re­sist.

Dick­ens used to be on the Bri­tish £10 note. That was very fit­ting, be­cause Dick­ens was in­tensely in­ter­ested in money.

But of all the six Dick­ens nov­els I have so far got through, it is Great Ex­pec­ta­tions, the story of a black­smith’s ap­pren­tice who sud­denly comes into a gen­er­ous in­come, that I found most pro­fes­sion­ally in­ter­est­ing.

We tend to think of con­sumerism, easy credit and fi­nan­cial profli­gacy as be­ing par­tic­u­larly mod­ern evils.

They aren’t, and nor is the ten­dency of peo­ple to squan­der an in­her­i­tance.

Great Ex­pec­ta­tions is the story of Pip who comes into ‘‘great ex­pec­ta­tions’’ of wealth.

It goes to his head. He runs up debts. Spends a bun­dle on food, books, clothes, jewellery and liv­ing it up.

He lives beyond his means, runs up debts, and spends prac­ti­cally none of the in­come (which comes from an anony­mous bene­fac­tor) on any­thing use­ful.

Pip makes five mis­takes peo­ple to­day of­ten make with money.

He spends more than his

1.

which I could not

GOLDEN RULES

Aim for self-suf­fi­ciency De­velop a sav­ings habit Don’t bank on in­her­it­ing any­thing in­come, which is the road to ruin in Dick­ens. Sav­ing and fru­gal­ity is the hall­mark of good sense.

He lays noth­ing aside against the fu­ture, and worse, he does not in­vest in prop­erty or skills. When his great ex­pec­ta­tions van­ish, he’s in­debted and un­able to see how he will earn money.

His spend­ing is guided by the de­sire to earn the ap­proval of oth­ers, namely the cold-hearted Estella, who he loves.

He re­lies on oth­ers to pay his way. Pip’s debts are paid off by the black­smith, whose mod­est wealth is built on work skills, pride and fru­gal­ity.

Pip banks on com­ing into money. Many peo­ple to­day bank on a bit of money com­ing their way in wills. It’s a dan­ger­ous thing to do. Even if you have ex­pec­ta­tions of in­her­it­ing money, it’s best to live as though this won’t hap­pen, and treat it as a bonus if it does.

2. 3. 4. 5.

Cen­tral bankers used to be such a big deal in the 1990s, along with grunge mu­sic, choker neck­laces, and the Ally McBeal TV show.

These days, you could for­give Re­serve Bank gov­er­nor Graeme Wheeler if he yearned for a 90s re­vival. When­ever the likes of Wheeler’s pre­de­ces­sor Don Brash used to click their fin­gers and pushed up in­ter­est rates – and in­ter­est rates were al­ways go­ing up, since mone­tary pol­icy was al­ways tight­en­ing – our ex­porters would trem­ble, and beg for mercy.

All changed now. Across the de­vel­oped world, cen­tral bankers seem to be im­po­tent.

The doc­trines of aus­ter­ity they once presided over are now widely seen as fail­ures, or even as im­ped­i­ments to growth. Now, it is cen­tral gov­ern­ments with their neo-Key­ne­sian eco­nomic poli­cies and their quan­ti­ta­tive eas­ing and their mas­sive in­fras­truc­tural spend­ing projects who have re­as­sumed the task of pump­ing life back into the pro­duc­tive econ­omy, thereby un­do­ing the dam­age that (fairly or oth­er­wise) has come to be blamed on the cen­tral bankers of yore.

Not that the an­cient rit­u­als have been done away with, en­tirely. Last week, the Re­serve Bank’s Wheeler was once again saw­ing away in­ef­fec­tu­ally at in­ter­est rates, in an ef­fort to ig­nite a spark of in­fla­tion in the wet, dead wood of New Zealand’s pro­duc­tive econ­omy.

The in­evitabil­ity of the ges­ture was un­der­lined by the fact al­most ev­ery com­men­ta­tor not only pre­dicted the in­ter­est rate cut, but its ex­act size. Wheeler, every­one said, would be tak­ing in­ter­est rates down to a new record low of 2 per cent, in an ef­fort to get in­fla­tion back into the Bank’s pre­ferred 1 to 3 per cent tar­get band.

That’s ex­actly what Wheeler did, and it prob­a­bly won’t make a scrap of dif­fer­ence. In the 90s, the

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