12.2 The Micawber Principle

Charles Dickens’s 1850 novel David Copperfield (Dickens, 1850/2004) offers a timeless lesson on financial wellness through the character Wilkins Micawber:

“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery” (Dickens, 1850/2004, Chapter 12).

His advice captures the heart of the Micawber Principle. Regularly spending more than your income, even by a small amount, leads to stress and instability, while spending less than your income (living within your means) leads to security and contentment.

At its core, the Micawber Principle underlines the importance of balancing income and expenses as a foundation for financial well-being, which is defined as having both security and freedom in the present and the future (see table below). Because financial well-being is highly personal, each individual’s definition may look different.