Personal Finance Lessons In Classic Literature

When you think of classic literature about money, you think of high society glamour, indulgent parties, and stories of the multigenerational wealth of families. What’s not to like? 

We can learn personal finance lessons in classic literature. We find stories of conspicuous consumption, overspending, too much debt, poor investing choices, and errant estate planning in abundance through the classics. Like The Great Gatsby, many stories and authors like Mark Twain recount the follies and financial disasters. Wealth and power are very visible in our favorite classics. 

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Personal Finance Lessons In Classic Literature Will Enhance Your Library and Knowledge About Money:

 

The Custom of The Country by Edith Wharton

 

Edith Wharton is among my favorite authors. She richly writes as an insider and social observer of the glamorous turn of the 19th century wealthy New York and European societies. Before she was Wharton, she was Edith Jones. Her father’s family was the basis of “Keeping Up With The Joneses,” a term associated with conspicuous consumption.

She is better known for her novels, The Age of Innocence and The House of Mirth. However, The Custom of The Country has it all. Undine Spragg of Apex City convinces her parents to move east to New York City. While her father was making a decent living that supported the standard of living in the small town they came from, he is out of his league in New York.

Undine–beautiful, vain, spoiled, ambitious, and selfish–likes to get her way. Her parents are used to giving in to her harsh consequences to themselves. She believes she is entitled to a rich, luxurious lifestyle and intends to live it to the fullest.

Undine favors immediate and quickly acquired satisfaction by rising on the back of better-situated friends and the consumerist society. She marries Ralph, intellectually her superior, a member of an old respected New York family. Undine has a son but no interest in him.

Lifestyle Inflation

Ralph comes from a comfortable financial position, and there are no expectations that he will work for a living. However, he is no match for Undine’s constant and growing materialistic demands.

As they are short of funds, Ralph ultimately has to work and does so unsuccessfully. He makes poor investments and can’t keep up with her bills. Higher costs accompany his increased income, inevitably leading to lifestyle inflation. 

Her father still gives Undine an allowance that doesn’t go far. He is a doting father while Undine spends her time in Europe with friends. She uses other people’s money, keeping company with wealthy men in her pursuit of wealth at any cost.

Ralph and Undine eventually divorce. Ralph and his family have custody of their son, if only because she had no interest in her child. Undine learns the hard way that abandoning her husband and son is not valued by the society she keeps. Her friends find her less attractive and lacking culture. She goes to art galleries to match their interest, but her lack of knowledge challenges her. Fearing that she is now an outcast, she marries Raymond, a French Count, and aristocrat. She obtains custody of her son. This event devastates Ralph, who commits suicide.

Though Undine is now an aristocrat and countess, she is dissatisfied as she learns that her new husband’s wealth is bound by his legacy, mainly on the walls of their castle she shares with her mother-in-law.

Overspending Leads To Unpaid Bills

Undine continues her indulgent overspending despite Raymond asking her to stop spending. He finally tells her to pay her bills. Undine sees herself as deserving of money, and when it is not forthcoming, she feels victimized.

“She had everything she wanted, but she still felt, at times, that there were other things she might want if she knew about them.”

“Undine was fiercely independent and yet passionately imitative. She wanted to surprise everyone by her dash and originality, but she could not help modeling herself on the last person she met.“

Moral of The Custom of The Country

Money ultimately did not buy Undine happiness. Her overspending ruined her family. Social climbing was her career, but she lacked culture, education, and depth. She did not fit in where she wanted to be. Her ability to dress the part through conspicuous consumption and lavish lifestyle only helped her part of the way. 

Madame Bovary by Gustave Flaubert

In the classic, Madame Bovary, overspending is a significant theme. Emma, a beautiful and educated young woman, marries Dr. Charles Bovary. She is soon bored of her provincial life with Charles. They have a daughter, but Emma is soon disappointed as a mother. She has romantic fantasies about Leon, to who she is attracted. She does not act on her passions until later with another man who then abandons her.

Emma finds Leon again and acts on her passion for him. They are happy for a time. Soon, they abandon their relationship. As Emma is disappointed in her life, she begins to indulge herself, fancying luxury goods by buying on credit from the crafty merchant Lheureux. She spends lavishly on herself and her lovers.  Wanting control over her finances, she forces Charles to give her power of attorney.

The merchant calls in her debts. Emma pleads for money from her lovers and others, but they turn her down. Creditors repossess her house, and they are in ruin. She swallows arsenic and dies a horrible death.

There are clear parallels between Undine and Emma. They both exist in their self-absorbed natures and the abandonment of their families. Both are bored by their own lives, do not enjoy motherhood, and want to strike out independently. They envision their lives as more bountiful with food, drink and filled with laughter.

Don’t Borrow For What You Can’t Afford And Don’t Need

From a money point of view, overspending is their passion, and they lack the ability or desire to curb it.  Both women throw away bucks they don’t have just to obtain luxury. High-cost goods are wants, not needs. They buy on credit and are not able to pay the bills. Indeed, Madame Bovary has some sense of morals when she takes her own life. Undine Spraggs goes on to another marriage, this time with a man from her past life in Apex.

Thankfully, there are better ways for women to achieve financial independence.

Moral of Madame Bovary

Spend less than you make. Beware of spending on credit. Don’t take on debt you cannot afford. Madame Bovary could have benefited from an emergency fund.

The Great Gatsby by F. Scott Fitzgerald

I read The Great Gatsby in high school and again, not too long ago. It resonated differently from both angles of life, adding layers with age.

Jay Gatsby is the narrator’s neighbor, Nick Carraway, a bond salesman who has moved to posh Long Island. Gatsby is a mysterious millionaire who throws lavish parties for his 1920s society guests. It is a decadent time where excessive lifestyles are the norm. Cars are providing people with mobility and the ability to be seen.

We learn that Gatsby’s money is ill-gotten through bootlegger dealings. All of the novel’s characters, especially Jay Gatsby and Daisy Buchanan, have sacrificed their morals. Despite their wealth, they cannot obtain happiness. Gatsby does not fulfill his dream of being with Daisy, a parallel to F. Scott Fitzgerald’s American Dream of those wanting to acquire wealth.

“Gatsby believed in the green light, the orgastic future that year by year recedes before us. It eluded us then, but that’s no matter–tomorrow we will run faster, stretch out our arms farther….And then one fine morning–So we beat on, boats against the current, borne back ceaselessly into the past.”

The Moral of The Great Gatsby

We may not quickly get our dreams if they are an illusion.  Make reasonable goals, especially financial objectives, that may be attainable with careful planning.

Miser And His Gold, Aesop’s Fables (In Its Entirety)

Have you read Aesop’s Fables? Countless stories and this one is fitting.

A Miser had buried his gold in a secret place in his garden. Every day he went to the spot, dug up the treasure, and counted it piece by piece to make sure it was all there. He made so many trips that a thief, who had been observing him, guessed what it was the Miser had hidden and one night quietly dug up the treasure and made off with it.

When the Miser discovered his loss, he was overcome with grief and despair. He groaned and cried and tore his hair.

A passerby heard his cries and asked what had happened.

“My gold! O my gold!” cried the Miser wildly, “someone has robbed me!”

“Your gold! There in that hole? Why did you put it there? Why did you not keep it in the house where you could easily get it when you had to buy things?”

“Buy!” screamed the Miser angrily. “Why, I never touched the gold. I couldn’t think of spending any of it.”

The stranger picked up a large stone and threw it into the hole.

“If that is the case,” he said, “cover up that stone. It is worth just as much to you as the treasure you lost!”

Moral of Miser And His Gold

This ancient tale deals with the improper use of a property. A possession is worth no more than how we make use of it. There is an opportunity we bear by leaving cash in non-interest-bearing accounts. We need to invest our money for returns, diversifying our assets into different allocations. 

The One Million Pound Note by Mark Twain

The irony of reading this excellent short story written in 1893 is how Twain lost a fortune in the 19th century after speculating on many failed businesses. Twain loved risk and opportunities. His two big bets were venture capital and start-ups.

One of my favorite Twain quotes: “There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can.”

Henry Adam survived a mishap on the seas after two old brothers rescue him. Virtually penniless, without shelter and food, he wanders the streets of London. His rescuers beckon Henry. He realizes that the two brothers are wealthy. They have made a bet with each other centered on a 1 million pound note that they want to give to an honest-looking stranger, that is, Henry.

The Brothers’ Bet

One brother bets that no one would survive in possession of this note. A person can’t spend a note of this size without suspicion of theft and would end up in jail. The other brother believes that a man can live 30 days and makes his bet.

When the brothers call Henry over, they give him an envelope to not open it in front of them. He looks into the envelope from the brothers and sees the money. Hungry, he goes into a restaurant to eat a meal. He presents the note, but the owner cannot cash it and gives Henry credit for one month.

Perplexed, Henry reads the letter accompanying the note and realizes that the money is a loan without interest from the brothers for 30 days. As one brother believes, if he can last 30 days, he will get his wish based on any situation he favors.

30 Days Credit

Walking around in tatters, Henry gets clothing from a tailor, who also provides him credit for 30 days. Now better dressed and fed, Henry has become a celebrity. He gets short-term loans as no one can make break the note into smaller ones. At a party, he becomes smitten with a young woman, Portia.

Henry uses his fame to endorse a mining company stock deal by an old friend selling it because of financial difficulties. With Henry’s help in spurring demand in the stock deal, many people subscribed to the offering as they trusted him.. He earns a significant commission for his efforts and gets wealthy on his own.

Finally, A Happy Ending For This Story

When the 30 days are up, he goes to the old brothers with Portia. He gives them back the 1 million dollar pound. He is now wealthy and can pay back all of his debts. The story reveals that At a party he attended, Henry had met Portia, a woman he liked. She is the daughter of the brother that won the bet. When asked what he wants, he answers that he wishes to be his son-in-law.

Moral of One Million Pound Note

The best moral of all the stories is that money did not corrupt the man’s character as it does more often. Here, Henry Adams was indeed an honest man, who used his fame to help his friend in need. Both gained wealth through the deal. Henry was able to keep his wealth abundant enough to pay short-term loans and marry the woman he loved.

Personal Finance Lessons In Classic Literature: 

1. Spend less than you earn.
2. Buy more rationally.
3. Know the difference between needs and wants.
4. Don’t spend to impress others.
5. Create an emergency fund for times of unforeseen circumstances.
6. Minimize debt by paying your credit card balances in full or reducing your spending.
7. Save diligently and deploy into retirement and investment accounts.
8. Invest early, diversify to minimize risk, and use long-term strategies.
9. Yes, Money Can Buy You Happiness

Final Thoughts

We found at least nine personal finance lessons in classic literature. You can learn lessons from anywhere as long as you are open to learning. Sometimes reading classics can provide memorable lessons that are less intimidating to the reader than your money mistakes that can be challenging to face. 

Have you read any of these classics? Have you found any money lessons you would like to share? We are constantly reading and re-reading the best books! We would like to hear from you.

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