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.’

—Mr Micawber, David Copperfield (Charles Dickens, 1850)



An ideal economic relationship is that you sell a bit more than you buy. And you earn somewhat more than you spend.

You have margin. You have spread.

This is encapsulated in what has come to be known as The Micawber Principle.

It is my favourite piece of financial advice in literature. Though readers of Dickens will know that Micawber was incapable of following his own advice. He ends up in debtors’ prison.


The Micawbers (1870s edition of David Copperfield). Source: Wikipedia


Another useful lesson from Micawber is picking the right spouse.

His long-suffering wife, Emma, stands by him despite having to pawn her family heirlooms. She lives by the maxims, ‘I will never desert Mr Micawber!’ and ‘Experientia does it!’ (One learns by experience).

In the end, the Micawbers migrate to Australia for a fresh start.

Mr Micawber eventually finds prosperity following his principle as the manager of the Port Middlebay Bank and as a successful government magistrate.


Spending and investing matters


At the heart of The Micawber Principle is that spending and investing are key.

Failing to use or deploy the money you earn will not result in happiness. To quote Francis Bacon: ‘Money is a great servant but a bad master.’

So, it came as a shock to me to hear the experiences of a financial adviser working with many New Zealanders who are outwardly successful. Household incomes over $300,000. Often derived from careers in senior management.

‘We’re seeing many people at this income level and beyond who are struggling. After paying very high mortgages and school fees, they do not have enough left over to save or invest. With some Auckland mortgages of $1 million or more, and the rate at which interest rates have increased, we’re also having some very difficult conversations on the sustainability of their housing situation.’

This got me thinking —and fearing — economic forces that have long disadvantaged this country.

Does New Zealand, as a nation, spend more than it earns?

Do enough New Zealanders invest well for a successful future?

What opportunities exist to potentially earn more and invest more profitably?

Let’s take a look at the specific threats and opportunities I am seeing…

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