Money lessons learned from 'Downton Abbey'
By Susan Johnston Taylor
January 22, 2016
As the sixth and final season of “Downton Abbey” draws to a close, PBS viewers watch spellbound as Lord Grantham struggles to keep the family house afloat amid rapidly changing financial realities. Meanwhile, the downstairs staff discusses new career options and potential retirement plans.
Lord Grantham and his daughters didn't have credit cards — and that's probably a good thing.
“If they had had credit cards and it were 2016, they'd be running off to Harrods, and they'd probably have some serious trouble,” says Ann Logue, a chartered financial analyst and author of “Emerging Market for Dummies.” “If you look at the people below stairs, you'd probably see Mrs. Patmore and Daisy be extremely practical because they know how to run a kitchen budget.”
England had closed debtor prisons by the 1920s, but unpaid bills could still have a chilling effect on the borrower.
“I think in those days, the debt could be called pretty easily,” says Michael Garry, a certified financial planner and author of “Independent Financial Planning: Your Ultimate Guide to Finding and Choosing the Right Financial Planner.” “They could up the minimum payment or stop you from borrowing more.” Not to mention the reputational risk for an earl who wants to keep up appearances.
“If you look at the people below stairs, you'd probably see Mrs. Patmore and Daisy be extremely practical because they know how to run a kitchen budget.”
Downton's world of gramophones and butlers may seem worlds away, but the period drama's central themes about money and power can teach us four valuable lessons for today:
If they had had credit cards and it were 2016, they'd be running off to Harrods, and they'd probably have some serious trouble.”
— Ann Logue, author
of “Emerging Market for Dummies”
1. Talk to your kids about money.
Born into privilege and wealth, the Crawley family doesn't worry about money, nor do they educate their children about the finer points of preserving their wealth. But as the economics of running a family estate change, they find themselves ill-equipped to adapt or make sound financial decisions.
Lord Grantham loses much of the family fortune investing in the Canadian railroad (also a lesson about the importance of diversification) and few of the characters, such as the daughters, learn workplace skills.
Many of the well-off “Downton” characters, though, and especially the women, resemble people today who don't work because they don't need to — but when circumstances change (a divorce or a loss of a spouse, for instance), they're in real trouble.
Even in privileged families, people need to teach their children important financial lessons, Logue says. “Violet is really involved with her charities, which means she knows something about the funding, but the basics of budgeting seemed to have escaped Lord Grantham,” she explains. “He's magically had money show up a couple of times, and I don't think anybody should count on that.”
In today's world, parents need to help children learn the basics of using credit responsibly, living below their means and setting a budget. Even those with trust funds need help managing their money in order to keep it properly invested or else they risk losing it all.
2. Keep expenses in check.
Whether you're running a lavish home like Downton or a more modest one, you need to keep your expenses (including taxes) in line with your income. Otherwise, you're setting yourself up for debt and other problems, as Lord Grantham has learned repeatedly.
“Lord Grantham probably studied Latin or Greek and not finance and accounting,” Garry says. “You need to get a grip on what all your assets and liabilities are. It is striking that they reacted to daily life in ways that a lot of poor and working-class Americans do.”
Today, Americans who lack savings can be bankrupted by a medical bill or fall into major debt if they lose their jobs. People who live paycheck to paycheck — then and now — have more of an excuse for not saving or planning for emergencies because they don't have much means to do so.
Lord Grantham probably studied Latin or Greek and not finance and accounting,” Garry says. “You need to get a grip on what all your assets and liabilities are.”
— Michael Garry, author
of “Independent Financial Planning:
Your Ultimate Guide
to Finding and Choosing
the Right Financial Planner”
Lord Grantham does no planning for what if's. When he gets a big estate tax bill, he panics. With all his resources, his behavior is reactionary and arrogant. At the same time, his servants are much more practical in their approach to money.
If you're living in denial of your financial situation, as Lord Grantham is, it's hard to get out of debt or set yourself up for financial success.
“People tend to assume that real estate is a great investment,” Logue says. If you can afford upkeep on a property or rental properties are generating income, that's one thing, but if maintenance is beyond your budget, then it often doesn't make financial sense.
Without an emergency fund, unexpected expenses like a roof repair or higher tax bill can wreak havoc on your finances.
3. Adapt with the times.
The Crawleys weren't the only British nobility to find themselves with a larger house than they could afford in the post-World War I economy.
“That was something that happened to the whole British aristocracy,” Logue says. And now, she adds, “A lot of those big houses are owned by rock stars and Middle Eastern princes, because the families that inherited them couldn't afford to maintain them.”
Logue says she'd suggest that the Crawley family sell Downton and move into their London home to cut expenses.
Although it's often a blow to the ego, many modern-day families struggling to maintain multiple properties or pay for a home larger than they can afford might heed the same advice. By rightsizing their lifestyle, families can shift to something more affordable as their situation changes.
4. Take charge of your future money needs.
As other houses downsize staff, Downton's employees begin to fret about the future.
“For the English class system, there had been an assumption that the lord of the estate would take care of them,” Garry says. “That whole relationship is breaking apart [in the show]. One lesson is that ultimately you have to take care of yourself.”
The staff manage this new reality in different ways. Daisy plans to take her exams and pursue other career options. Anna and Mr. Bates, and Carson and Mrs. Hughes discuss buying a small property and taking in boarders.
As modern-day employers cut pensions or lay off employees, today's workers need to consider building multiple revenue streams and saving for retirement themselves.
“Economies are always changing, and if you can accept that, you're probably in a better position,” Logue says.