What Does The Office Teach Us About Personal Finance?

Michael Scott makes many mistakes. Let's learn from them

Michael Scott from The Office is a fantastic person to learn economics and personal finance from. (Largely because he makes so many mistakes!) In the season four episode, Money, Michael is clearly having a lot of personal finance issues, as we see in this video clip.

Wow, what a mess! Some issues that Michael is dealing with:

• Michael is spending recklessly

• His partner Jan seems to be spending even more recklessly.

• Jan and Michael don’t seem to agree about their major spending decisions

• Jan and Michael aren’t using a household budget

• Last and least, at least in terms of personal finance rather than the humor of the clip, Michael does not understand how bankruptcy works.

Any of these can be problematic, but let’s break this into two main categories: Michael’s individual behavior and his financial relationship with Jan.

For Michael’s individual behavior, we see two big issues. First, as Oscar points out, he’s spending a lot of money on things “nobody needs”. The ability to differentiate between needs and wants is important when making purchasing decisions and living within one’s means. Second, and relatedly, Michael isn’t using a budget and isn’t familiar with one. He has no idea where his money is going: he just knows he’s in trouble.

In terms of Michael and Jan’s relationship, they have major problems. Differences in money management and/or financial stress have been cited as the second-leading cause of divorce. Jan and Michael have clear differences in what they think they should spend money on, both seem to be overspending their household income, not budgeting at all, and they are not communicating. This would put a lot of stress on their relationship and it’s tough to imagine any relationship surviving with this type of financial stress and differing views toward spending. Here are a couple articles with tips for couples on money matters.

I mentioned earlier that Michael Scott and The Office are great for teaching. My friends Dan Kuester and Dirk Mateer created a website devoted to teaching economics from The Office and you can check it out here. (Note, I shared this clip with Dan in case he’d like to add it to his site!)