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At Pub Crawl, author Julie Eshbaugh shares the importance of writing a great character arc. The point that I enjoyed most was how well she knows her characters to the point of being able to tell if an action was something they would perform or not. Check it out for more great tips!
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Those are broad examples, of course. In practice, the change in your character over the course of your story may be more subtle or internalized. For instance, a character might believe in herself at the beginning of a story but be untested, so she may seem to be tentative and reserved. The obstacles she faces may not change her as much as reveal what was inside her all along. This is still a character arc! As long as a character changes and evolves in response to the plot—externally, internally, or both—there is an arc.
Character arcs matter because they lend significance to the plot of your story. Your character might face one life-or-death situation after the other, but if he emerges unchanged at the end of it all, it’s difficult for the reader to feel the magnitude of everything that happened. As readers, we may have very little in common with the characters we are rooting for, but we can relate to a character’s growth and development. We will feel more empathy and become more engaged with a character who shares our challenges and vulnerabilities, and who finds a way to overcome them or succeed in spite of them.