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How To Lessen Your Financial Worries – Advice From Dale Carnegie
By JLP | November 26, 2007
I like old books. Even though some of the advice in Dale Carnegie’s How to Stop Worrying and Start Living
Here’s Dale Carnegie’s 11 Principles for Managing Your Money:
Rule No. 1: Get the facts down on paper!
If you are spending more than you earn and you don’t know why, you need to track your spending by either writing down everything you spend or by using a software program like Quicken or Excel.
Rule No. 2: Get a tailor-made budget that really fits your needs!
One budget won’t fit everyone’s needs. What’s important to one person may not be important to another person. That’s why you need your own budget.
Rule No. 3: Learn how to spend wisely.
The author mentions several pamphlets and resources that are no longer available (the book was updated in 1951). However, there are resources like Consumer Reports that can be extremely helpful when it comes to making buying decisions.
Rule No. 4: Don’t increase your headaches with your income.
Just because you make more money doesn’t necessarily mean you need to increase your spending. In fact, one of the ways to build wealth is to not increase your lifestyle as your income increases. If your spending holds steady while your income increases, your net worth will grow dramatically.
Rule No. 5: Try to build credit, in the event you must borrow.
To this advice I would add that it is also important to keep tabs on your credit report and score. One way you can do that is through MyFICO. They offer subscription plans but I don’t think that’s necessary. For a one-time fee of $15.95, you can get your credit report and credit score from one of the three credit bureaus.
Rule No. 6: Protect yourself against illness, fire, and emergency expenses.
The right kind of insurance is very important. It’s also important to have an emergency fund. In fact, the two go hand-in-hand because an emergency fund can actually reduce your insurance costs because you can raise your insurance deductibles.
Rule No. 7: Do not have your life-insurance proceeds paid to your widow in cash.
This one sounds dated as it almost implies that a woman is too stupid to know how to handle money. Rather than worrying about how life insurance proceeds are paid, it is more important to have a plan put together in the event of a premature death.
Rule No. 8: Teach your children a responsible attitude toward money.
In my opinion, this is one of the best gifts that parents can give to their kids.
Rule No. 9: If you are a house wife, maybe you can make a little extra money off your kithen stove.
Again, this one sounds quite dated but the point makes sense: if times are tight, figure out a way to make additional income. The author detailed a story about a woman who started making baked goods for a local deli. Before long she was making 5,000 pies a year from her kitchen. Eventually, she moved into a bigger building and hired people to help her.
Rule No. 10: Don’t gamble—ever.
I can’t argue with this one.
Rule No. 11: If we can’t possibly improve our financial situation, let’s be good to ourselves and stop resenting what can’t be changed.
This last one is probably difficult for people to accept. However, I do think it is important for people to embrace the reality that not everyone can be rich. Instead of griping about the situation, we should concentrate on giving our kids the tools they need to succeed.
I was surprised to see that he makes no mention of investing for the future. Maybe we should make that Rule No. 12!
Like I said earlier, some of the points are dated but for the most part, what the author says is common sense. Fortunately, common sense never goes out of style.
Topics: Books, Budgeting | 1 Comment »
January 18th, 2008 at 5:31 pm
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