Why Socioeconomic Status and Depression Are Linked

This article is an excerpt from the Shortform book guide to "How to Stop Worrying and Start Living" by Dale Carnegie. Shortform has the world's best summaries and analyses of books you should be reading.

Like this article? Sign up for a free trial here .

Do you often catch yourself worrying about money, constantly thinking of ways to either save or earn more?

Most people will at one point or another will find themselves stressing about money matters. Yet paradoxically enough, financial problems are rarely solved with higher income. They are solved by making a clear and feasible plan of how you are going to spend itand sticking to the plan.

There are 10 rules to keeping your finances under control and easing your financial worries. 

Higher Income Is Not the Solution

Research finds that most people think that just a 10% increase in income could solve all of their financial problems. However, your income usually isn’t the problem—it’s the way that you spend it. If your income were to increase by 10%, your spending would likely increase by 10% as well.

Rule #1: Write Down the Facts 

Write down everything you spend your money on—from large expenditures like rent down to occasional orders at Starbucks. This is a time-consuming task and takes practice to remember—but the good news is, you don’t have to track your expenses forever. Track meticulously for at least one month, ideally three months. 

This practice will help you build an accurate picture of where your money goes. Many people think they know exactly how they’re spending their money—but this exercise surprises almost everyone who does it. 

Rule #2: Create a Personalized Budget 

Once you have an accurate idea of how you spend your money, you can put together a budget that’s suited to your specific needs. Budgets have a reputation for being “fun-sucking,” but they actually give joy to your life, because they create a sense of security and control that prevents you from worrying about money and keeps your emotions stable. 

(Shortform note: There are many resources you can use to build a budget that makes sense for your lifestyle and goals. You might talk to a financial advisor, browse financial literacy websites like NerdWallet, or use an online budgeting resource like Mint.)

Rule #3: Spend Wisely 

Focus on spending your money wisely. Wise spending means getting good value for your money—doing research can help you shop smarter in several ways:

  • You make sure you’re getting a good price for a product. 
  • You avoid overpaying for items that can be found much cheaper—for example, choosing to buy a generic brand rather than name brand. 
  • You understand if the product is truly worth the money—reading product reviews is one useful way to do this. 

Wise spending can also mean spending your money on things that are meaningful to you and will bring you genuine happiness.

(Shortform note: Read our summary of Your Money or Your Life to learn how to evaluate the meaningful value of your spending.) 

Rule #4: Avoid “Lifestyle Creep”

Imagine that your salary was $50,000—at this income level, you’d probably be able to save a small amount while living a modest lifestyle. You’d live in a decent, small apartment, shop for sensible and relatively inexpensive clothing, and make your meals at home instead of constantly ordering takeout. You get a promotion that comes with a salary of $100,0000. If you were to maintain the modest lifestyle of your previous salary, you’d be able to save $50,000 per year. 

However, most people fall victim to “lifestyle creep” when their income increases—that is, they start upgrading their lifestyle in small ways such as buying nicer clothes, going out to restaurants more, or moving to a slightly larger apartment. These small changes creep your spending higher and higher over time. Though you’re making more money, you’re not saving as much money as you should be able to. 

Lifestyle creep—and living beyond or at the limit of your means—can quickly get you into trouble. Make a conscious effort to keep your budget as consistent as possible after experiencing an increase in income. Staying well within your means will create a significant financial cushion, providing you with a sense of security. This isn’t to say that you can’t make some upgrades to your life. For example, moving your growing family into a larger apartment or adding a few more date nights with your spouse to your schedule might be meaningful, wise purchases for you—just have a close eye on your budget and keep your spending under control.  

Rule #5: Maintain Your Credit

Credit is important because, with good credit, you can get loans, buy a car, or get a mortgage. 

While establishing credit and using it is easy enough, be sure that you are doing the hard work of maintaining it and keeping your credit score high to keep yourself eligible for loans. You can do this by:

  • Using your credit cards wisely—don’t put more on them than you can afford to pay off, and try to pay them off in full every month. 
  • Staying on top of your payment schedules and making at least the minimum payment each month to avoid interest hikes, late fees, and compounding debt. 

Rule #6: Get Insurance and Build Emergency Funds

Using money wisely safeguards you against major financial setbacks, such as accidents and illness, job loss, natural disasters, and so on. You can do this in two ways:

  1. Create an emergency fund. Set money aside in a savings account that’s only to be used for emergencies such as car maintenance, vet bills, and so on. 
  2. Get insurance. Make sure that your health, home, and automobile will be covered if something unexpected happens to them. 

These measures combat worry in both the present and the future: 

  • You have peace of mind in the present, knowing that you’ll be taken care of if things go wrong. 
  • You don’t have to deal with financial worry in the future on top of a stressful event.

Rule #7: Teach Your Children Money Management

If you have children, teach them responsible money management from a young age—this eases your worry that they will one day have financial troubles. 

  • For example, one mother gave one of her old checkbooks to her daughter. Each week, her daughter “deposited” her allowance with her mother, who acted as a “bank.” Whenever the daughter wanted to “withdraw” some of her money, she wrote her mom a check. This taught her the concept of savings, balancing a checkbook, and tracking expenses.

Rule #8: Start a Side Hustle

If you’re not making ends meet, you have two options. You can either worry and complain about your situation, or you can create a side business that gives you a small income boost. 

When coming up with a business idea, think of what skills you already have, what type of business can fit into your life around your working hours, and what type of business won’t cost you too much money upfront. Many people start side businesses from their hobbies, which usually fit into each of these guidelines. 

  • For example, Carnegie tells the story of a widow who was struggling to make ends meet. One day, she noticed the unappetizing baked goods in a nearby shop. An avid baker, she offered to sell her homemade pies there instead. Within a year she was turning a huge profit, opened a bakery, and had two employees. 
  • For you, this might look like doing freelance graphic design work, selling handmade earrings on Etsy, tutoring, or dog walking. 

Rule #9: Do Not Gamble

Most people realize gambling isn’t a good use of your money—yet many people fall into the trap of spending a little money for the chance to hit a jackpot. In fact, Americans lose upwards of $117 billion on gambling each year. 

A good way to talk yourself out of the temptation of gambling is to understand the odds of winning. Once you see how infinitesimally low your chances of winning are, you might be less tempted to waste your money. 

Rule #10: Practice Acceptance

If there’s no way to better your financial situation, you can at least improve your attitude toward it. There are three ways to accomplish this:

  1. Remember that everyone has financial concerns and understands your struggle. You might be worried about how your lifestyle compares to Person A, but Person A is focused on keeping up with Person B’s lifestyle. Furthermore, many successful people started out needing to scrimp and save or by borrowing money. 
  2. Forget about what you don’t have. Instead, focus on what you do have and work on your gratitude—this is an important step to financial stability because if you’re not happy with what you have now, you’ll likely be unhappy when your income is higher. To counter this unhappiness, you’ll subscribe to lifestyle creep and start pushing the limits of your means. 
  3. Reflect on human limits. No matter how much money someone has, she can only be in one place at a time and eat three meals per day. While money might help you get nicer things, it can’t expand human abilities. As long as your needs are met, money is just money. 
Stop Worrying About Money With These 10 Rules

———End of Preview———

Like what you just read? Read the rest of the world's best book summary and analysis of Dale Carnegie's "How to Stop Worrying and Start Living" at Shortform .

Here's what you'll find in our full How to Stop Worrying and Start Living summary :

  • What worry is and how it manifests both physically and mentally
  • How to deal with worry about work, finances, and criticism
  • How to cultivate a less worried mindset

Darya Sinusoid

Darya’s love for reading started with fantasy novels (The LOTR trilogy is still her all-time-favorite). Growing up, however, she found herself transitioning to non-fiction, psychological, and self-help books. She has a degree in Psychology and a deep passion for the subject. She likes reading research-informed books that distill the workings of the human brain/mind/consciousness and thinking of ways to apply the insights to her own life. Some of her favorites include Thinking, Fast and Slow, How We Decide, and The Wisdom of the Enneagram.

Leave a Reply

Your email address will not be published.