Here's everything you need to know about money, on a 4-by-6 inch index card
Courtesy of Harold Pollack
In 2013, University of Chicago professor Harold Pollack offhandedly mentioned that the best money advice fits on a three-by-five inch index card while interviewing financial journalist and author Helaine Olen on The Reality-Based Community blog.
A commenter, Alex M, asked for the actual index card.
Although he was originally speaking in metaphor, to prove his point, Pollack grabbed a pen and four-by-six inch note card, and scribbled the basic financial rules he'd been following the past decade.
Pollack's next blog post, titled "Advice to Alex M," included a picture of the card. It quickly went viral.
Economist Sendhil Mullainathan tweeted the card out. So did top economist Justin Wolfers. Vanguard mentioned the card on its blog. "Pollack's right," wrote Ezra Klein in the Washington Post. "Follow these principles and you'll be in much, much, much better shape than most Americans — or most anyone."
Unlike the majority of money advice out there, Pollack's index card simplifies things, and is based on his personal experience of turning around his and his wife's financial situation.
"Through trial and error, conversations with friends and other academics, I slowly pieced together a new financial regimen," Pollack writes in "The Index Card," the book he and Olen co-authored. "Some was common sense. Some involved teaching myself insights that were actually well known to financial economists but under emphasized in the cacophony put out by the financial services industry. The most important advice was embarrassingly simple."
Here's the original card, which Pollack drafted up in three minutes:
Courtesy of Harold Pollack
The card reads:
1. Max your 401(k) or equivalent employee contribution.
2. Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20XX funds.
3. Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff.
4. Save 20% of your money. (In "The Index Card," Pollack and Olen altered this to "10% t0 20%").
5. Pay your credit card balance in full every month.
6. Maximize tax-advantaged savings vehicles like Roth, SEP, and 529 accounts.
7. Pay attention to fees. Avoid actively managed funds.
8. Make financial advisers commit to a fiduciary standard.
9. Promote social insurance programs to help people when things go wrong.
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