Personal Finance 

Your take: Fit all finance advice on a 3×5 card

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What personal finance advice do you consider essential?
This week a fascinating exercise by University of Chicago professor and Incidental Economist writer Harold Pollack made the rounds in the blogosphere.

Asked by a reader “What is this simple free best personal finance advice that fits on a 3Ă—5 card?” Pollack filled out an index card with what he thinks is all the knowledge you need to manage your personal finances.

Here’s what he came up with:
Harold Pollack's index card of financial advice

For those who can’t read his hand-writing, this is the all-around pretty solid personal finance advice offered by Pollack:

  • Max out your 401(k) or equivalent employee contribution.
  • Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20XX funds.
  • Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff.
  • Save 20 percent of your money.
  • Pay your credit card balance in full every month.
  • Maximize tax-advantaged savings vehicles like Roth, SEP and 529 accounts.
  • Pay attention to fees. Avoid actively managed funds.
  • Make your financial adviser commit to a fiduciary standard.

Being a guy who spends a lot of time studying public policy, Pollack also throws in at the end that people should support social insurance programs, e.g. Social Security, as a hedge against misfortune.

Your take: What would you write?

What I’m interested in knowing is, given the assignment of putting everything you need to know about money on a 3×5 index card, what would you write?

For the record, as someone who’s read thousands of pages on the intricacies of finance and still feels like I have more to learn, I disagree with Pollack’s premise that it’s possible to fit everything you need to know to be manage your money well on a card like this. But if I was going to try, I’d definitely need to add a few things that Pollack leaves out, such as:

  • Keep at least 6 months’ worth of expenses on hand at all times for emergencies.
  • Don’t take on a mortgage payment that’s more than 28 percent of your income.
  • Put aside money for medical savings in an FSA.
  • Keep five years’ worth of your salary in life insurance coverage to help take care of your family in the event you unexpectedly croak.

Update: Here’s mine (Pollack actually kind of cheated and used a 4×6 card so that’s why mine is smaller).
My take on Pollack's card

What else do you think we need to add or subtract?

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7 Responses to “Your take: Fit all finance advice on a 3×5 card”

  1. Michelle says:

    I would put:

    Live on less than 50% of your income.
    Pay off high interest debt.
    Don’t be house poor.
    Have an emergency fund.

  2. Claes says:

    Really like this one, Michelle. Simple and definitive.

  3. Sadie says:

    Have had similar posted on refrigerator since retiring & moving to this home in 2006!

    Takes more than writing; need to act!

  4. Score!!! I do 90% of these! I think the tips on cards one and two are perfect. I wouldn’t really change anything.

  5. Debt Blag says:

    “Being a guy who spends a lot of time studying public policy Pollack also throws in at the end that people should support social insurance programs, e.g. Social Security, as a hedge against misfortune.”

    It’s not a stretch to think he wrote that because he believes he personally benefits. Maybe he wouldn’t have taken the risks he has if there wasn’t a safety net in case he didn’t succeed. Maybe he knows social insurance has indirectly led to him having better people to teach and more people to buy his books.

    I’m not sure why this doesn’t get to be with his other tips in your bullet point section 🙂

  6. Mike Sinark says:

    Educate yourself so you don’t have to get advice off of a 3 by 5 card.

  7. Meagan Bell says:

    Love this!! Just pinned to my “Good To Know” Board. I have been very happy that I followed the mortgage advice. Some months having a lower mortgage payment has made the difference between saving or going into debt

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