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

Posted By Claes Bell On 09/20/2013 @ 8:30 am In Personal Finance | 7 Comments


This week a fascinating exercise [3] 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 3×5 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:

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).

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

Connect with me on Google+ [4]


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[3] a fascinating exercise: http://www.samefacts.com/2013/04/health-and-medicine/medicare-health-and-medicine/advice-to-alex-m/

[4] Connect with me on Google+: https://plus.google.com/103301703190080602693/posts/p/pub?rel=author

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