Read this New York Times article about Harold Pollack, a University of Chicago professor that wrote some maxims of personal finance onto an index card, and subsequently published a book Index Card: Why Personal Finance Doesn’t Have to Be Complicated. The original index card is found here.
The article compiled a number of other index cards written by columnists/authors in personal finance, shown below. I have also included one from Christine Benz (Morningstar).
Here are the common themes:
- Save first
- Automate savings, pay yourself 20% of your income first
- Save and spend towards a goal
- Maximize tax-advantaged and retirement accounts
- 401(k), IRA, Roth, SEP, 529
- Invest in low-cost, well-diversified index funds
- Protect against the unexpected
- Get term insurance, disability insurance
- Make a will
Harold Pollack, University of Chicago professor in the School of Social Service Administration
- Max your 401(k) or equivalent employee contribution
- Buy inexpensive, well-diversified mutual funds such as Vanguad 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% 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 financial advisor commit to a fiduciary standard.
- Promote social insurance programs to help people when things go wrong.
- Strive to save ten to twenty percent of your income
- Pay your credit card bill in full every month and deal with other forms of debt
- Max out your 401(k) and other tax-advantaged savings opportunities.
- Never buy or sell individual stocks
- Buy inexpensive, well-diversified indexed mutual funds and exchange-traded funds.
- Make your financial advisor commit to a fiduciary standard.
- Buy a home when you are financially ready.
- Insurance – make sure you are protected
- Do what you can to protect the social safety net to help people when things go wrong.
Carl Richards, New York Times contributor and Author of “The One-Page Financial Plan”
- Time with family, mainly outside.
- Time to serve in the community.
- Fully fund retirement accounts
- Fund kids 529 accounts every year
- The rest of the $ goes to save for a house
Tara Siegel Bernand, New York Times personal finance reporter
- Automate savings – downpayment, retirement, 529, even small goals like vacation. Then spend what you want
- Index funds. Always index funds. Ignore the market, mostly. Rebalance
- Retirement savings may not be linear. But aim for at least 10-15 percent of salary. Raise it 1 percentage point annually.
- Do a ton of prep work before asking for a raise. If you’re a woman, do more.
- Change the culture. Take all of your parental leave. Dads, too.
- Work only with financial planners who have nothing to sell but their time. Must be a fiduciary.
- Get term insurance, a will, have a money talk with your parents.
- Before you vote, think about whether you’ll need Social Security.
- Spend on experiences
Jane Bryant Quinn, Author of “How to Make Your Money Last”
- When you retire you’re finally free – but free to do what? Let go of who you were and focus on who you’ll become.
- Right-size your life! Work out how much you can afford to spend when your paycheck stops.
- You’re still a long-term investor with 25 or 30 years ahead. Keep buying stock-owning index mutual funds.
Christine Benz, Morningstar’s Director of Personal Finance and Author of “30-Minute Money Solutions”
- Goal: To build a low-maintenance, low-cost, high-growth portfolio to fund retirement and shorter-term goals
- Invest in low-cost mutual funds, both index and active, via 401(k)s, IRAs, and taxable accounts.
- Favor equity funds but gradually enlarge bond position as retirement approaches.
- Hold cash and municipal bonds for S/T expenses.
- Check up once a year; rebalance if asset allocations +/- 10 percentage points of target of allocation.
Ron Lieber, “Your Money” Columnist
- Money = Feelings (HT 9 Behavior Gap). Measure both. Know yourself.
- Doing things > Having things. Experiences > Stuff
- Our spending = Our values. Explain both to children
- Do something you love. Money may not follow, but you’ll be happier.
- Food trucks good. Mediocre pricey NYC restaurants bad. Omakase!
- Honor your family’s history of having been helped: Give time + $$
- Index only. Save a ton. Re-allocate periodically (HT 9 Michael Pollan)
- Disability insurance: Undersold, Underbought.
- Yes you can borrow for retirement. More people will use (+ need) reverse mortgages, + they will help many with few options.
- Spend your old-age money. Your adult kids will be fine!
John Clements, Author of “Money Guide 2016”
- Five Keys to Financial Wellness
- Keep housing, cars and other fixed living costs to less than 50% of income. That’ll mean less financial stress, more cash for fun – and the ability to save gobs of money.
- Never take on any debt you can’t pay off by retirement.
- In your 30s, worry what would happen if you died or couldn’t work. In your 60s, worry what would happen if you lived longer than you ever imagined.
- You can’t control the markets, but you can control risk, taxes and investment costs. Hint: Buy index funds.
- Want greater happiness? Design a financial life where you spend your days engaged in fulfilling work — and your evenings with friends and family.
Paul Sullivan, “Wealth Matters” Columnist, Author of “The Thin Green Line”
- Saving too much gives you options. Saving too little means someone else makes decisions for you.
- Think in terms of plans, not budgets. A healthy financial life is about saving and spending toward a goal, not depriving yourself.
- Focus on what you can control — saving, spending, being healthy. But be prepared when something fails.
- Every financial life — good or bad is about three things: decisions, behaviors and the choices they create.
- In the end, be realistic!
Scott Adams, Dilbert cartoonist
- Make a will (if you care)
- Pay off credit cards. Now! Now! Now!
- Get term life insurance if you have family.
- Fund IRAs and SEPs to the max
- Houses are expenses, not investments!!!
- Put six months worth of expenses in bank
- If any money left: 70% = Stocks ETF or Index fund (low fees type), 30% = Bond fund
- For the “big plan” hire a financial planner who charges a flat fee (only!)