SMMC Book Club
Danielle, Assistant Director of Financial Wellness
Synopsis
During an interview regarding Olen’s first book on the personal finance industry, an offhand comment was made about how the most important rules don’t have to be so complicated. To demonstrate, Pollack wrote his list down on a single index card:
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.
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 advisors commit to the fiduciary standard.
9. Promote social insurance programs to help people when things go wrong.
The book is divided into these sections and explains how to apply them in a fiscally responsible way. The rules can be applied to many people’s financial circumstances, though some will not be feasible immediately for traditional college students. However, knowing the rules and how to apply them for the most usefulness will serve new graduates well as they assess which benefits to prioritize as they begin their goals of financial independence and retirement planning.
My Takeaways
These are rules that anyone can start applying today – save money, pay off debts – and the rest are lessons to learn about fiscal prudence, incorporating goals into your actions, and paying attention to your financial future. The book is written clearly, but never talks down to the reader. Examples are useful, and help to illustrate the topics. I enjoyed reading this to remind me of the basics and to think about how I can make even better decisions to maximize my financial potential.
The Index Card: Why Personal Finance Doesn’t Have to be Complicated
by Helaine Olen and Harold Pollack