Personal finance really doesn’t need to be difficult. Too many finance books and websites fail to highlight this and make things unnecessarily complicated. In The Index Card: Why Personal Finance Doesn’t Have to Be Complicated, Olen and Pollack do a great job of laying out the basics as simply as possible.
Ironically, the premise of the book is that you only need an index card to cover the important points – not a whole book. It’s a relatively short and easy read though, and does a good job of value-adding to the concepts without dragging things out. If you have the time, I recommended buying the book and reading through in full – if you’re time poor, then just read the summary below!
The 10 key personal finance points:
- Save 10-20% of your income
- Pay off your credit cards in full every month (and minimise other debt)
- Maximise your tax-advantaged savings accounts (e.g. 401(k), superannuation)
- Don’t trade individual stocks
- Buy inexpensive diversified indexed mutual funds and exchange-traded funds (ETFs)
- Hire a fee-based fiduciary (avoid commission-based financial salespeople)
- Only buy a home that you can afford
- Buy term life insurance, car insurance , home insurance, renter’s insurance and disability insurance
- Support the social safety net (Social Security, Medicare, Medicaid etc.)
- Keep doing the first 9 points!
Importantly, this book is written primarily for a US audience and thus some points will be less applicable to readers elsewhere. The general principles are the same though!