Can Your Money Rules Fit On An Index Card?

Illustration by Abbie Winters
For many people, establishing good habits is a matter of extremes. If you're trying to drink less coffee, you might go cold turkey instead of downsizing to one cup a day. Trying to spend less money? Looks like it's time to lock yourself in your house all weekend and delete Seamless off your phone. It might seem like your only alternative is to settle for paycheck-to-paycheck living, or to shell out for an expensive advisor. But if you want to create better, more doable rules for yourself when it comes to your finances in particular, you really can think much more simply.
At least, that's the motto of Helaine Olen and Harold Pollack, the authors of The Index Card: Why Personal Finance Doesn't Have to Be Complicated. In their book, Olen and Pollack explain that all the rules you need to weather your current financial situation could actually fit on a four-by-six index card.
Pollack came up with the initial idea after his wife's mother died unexpectedly, leaving his brother-in-law (who is intellectually disabled and requires a significant amount of help) in their care. Up until then, Pollack says he had "taken a rather lackadaisical attitude" toward his finances and had little in the way of savings. But when he realized how dire their situation might be if they didn't find a way to come out on top, he became "obsessed" with learning more about money.
"I really didn't know that much about finance, but I had a doctorate in public policy, and when I looked at the expert conversation, it was actually so much simpler than the cacophony you get from watching financial TV," he says. "One day, I interviewed Helaine and joked that the best advice is available for free at the library and fits on an index card."
Challenged by others to prove it, Pollack grabbed one of his daughter's index cards and "scribbled out" nine rules as basic as: "Strive to save 10-20% of your income," "Never buy or sell individual stocks," and "Max out your 401(k) and other tax-advantaged savings accounts" — all of which he later honed with Olen's expertise.
There's room to make the cards fit your situation, Pollack adds. "My original card said, Save 20% of your pre-tax income, and I got one email that said: 'Dear Professor Pollack, I'm a 28-year-old single mom, and you've just told me to save 20% of my money. Blank you.' And I get where she's coming from," he admits. "At that stage, if you cannot save 20% of your pre-tax income, you just can't. But what you can do is be methodical, watch your credit card, and be on a sensible budget...that makes sure your spending matches the things that are really important and necessary for you."
In time, by sticking to the basics individualized for himself, Pollack and his wife ended up breathing much more easily. They say you can do the same by figuring out your own rules.
"On one level, finances are very complicated, because they're based on the fact that you need to guess into the future — something that is basically an impossible task for us all," says Olen. "It's even more impossible in the world we live in, where incomes are not where they were, college costs are going up at rapid rates — as are healthcare, housing costs, and so on."
On the other hand, she explains, you shouldn't feel like the only people who hold the keys to wisdom are people whom you'd have to pay tons of money for advice. Ahead, Olen and Pollack review financial index cards from three Refinery29 readers and give their take on what's working — and what could use a bit of improvement. Check it out, and then try your own card.
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Annual Income: $85,000

Relationship Status: In a relationship

Situation: "I have two roommates and unfortunately, home ownership may not be in the cards for me until I'm in my early to mid-30s."

Goals: "My current goal is to apply to business school — and then figure out a way to afford it! Business school applications are pretty expensive when you factor in all of the hidden costs, like application fees (which can easily be $500+ if you apply to several schools), the GMAT ($250), GMAT preparation (almost everyone I know has taken a prep course, if not private tutoring, which can reach into the thousands), admissions consulting (useful, even if not necessary — and costs thousands), and eventually, the costs of traveling for interviews. After that, the cost of attending business school is very expensive."
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Photographed by Ruby Yeh.

Harold & Helaine Say:

"Good luck on the B-school hunt! Make sure to visit each school and not get your heart set on any one of them. Yes, you will feel the travel cost, but that is a long-term investment.

"Don’t be too worried about not buying a home. You don’t want to be financially or logistically tied down to a house until you have a good reason to believe you'll be in the same place for at least five years. (And if you are planning to attend graduate school, chances are this won't happen now.)

"Finally, don't spend much time thinking about your Chase Sapphire Reserve card. Research indicates that focusing on reward programs tends to increase your spending by at least 20%. Our advice: try an experiment. See if you spend less money if you use cash more often. Then, you can pay yourself with your own reward program."
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Relationship Status: Married

Annual Income: $100,000 (combined)

Situation: "I live with my husband and our dog, and we're fortunate to live a life free of student loan debt, credit card debt, and even car payments. (Mine was a gift; his is paid off.)"

Goals: "Our current goal is to buy a house within the next year, and we're aiming for a mortgage that is the total of our monthly rent and what we currently save each month toward the house. My husband thinks all of our savings should be used for a down payment on a house, and I believe we should save some of the money for emergencies."
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Photographed by Rockie Nolan.

Harold & Helaine Say:

"You are in great shape! Just a few thoughts:

"First, you definitely don’t want to deplete your savings on the down payment. You need a strategic reserve — we'd say two months' salary is ideal — in case a raccoon eats its way through the roof, the basement leaks, or you need new hot water heater. If at all possible, make sure to save for a 20% down payment, and to get a good old 30-year or 15-year fixed-rate mortgage. When buying a house, it's more important to be well-positioned financially than it is to buy one quickly.

"Also, there’s nothing on your card about retirement savings. Make sure that you and your husband are taking advantage of any workplace opportunities. If you have access to an employer match, that is free money. Since you are young with a good income, you can get a nice head start."
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Annual Income: $50,000

Relationship Status: Partnered

Situation: "I live with my boyfriend in Somerville, MA and work in Boston. We split the rent; his income is a bit larger, so he pays a little more than I do. We also split the payments for a car lease and car insurance. I have a very small amount of student debt and make loan payments of around $50 each month."

Goals: "At the moment, my main financial goal is to save money to go to graduate school — I'm trying to avoid student loans at all costs — and to travel around Europe and Asia. I do try to create (and stick to) a budget in advance based on my income, spending, and savings goals. However, I also try not to be too strict, and allow myself to spend on little things that bring me joy, like yoga classes, going out for dinner or drinks occasionally, and going to concerts over the summer."
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Photographed by Rockie Nolan.

Harold & Helaine Say:

"It is great that you are staying off the credit card debt treadmill. At your age, this isn’t easy.

"You seem as though you are staying roughly on budget without going crazy about it. Your emphasis on bigger expenses shows that you understand a major principle of finance: large outlays — not small ones — are almost always the ones that cause us the most grief.

"There’s nothing on your card about retirement savings. If your workplace offers a retirement plan, take advantage of it. If not, set up an Individual Retirement Account and invest the sum in a low-cost growth index fund."
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