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.