Why Personal Finance Doesn't Have to Be Complicated

1st read about his index card several years ago; was thrilled to see it fleshed out as a book. I will give it for Christmas presents this year. No one wants to not buy toys and delights, but he helps the reader imagine a viable way to have a more secure retirement, and that makes saying yes to CZ stones and no to diamonds a lot more palatable.

This book has SAVED my finances. I cannot recommend this book more to anyone who has to deal with money (which is everyone) and isn't entirely sure what to do. It covers every area of money from loans to retirement to saving. The writers are unbiased and will tell you the truth behind every transaction. This is my bible of finance.

Everyone needs to read this book. I've been living my life pretty closely to this guidance for a handful of decades. Smart, simple, and applies to everyone. You don't need to be rich to be wise and plan for your future.

Simple and to the point, cuts through the mainstream financial guru gunk advice. Advice should always be given on a provisional basis ("If this is your situation or needs or values than ____" It's up to you to decide and with your trusted others what's important and best") - rather than dictatorial. And the book does a fine job of doing the former through stories.

My first issue with this book is that the authors decided to water down the original advice to save 20% of your income "because that is too hard for most of us" and change it to 10-20%. Come on now. Any of a dozen calculators show that starting from 0 and only saving 10% of your income = 51 more years until retirement. I think "financial writers" should challenge their readers to stretch and grow.

My second issue with this book has to deal with limited or misleading information. Specifically on p. 85-87 in the section on "if you change jobs, don't change retirement accounts." They claim that workplace retirement plans typically come with lower-fee investment options and stronger regulatory protections than you will get on your own. I don't know where they have worked, but Vanguard ALWAYS beats my employers' plans in terms of fees and options. Next they cite an article where the individual was given poor advice to roll over his TSP into an IRA. Well, yeah that is bad advice. But how many of us actually have access to a TSP? I sure don't. So again, rolling over my 401(k) from my old employer with fees at least .5% higher than Vanguard to a nice low-cost IRA at Vanguard saves me money that gets to compound at a much faster rate. But unless you go look at the article they reference (by typing in a VERY long URL found at the back of the book b/c they DON'T tell you the name of the article or the researcher who investigated the process) you won't know the oh-so-important detail that he was looking at a TSP!

They should have just stuck with the original index card and not wasted their time writing this book...

The Index Card, Why Personal Finance Doesn't Have to Be Complicated, By Helaine Olen and Harold Pollack is a marvelously straight forward book written for people who need to hear sound financial advice in clear and simple language. This book gives many examples to explain their advice. They ALL make sense and should be easy to follow once you make it a part of your everyday routine. And I say to you all, it should be part of your everyday routine. From learning to budget, to paying off credit cards, ending debt, and saving for everything from vacations to automobiles to saving for retirement, this book is a clear and great guide to peace of mind.
This book was recommended to me by my wife, of all people. Although she reads mostly nonfiction, money and finance are NOT what she normally reads. She loved the book enough to tell me about it and once I started reading the book I knew why she liked it so much. The authors spoke to the reader and in everyday language so it would be easy to understand. Their examples are real life and relatable to most people.
Read this book first by taking it out from your library and then, once you have finished it and realize how much it can help you, go out and buy a copy for yourself, loved ones and friends too.

Summary

“The Index Card: Why Personal Finance Doesn’t Have to Be Complicated” is a simple book for investors who want to take control of their finances without spending long hours studying and researching the topic. It covers a lot of the information people need to build a strong financial foundation, starting with saving 10 to 20% of their income, paying off credit cards in full every month, and maximizing tax-advantaged savings accounts. It also recommends not to purchase any individual stocks, noting that even many experts are bad at predicting the future price of any given company’s stock. Instead, the authors recommend investing in low-cost index funds. Readers are also urged to only hire financial advisors who commit to the fiduciary standard. Finally, the topic of insurance is also addressed.

Pros

Unlike most personal finance books out there, “The Index Card” contains simple, actionable information and doesn’t waste readers’ time with too many anecdotes. It covers many of the topics that beginners will need in order to get started: debt management, creating an emergency fund, investing in index funds, etc. The most refreshing aspect of the book is the fact that it doesn’t pretend to reveal “secret” financial information, unlike many of the other personal finance books out there. Instead, its premise is that personal finance doesn’t have to be complicated and anyone can learn the basics pretty quickly.

Cons

Although they provide a sample portfolio for a forty-year-old person, it would have been helpful to see additional portfolio samples for people of different ages and risk tolerance. The portfolio described in the book, although decent, would not necessarily be good for younger investors.
Some of the advice in the book could have been a little more specific. For example, readers are encouraged to get term life insurance but it doesn’t specify how much insurance to get.

How practical is the information in the book? Rating: A–

Most of the information is specific enough that anyone could apply it immediately after reading the book. It would have been helpful to list specific companies for some the products and services that they recommend, such as robo-advisors. (They do provide company names for a number of their recommendations, just not all of them.)

How sound is the advice in the book? Rating: A

The information is solid and it covers a surprising number of topics for such a short book. Some of the topics could have been expanded a bit, such as the importance of regularly rebalancing your investments.

Does the book live up to its claims? Rating: A+

Unlike many personal finance books which make bold promises of wealth or low-risk/high-reward investing, “The Index Card” simply tries to demystify basic financial topics and it does a great job at that. The book covers most of the topics beginners need to know about to get started investing for retirement.

Overall Rating: A-

This book should be required reading for all college students or anyone who is about to start working at a first job. People who are not interested in spending long hours studying this topic will appreciate the “no-bs” approach of this book and the fact that it is a relatively quick read (250 pages). Although most of the information in the book is very actionable, the format could have been further simplified and a list of recommended companies could have been added to make it even easier for readers to immediately put the information into action. Other than that, the information is sound and will benefit most beginner investors.

This book is ridiculously light on the details, and is basically for people who are still working on the very first steps of getting their financial house in order. If you are saving money towards retirement every month and investing it in low cost index funds, not maintaining large credit card balances, and already have term life insurance, then there's no need for you to read this book.

Two examples: Firstly, the chapter on insurance says that you should buy term life insurance rather than whole life, but it says *absolutely* nothing about how much life insurance you need! That is completely useless to me. Secondly, the chapter on saving money says you should save "10-20%" of your income, but again says nothing about where these magic numbers come from.

Overall, this book is completely worthless to me.

Well, I won't take credit for this observation, but if everything you need to know about personal finance can be written on an index card, then why do you need a whole book on it? Think about that one for awhile. Seriously, I am an expert on this subject, and I didn't learn anything I didn't know, but I still enjoyed reading the book, and I have strongly recommended it to many others. Half of the financial problems in the US and perhaps other countries come from too much spending and not enough saving. What savings people do are not invested wisely and efficiently. Everyone should read this book and use it on a day to day basis. If they did, people would be able to keep more of their hard-earned money and Wall Street would be facing an unemployment problem. Wouldn't that be nice?

I wouldn't say this book contains BAD advice, and it's far better than entering into a financial life with zero guidelines, but I'd definitely call it just a starter plan. Yes, indeed, don't use credit cards if you can't pay off the balances in full each month. Yes, commit to save and take advantage of tax-benefitted savings options.

But assuming you do follow its (or some other starter-plan adviser's) advice, at some point 5-10 years down the road, many people will have developed enough of a nest-egg that they should consider learning a lot more about investing and possibly branch out into a more individual and better informed path.

I don't think I'm "exceptionally skilled" at investing, but after doing a fair amount of careful reading on stocks, I started investing in individual stocks almost four decades ago, and have done far better than plenty of investors who stuck to "well-chosen" mutual funds but were so ignorant of the market they got greedy in 1999 and went all-in the tech bubble thinking they were safe in tech mutual funds, or panicked in 2008 and sold everything at the bottom and cowered in fear until recently. I didn't do those things because of my earlier studies, and as a result, have fared quite well. Anyone with a college degree or equivalent real life experience in a subject that demands logical thought and depends on a high proportion of right answers (sciences, math, engineering, business) is capable of learning enough about investing to go beyond this book's advice.

Finally, I didn't enjoy the mixing of off-topic (and off kilter) political commentary with the financial advice in the book.

Considering especially Olen's background with debunking financial advisers, if they were going to branch off on the politics of the "social safety net" the least they could have done was be honest about the financial consequences of those systems for people who DID successfully follow their advice: The reality that Social Security offers an abysmally poor rate of return on investment for most middle class participants and a negative return for those above that class; the reality that "affordable" insurance for some is being purchased by skyrocketing premiums on others (I'm especially attuned to that since the individual plan I was happy with for decades cost me only $207 a month the year before the ACA made it "illegal" and forced me into an inferior plan the premium for which is now $847 a month. Gee, thanks for the help!).

Not to mention that it is the height of hypocrisy to urge people on the one hand to focus on tax sheltered investments while urging them on the other to politically engage in making taxes higher. It smacks of "Don't tax me, don't tax thee, tax that fellow behind the tree."

In the confusing world of personal finance books, this is an excellent place to start. It is written in a clear and straightforward manner. I particularly like the fact that the authors gave concrete examples/case studies from their own lives or the life of their friends. For instance, one of the authors discusses how his family experienced serious financial distress after he had to take responsibility for the care of his adult brother-in-law who had an intellectual disability. It makes the authors more relatable. (i.e. they are one of us instead authors making millions by giving us confusing and intimidating advice.) I would also highly recommend reading Helaine Olen's first book, Pound Foolish, to have a broader understanding of the world of personal finance.

With all the information we can access today, it's easy to be overwhelmed by financial decisions. This book is an excellent resource for anyone who wants to understand the basics of personal finance and what pitfalls to avoid. Rules 1-3 are things we hear all the time, but the rest are less commonly discussed. If you want unbiased ideas definitely read this book.

Good for novices. Basic financial information. Written in easy to read and understand knowledge. I
One criticism it seems the author refers to her book Pound Foolish a lot which makes it seems she us marketing her other book.

If you are new to personal financial planning this is the book for you. The information given I have read from other sources. I think it does not give any profound or innovations that can increase your net worth.

This book gave me the confidence to start saving wisely.
Explains well all the financial terms in a very concrete and simple manner.
The tips and guidance are very practical and can be acted immediately.

Basic financial information for a very financially unfit population.

My concern was the five pages the authors spent on life insurance. They know nothing about life insurance and it showed.

They make the comment; "the best type of life insurance to protect your loved ones, at the least cost to your pocketbook, is called term insurance."
No, the best type of insurance for your loved ones is one that fits your goals for income and asset protection, which in many cases is not the cheapest. If term insurance is selected because it's the cheapest and it doesn't accomplish what was needed then the money spent or saved over purchasing another type of life insurance was wasted. They never talk about the benefits of whole life insurance with a fair and open comparison.

They describe "level term" insurance as insurance where the premium doesn't increase. While it is true the premium for term policies for the duration of the term period remains the same, the phrase "level term" describes the amount of insurance remaining level during the period. Anyone with a very basic understanding of life insurance would have caught that.

They also try to tackle another topic often associated with life insurance. The authors say that a sales pitch "is to use life insurance to outsmart college financial aid offices and you should consider this a huge red flag." A huge red flag for what? Colleges don't use 401K, IRA, or the value of life insurance policies in their aid calculations. It's written in the free application for federal student aid, (FAFSA), the form submitted by parents and students, not to include those assets. The authors make it seem that using a strategy open to everyone and approved by the federal government is somehow shady. When I read that paragraph, I was thinking, why are the authors even mentioning certain sales pitches, when they should be covering the benefits of having life insurance (any type) in place to protect income and assets. In other words, say something like: you should have life insurance to cover college costs for your children in the event you pass away early. Or have life insurance on a young adult to cover the amount of student loans taken out by your child and that you cosigned for. That type of conversation concerning life insurance makes more sense that trying to tell readers to watch out for sales pitches.

It's obvious they knew nothing about life insurance and didn't have a licensed life insurance agent review what they published. I can't go over every item individually, but don't take any of the life insurance advise in this book without actually doing some more in-depth research. They did more harm than good on this topic.

Lastly, when I read the intro, Mr. Pollack says his wife's mother (who was the caretaker for her disabled son) passed away suddenly and he (his disabled nephew) had to move in with his family causing a financial strain. I was hoping that in the life insurance section, he would have mentioned that's exactly why the mother should have had a life insurance policy sufficient to make sure her son got the care he deserved without financially burdening other family members. That's exactly what life insurance is for and he never made the connection.

Certainly some obvious, common sense points here......but a lot of simplistic, blanket, one size fits all, low hanging fruit nonsense. It utilizes one of the most disingenuous forms of deception - to make something look good compare it to something worse. This is the problem with traditional financial "advice." Shouldn't we be comparing ideas to the ideal? Shouldn't we be evaluating ideas based on their ability to solve real problems that we face in our current practical reality? Should we base every decision based on a past performance that no longer exists? These ideas can work and they certainly can be part of an overall financial strategy but these uncoordinated ideas on their own are not a sound, efficient financial strategy. We can do better.

This book is a savage and unprincipled attempt to deny fakers, con artists, fee-fed financial "advisors", shills, churning fund managers, and TV money pundits their yachts and condos. They should be headed for Olen and Pollack with torches and pitchforks, and all Americans who think they are the legitimate prey of that crowd should join them.

Totally oriented to US. Most of the content, e.g. recommendations related to taxes or retirement funding are US-based. For international readers the only practical advice is to save a certain percentage of your income monthly. You really wouldn't need a book to figure this out.

Horrible book. The authors don't understand how credit cards work. Hint: The issuer charges merchants a percentage of the purchase price, so they make money even if you pay your bill in full every month. The authors don't understand that the federal reserve is largely responsible for the low saving rate by manipulating interest rates. The authors don't understand buy and hold investing with individual stocks. it appears that they assume you will put all your money in one company and then day trade. The authors don't understand the causes of the 2008 financial crisis. The final chapter celebrating big government was very disappointing.

In short don't buy this book unless you have no concept of personal finance and want to improve to an inaccurate concept of personal finance.

Basic financial information for a very financially unfit population.

My concern was the five pages the authors spent on life insurance. They know nothing about life insurance and it showed.

They make the comment; "the best type of life insurance to protect your loved ones, at the least cost to your pocketbook, is called term insurance."
No, the best type of insurance for your loved ones is one that fits your goals for income and asset protection, which in many cases is not the cheapest. If term insurance is selected because it's the cheapest and it doesn't accomplish what was needed then the money spent or saved over purchasing another type of life insurance was wasted. They never talk about the benefits of whole life insurance with a fair and open comparison.

They describe "level term" insurance as insurance where the premium doesn't increase. While it is true the premium for term policies for the duration of the term period remains the same, the phrase "level term" describes the amount of insurance remaining level during the period. Anyone with a very basic understanding of life insurance would have caught that.

They also try to tackle another topic often associated with life insurance. The authors say that a sales pitch "is to use life insurance to outsmart college financial aid offices and you should consider this a huge red flag." A huge red flag for what? Colleges don't use 401K, IRA, or the value of life insurance policies in their aid calculations. It's written in the free application for federal student aid, (FAFSA), the form submitted by parents and students, not to include those assets. The authors make it seem that using a strategy open to everyone and approved by the federal government is somehow shady. When I read that paragraph, I was thinking, why are the authors even mentioning certain sales pitches, when they should be covering the benefits of having life insurance (any type) in place to protect income and assets. In other words, say something like: you should have life insurance to cover college costs for your children in the event you pass away early. Or have life insurance on a young adult to cover the amount of student loans taken out by your child and that you cosigned for. That type of conversation concerning life insurance makes more sense that trying to tell readers to watch out for sales pitches.

It's obvious they knew nothing about life insurance and didn't have a licensed life insurance agent review what they published. I can't go over every item individually, but don't take any of the life insurance advise in this book without actually doing some more in-depth research. They did more harm than good on this topic.

Lastly, when I read the intro, Mr. Pollack says his wife's mother (who was the caretaker for her disabled son) passed away suddenly and he (his disabled nephew) had to move in with his family causing a financial strain. I was hoping that in the life insurance section, he would have mentioned that's exactly why the mother should have had a life insurance policy sufficient to make sure her son got the care he deserved without financially burdening other family members. That's exactly what life insurance is for and he never made the connection.

Certainly some obvious, common sense points here......but a lot of simplistic, blanket, one size fits all, low hanging fruit nonsense. It utilizes one of the most disingenuous forms of deception - to make something look good compare it to something worse. This is the problem with traditional financial "advice." Shouldn't we be comparing ideas to the ideal? Shouldn't we be evaluating ideas based on their ability to solve real problems that we face in our current practical reality? Should we base every decision based on a past performance that no longer exists? These ideas can work and they certainly can be part of an overall financial strategy but these uncoordinated ideas on their own are not a sound, efficient financial strategy. We can do better.

This book is a savage and unprincipled attempt to deny fakers, con artists, fee-fed financial "advisors", shills, churning fund managers, and TV money pundits their yachts and condos. They should be headed for Olen and Pollack with torches and pitchforks, and all Americans who think they are the legitimate prey of that crowd should join them.

Totally oriented to US. Most of the content, e.g. recommendations related to taxes or retirement funding are US-based. For international readers the only practical advice is to save a certain percentage of your income monthly. You really wouldn't need a book to figure this out.

Horrible book. The authors don't understand how credit cards work. Hint: The issuer charges merchants a percentage of the purchase price, so they make money even if you pay your bill in full every month. The authors don't understand that the federal reserve is largely responsible for the low saving rate by manipulating interest rates. The authors don't understand buy and hold investing with individual stocks. it appears that they assume you will put all your money in one company and then day trade. The authors don't understand the causes of the 2008 financial crisis. The final chapter celebrating big government was very disappointing.

In short don't buy this book unless you have no concept of personal finance and want to improve to an inaccurate concept of personal finance.