9 Simple Family Finance Rules

9 Simple Family Finance Rules

Remember the story of that dude who wrote 9 simple money rules all on 1 index card?

Harold Pollack index card for personal finance tips. Photo Credit/All Rights: Harold Pollack.

If not, here’s a brief summary.  Harold Pollack, a University of Chicago social scientist, mentioned on his personal video blog that all the best personal finance advice can be found for free in the library and can fit on an index card.  Problem was, the index card didnt’ exist.

He went home, wrote up 9 rules on an index card, and posted it online.  IT WENT VIRAL.

I’ve read a lot of things in personal finance over the last 15-20 years.  His 9 rules pretty much sums up the rules for pretty much everybody.

The Index Card Rules


  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.

While these tips help most people, there’s a lot more that you need to do.

While I don’t think my family index card will go viral, I did think of a few things that families need to consider.

Here are my 9 family finance rules.

My 9 Family Finance Rules


9 Simple Family Finance Rules

I think these 9 are relatively straightforward.  I realize there’s some overlap, but there’s some important actions that families should consider.

1.  Invest in yourself.  

Your future earning potential is your biggest asset.  Develop a new skill. Ask for a raise.  Show value to your employer.  If you feel they’re not paying you well, find another employer.

2.  Save 20% of your money.

This should be a minimum bar and hopefully you’re able to save more

3.  Invest in low-cost passive index funds.  That should be the only thing in your portfolio.

The data is very clear.  High-cost actively managed fees rarely beat the market over a long period of time.  Pay attention to fees…they eat into your returns.  And, unless you have hours of time to research every week, picking stocks is like throwing darts in the dark.

If you put your money in a low-cost passive index fund, you will do well in the long run.

4.  Maximize tax-advantage savings vehicles (401k, Roth, SEP, 529, HSA, Dependant Care).

When you get your paycheck every 2 weeks, the government has already taken their cut.  What you have left over is what you can spend, save, or give.

There are ways to keep the money before the government can take it.  In some circumstances, they will never be able to touch it.  In other circumstances, they can’t touch it for decades, allowing that money to grow over time.

401k’s, SEP IRAs, Traditional IRAs, HSAs, and dependant care expenses are all areas that are funded with pre-taxed money.

Roth IRAs and most 529 college savings plans are after tax money, but the growth is never taxed.

5.  Don’t risk retirement to pay for child’s college.  They can take out loans.

We plan on paying for our children’s college education.  If our kids go to an in-state school, we project we’ll need north of $700,000.  If they all go to a private school, we’d need $1,700,000.

We only fund their 529s after we max out all other retirement savings vehicles.

The bottom line is that you can’t take a loan out for your retirement.  Your children can take a loan out for college.

6.  Protect your family.  

Get term life insurance.  Get a will or better yet, a revokable living trust.

7.  Dont’ buy new cars.  Buy a 3-5 year old, good quality, used car.

Most of the depreciation occurs in the first 3-5 years, then depreciation slows.

Let someone else pay for the first few years of depreciation.  Now a days, cars go up to 150,000 to 200,000 without any major repairs.  If you get a car with 36,000 miles already on it, and you drive 15,000/year, you can get a good 10 years before you have to any major issues.

8.  Create a family budget and stick to it.  Make sure every cent has a purpose.

Treat you home like a company.  You have income that comes in, then you have money that goes out.  Every dollar that goes out should have a purpose.  For every $100 you make, you need to know how much will go to food, housing, cars, saving, investing, giving, etc.

9.  Create a family giving plan.  If for no other reason, science supports that giving makes people happy.

We believe that we need to be good stewards of our resources.  That also means giving to those who are less fortunate.  We also give to our church which provides a lot of benevolence services.  We hope our kids will want to do the same.  They’re a little young now to understand our donor-advised charitable gift fund, but we try to expose them to ways then can give themselves.

Let me know your thoughts in the comments below.  Am I missing anything?  Are these simple rules to follow?


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