Home / Money / Personal Finance /  Nine simple rules that can change your finances

You don't need to read books on finance, follow experts, or go through tonnes of research to manage your finances.

Harold Pollack, a professor at the University of Chicago, lists down nine simple rules that can help you save, invest, and better manage your finances.

According to reports, in 2013, Pollack shared his views on personal finance while interviewing Helaine Olen, an author. The interview was about Olen's book, 'Pound Foolish'.

During the interview, he said that the best personal finance advice can fit on an index card. "…if you're paying someone for advice, almost by definition, you're probably getting the wrong advice, because the correct advice is so straightforward," he had said.

After Pollack posted the video, viewers started writing to him. They asked where can they find the index card he mentioned. Pollack didn't have an index card. He was trying to make a point that personal finance need not be complicated.

But as queries on the index card started pouring in, Pollack wrote one and posted it online. It went viral. This led to a book called 'The Index Card: Why Personal Finance Doesn't Have to Be Complicated'. It was written by Olen and Pollack.

You can find the index card on Pollack's Twitter handle: (

Pollack's index card
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Pollack's index card

Here are Pollack's nine personal finance rules.

1. Max your 401(k) or equivalent employee contribution.

401(k) is similar to a provident fund in India. It's a retirement savings account in the US. In India, employees can use voluntary provident fund (VPF), or public provident fund (PPF), National Pension Scheme (NPS) to contribute more to their retirement savings, beyond what they do via employee provident fund (EPF).

2. Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20XX funds.

Use an index fund that has a low expense ratio and tracking error below 1% for your investments.

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.

Stay away from direct stock investment.

4. Save 20% of your money.

Of the salary you earn, or the monthly income you make, invest at least 20% of it.

5. Pay your credit card balance in full every month.

Rotating your credit card balance can lead you into a debt trap.

6. Maximize tax-advantaged savings vehicles like Roth, SEP and 529 accounts.

In India, it would be similar to in NPS, VPF, EPF, and making full use of Section 80C investment limit that offers tax benefits.

7. Pay attention to fees. Avoid actively managed funds.

It's difficult for an actively managed fund to beat its benchmark consistently. Instead of shifting from one fund to another based on performance, invest in an index fund.

8. Make financial advisors commit to the fiduciary standard.

Opt for a fee-only Sebi registered investment advisor (RIA) and use direct plans for mutual fund investments. As the advisor won't receive a commission, he or she will work in the best of your interest.

9. Promote social insurance programmes to help people when things go wrong.

Social programs in the US designed to ensure that the basic needs of the population are met. They have many such programmes that include cash assistance, health insurance, food assistance, housing subsidies, education, childcare assistance and so on.

In the Indian context, there is no equivalent of it. Therefore, the last rule would be to have adequate life, health, and critical illness insurance policies.

Do you have a personal finance query? Send them to and get them answered by industry experts.

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