Last week, Ezra Klein wrote a short post on Wonkblog about Harold Pollack's exercise of writing on a 4X6 note card the soup-to-nuts advice he'd gleaned from personal finance expert Helaine Olen. As Pollack notes, it's "the financial industry's basic dilemma: The best investment advice fits on an index card."
"It would probably fit on a 3x5 index card if you really crammed," Klein wrote. "Pollack's right. Follow these principles and you'll be in much better shape than most Americans. And it will cost you all of $2.20 for a pack of index cards." The post proved wildly popular.
CHICAGO -- This index card, which took maybe three minutes to scribble, is among the most widely cited things I've ever done. It's been copied, e-mailed, tweeted and retweeted hundreds of times. That's a little puzzling, since everything I wrote is familiar to millions of people. But I believe it reflects three things:
-- People hunger for useful basic information about how to manage their financial lives, particularly in a time of such economic uncertainty.
-- Most people require relatively simple advice and relatively plain accompanying financial products. The reality is that these products provide only modest profit opportunities for the financial services industry. In all too many cases, investment advisers have aggressive sold inappropriate or overly costly investment products that do not serve their customers well.
-- Particularly if you have a steady job that provides a 401(k) plan, following a few basic savings rules can change your life. Most people I know fail to take advantage of such opportunities, and dramatically under-save.
I've gotten dozens of e-mails and comments about it. Many have said they wish their parents had given them the same advice 20 or 30 years ago.
I've gotten fair criticism, too. Some young people with child-care expenses rightly noted how hard it is to save 20 percent of their incomes. My advice is easier to follow if you're an upper-middle-class person or a childless employed adult than if you're in more challenging life circumstances.
We should all be better savers. Yet we must also remember something else. Acting together, we can protect against catastrophic risks that would wipe out any one of us, were we forced to face these risks alone. This, too, belongs on my little card.
Pollack, a University of Chicago social scientist, is a Wonkblog contributor.