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On the Money: Finance 101

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By Jenny Hoff, Photo by Micheile Henderson.

These financial tips will help make you a money genius.

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Gaining some financial savvy doesn’t require an MBA or any kind of a degree. According to Public Health Professor Harold Pollack, everything you need to know about finance can fit on an index card. He set out to prove it. Jotting down nine tips for money management on a 3-by-5 index card and posting it online. Soon after, it had garnered hundreds of thousands of views.

Get the insurance with the biggest deductible you can get.

“It’s something about the simplicity of that index card [that]seemed to grab people even though everything I wrote on there is really simple and straightforward,” says Professor Pollack, co-author of the book, The Index Card: Why Personal Finance Doesn’t Have to Be Complicated. “It actually won one of Money magazine’s best ideas of the year. Which is kind of funny if you look at most of those nine tips. Like pay off your credit card debt.”
If you think that you’re not a numbers person or you don’t have the right education to truly understand how to manage your finances, you’re in luck. A few simple tips can get you on a financially stable path when it comes to savings, investments and debt.

Pay Off Your Credit Card Debt

According to Pollack, and many financial advisors, paying off credit card debt is one of the important financial moves you can make. It won’t happen overnight. But if you slowly start paying off your cards, one at a time, you can avoid thousands of dollars in fees and start making an actual plan to save money. If you have good credit and qualify for a card that offers no interest for a year or more, consider transferring your debt to this card and making a plan to pay it off before the promotional period is over.

Save Money

Saving money is also a priority, and Pollack recommends saving 20%. This doesn’t have to all be cash; it can be doled out through maxing out contributions to a 401(k) and using other tax savings vehicles like a 529 or Roth IRA. The savings plan should include some money in the bank for emergencies.

Invest

When it comes to investing, Pollack says avoid trying to time the market or picking individual stocks and securities. Instead, buy well-diversified, low-fee index funds. Most people don’t need a financial advisor. But if your situation is complicated and you need some assistance, only work with a fee-based fiduciary.

Get Insurance

Finally, make sure you’re adequately insured—your home, your health and your car. If you have dependents, get term life insurance. “You need insurance to make sure a tragedy doesn’t change your life or the lives of your loved ones,” says Pollack. “But get the insurance with the biggest deductible you can get.”

Through smart and simple investing, saving, avoiding debt and insuring yourself, you’ll be on a better financial path than most people you know. Soon, friends will be asking you for tips on how to also become a money genius.


READ MORE FROM THE NOVEMBER ISSUE

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