A bunch of years ago, I had just quit what I thought was my dream: career, trying to become a rock star and now is trying to figure out what came next. I was considering three options: number one was to become a shrink really liked psychology, but in the end I decided I was too selfish to spend my days helping other people with their problems and we're too, Was to become a financial adviser, I really liked learning about saving and budgeting and investing. But again I was selfish. I didn't want to devote all my energy to other people's problems number three was to become a writer and that's what I did, but the other ideas just go away. There is at least a little bit psychology in just about every episode of economics, radio. As for the financial sector,

that's something we all wrestle with every day is that today, on for economics, radio will wrestle with it together. We will wrestle with the standard advice on how much to save You have just told me to save twenty percent of my money. You will wrestle with the fact that manual. Windfall does not guarantee long term success. We found at fifteen percent, declare bankruptcy and will lay out a personal finance road map that anyone can yeah it's basically, I am pretty simple void. Emotion. And concentrate on the economics I'm fine

from w and why see studios this is freakin comics, radio, the podcast that explores the hidden side of everything. Here's your host Stephen Dogma Anna Maria lucidity is an economist who teachers in the business school at George Washington University. I born and raised in MILAN and move to the. U s about twenty five years or so ago, for my graduate studies, as you can tell she stole, sounds a bit milanese. I have to say I I cannot get rid of it. These inside mean when the sorority first move to the states. Many things were unfamiliar our sports, for instance, especially american football.

I became interested in football because everybody is watching football on Sunday saw enough. I need to talk to my friend. We add to talk about football for first and then when I met the football players than I to be able to talk football seriously when she met the football players. What's at all about well, a few years back, George Washington University started Especial MBA program called star in the stands for special talent, access and responsibility. The programme was designed. People who are already very successful, they are often very wealthy and they have to manage many things are not just that well, but also their name, that a quotation- and it just so happens that most of day students were actually athletes and the majority of a police were actually football players. These were

professional football players. Some of them were from their bows Timor events and I am a big Baltimore Ravens fan. They are first of all incredible students. They are my favorite students. Why were they her favorites Lucindy found her athlete students? Incredibly disciplined and perhaps not surprisingly, good team players should also impressed with her charitable they were and she was charmed by their sheer size. One day she was talking about the financing options of buying a car. The example should always used in previous classes was a toy Yoda Corolla, but the football players all started. Giggling one student raised his hand. Professor Anna, he said I do not fit into a toilet, occur, the Saudi also realise that these nfl players were facing an unusual financial predicament. These are people which are very talented, very competent

They have no knowledge of how to manage this money. Where often they come from background, where you know nobody, yes, thought them. Financial literacy financial literacy is and has been for a couple decades animal. Loose Artes passion in a week, financial decisions every day and if I now show this These that we make today are different than the decision that our parents made our parents them have to worry about Ben shows, you didn't phase the type of mortgages we face. Now didn't have probably all the credit cards and all these costs more credit at their fingertips and also they didn't I've student loans. But we see other trans as well for ex

but financial markets around the world at become more complex. Many economists for many years have assumed that most people are financially literate. So, for example, we assume that people know. About interests compounding, and they know about three sculleries diversification, and they act accordingly but how much do people really know about the most basic financial principles? That is what lucidity in collaboration with the economist, Olivia Mitchell, set out to learn that came up with three survey questions. This was actually

even by the fact that in the first survey we only room for three they piggy back to their financial literacy. Questions onto the two thousand for health and retirement study being limited to three questions turned out to be a blessing because, first of all, these questions are very predictive, but also because they are only tree. They were adopted in so many national surveys in the U S, and then in as many as fifteen other countries around the world Recently, a variation of these questions have been added to a global survey. So now we know about financial literacy around the world. Ok before we hear about the state of financial literacy around the world with here, the question

number one suppose you have one hundred dollars in a savings account in the interest rate was two percent per year after five years. How much do you think you would have in the account if you left the money to grow, the answers were multiple choice. A more than a hundred two dollars be exactly a hundred two dollars. So less than a hundred two dollars or if you really want to play along D, I dont know, and the correct answer is: the correct answer is a more than a hundred two dollars, because two percent interest on a hundred dollars in a year is two dollars so

after year, one you have a hundred two dollars and then over the remaining four years, the interest grows on that hundred two dollars and so on, and that is why compound interest has been called the eighth wonder of the world question one is about compounding terrorists, but really is about assessing numeracy. Ok, question number two question too, is about to flee. Shown. Imagine that the interest rate on your savings account was one percent per year and inflation was two percent per year after one year. How much would you be able to buy we'd the money in these account? The answers a more than today be exactly the same as today see less than today. Or do I don't know, the answer is less than today, because if inflation

is two percent prices go up, two percent, but if you have only earn one percent in your saving account, you basically can by less and question number three question three as to do about risk diversification. Do you think the following statement is true or false?. Buying a single company stock. You will surely provides a safer return, then stop mutual fund to force, and, of course, you can say do not at all, and the correct answer is true. Buying a single stock is safer than buying a mutual fund. Just kidding that's false, because a single company is a lottery secure than a basket of stocks, don't put all of your eggs in one basket. Ok, how do you do

Get all three right. If so, that would put you in a distinct minority. Americans are not financially literate. That's right! The sorry He found that only around thirty percent of the respondents got all three questions right. The numbers, are pretty similar around the world, even in other rich countries. In the Eu S, financial literacy has some distinct demographic differences. Those facing most challenges,

sorry and Mitchell wrote are the young and the old women african Americans Hispanics, the least educated and those living in rural areas. So I now shall literacy should not be taken for granted and actually, if you ask me, I think we ought to crises level. You might ask yourself if financial literacy is so important and if so many people are so bad at it. What are you doing wrong? One simple answer is that even well educated people often don't attain as part of their formal education. Much of a basic financial literacy. What about parents? Are they supposed to teach their kids, the basics, maybe but money being what it is? A topic that makes a lot of people uncomfortable. You can see how out of parents, especially if they are not actually would somehow never get around to teaching their kids. Some people argue that financial

Occasion isn't the answer. Anyway. They say the main problem. Is it too many financial instruments are either too complicated or inherently exploitive. We got into this debate in an earlier the sort of economics. Radio here is the legal scholar Lauren Willis on why it be better to design more user friendly financial instruments than to expect We want to learn more about personal finance is sort of like saying, while we should start teaching everybody to be their own doktor teaching everyone to be their own mechanic terribly inefficient to do that? Not only is inefficient, but it it has a sort of culture of blaming the consumer. You know you're the one who didn't figure this all out you didn't go to the classes, are didn't pay attention or whatever and that's not gonna help in the long run.

Anna Maria lucidity does not share that view. At George Washington, she founded a research centre called the global financial literacy excellent centre. Its mission is pretty obvious, and part of that mission it turned out was to teach financial literacy to a bunch of pro football players whose circumstances she points out. Quite atypical, they are very young and they get all of the money that people earn in a lifetime early in life. That's right as lucidity writes a career lasting six years. The median links will provide an end if l player with more earnings and an average college graduate will get an entire lifetime plus a modest pension, but they just couldn't translate That sum of money, the lump sum they had into the stream of money that could support themselves throughout life. There are a lot of ways to blow a sudden fortune from

and family may come out you with their palms open your approach by all sorts of advisers with all sorts of brilliant investment schemes. There are taxes to pay upper income bracket taxes by the way, which shrink your net income by a lot. And, of course, it's a lot more exciting to spend money today than to save it. For tomorrow who Saudi inspired by her current football students decided together some data on older players. She and her colleagues looked at a cohort of any fell players who'd been drafted in the late ninety nine, these nerli two thousands to assess their long term financial outcomes. So we look at that Europe see rather than other measure or financial distress, because these are the things we can check in which there is data and

find we found that more or less twelve year into retirement. Fifteen percent declare bankruptcy. That's right! Fifteen percent of these guys, who'd already earned a career, is worth of income went bankrupt, a rate that similar or even higher than the overall population of men in their age group. Even though the NFL retirees, it obviously earn a lot more money majority also found that the risk didn't even decline for the players who earn the most to me they experience of DNA fan is a good example of the effect of financial illiteracy, the NFL bankruptcy data, reinforce Lou Saudis earlier findings about financial illiteracy, so what's to be done, because it's pretty obvious that many people have no idea how to handle their personal finances, even people who think should know even

exceedingly well educated people like this guy, I must say had a very lackadaisical attitude about personal finance. Until I was about forty years old, it's Harold, Pollack, professor, Social Service administration at the University of Chicago Pollack, works with University of Chicago institutions like the crime lab and the Centre for Health Administration study. I have a doctorate in public policy, but I'm really applied it to finance, but then something happened. My mother in law died suddenly and a brother in law Vincent, had to move into our home, he's intellectually disabled and he was three hundred and four he pounds had many really the challenges Pollux wife had to quit her job to take care of her brother, and Pollack began to worry about their financial health. I remember one day we had to buy a lazy boy type cheer just because he was so big that dough but you didn't work for him, and it was like nine hundred dollars for this chair and I just meant

thinking like I'm just gonna go through all my money and I became him obsessed with personal finance. He began looking at, literature on investing one of the four things I learned was that the conversation among real experts was actually a lot simpler than the country, nation that you'd get. If you watched finance, tv or red brochures from financial service. These firms, the people Pollack, calls real experts. Academics typically, who done real empirical studies, told a very different story than investment professionals. Current joke. Rounded. The fundamental problem that the industry face was that the best advice so was available for free at the library, Pollack started. Writing about these ideas on a blog called the reality based community for one piece, interviewing the financial journalists, Helene Owen, about a book she'd written called pound foolish, exposing the dark side of the personal finance industry and I

during our isn't the industry's fundamental problem that the best advice for most people would fit in Ex cardinal available for free at the library and behind it a golden. The conversation moved on except then I started getting emails from people and comments on my blog say: hey where's the index card, but there was no index card. I was speaking metaphorically. So, of course, I was kind of ah but I had planted a flag and I felt I had to honour that. So I just reached into my kitchen drawer and I pulled out my daughter's for by six index cards- you know what she was using for school and I screwed down and maybe two minutes. Nine rules and I took a picture with my phone and I posted it on the web. Coming up on economics, radio, Harold Pollux index card catches. I'm on a variety of websites going going, which I had never heard of actually life hacker, which I also had never heard of. Also a credit card rewards programmes as good as they seem

All the research suggests that these were where'd programme should make you spend more money and how closely should you watch your investments? Don't peak. Everybody I'm Tika Sumter and I'm an actress, and most recently you can see me on ABC six Ish. I this is tyrande off and I'm the boss at hearts laugh out loud network and we the host of the sugar a sweet space where we are, she to indulge on topics we sometimes get left out of its face by Bore and about brown mom. This is a place of community where we want you to feel lots of love, peace and laughed aloud I was pregnant someone- those I oh when our hair, when I was in labour, I was like I was having a orgasm grow airs go now, some of you now somewhere baling, maybe

you ve not actually have an eye. This exists, we space or mom, like us, to see ourselves and be ourselves get ready to open up top, laugh even cry with Sweet shook him. The ship, is out now listen on stitches apple podcast, cast wherever you get, your pat gas as I mentioned earlier before, settling into my writing career, I thought about becoming either a psychologist or financial adviser. What I didn't mention is that the book I was working on before freak economics was a perfect hybrid of those two things. It was about the psychology of money. The working title was money makes me happy, except when it doesn't that book got put in a drawer once for economic started happening, but I still think it's estimating sentiment is pretty south.

Basically, money is one of those rare topics a bit like sex, maybe religion. The people have strong feelings about and yet have a hard time discussing. As a result, a lot of us stumble through life, knowing we should know more than we do about personal financed, but were to intimidate id or embarrassed or something to do much about it. Harold, Pollack, public policy scholar at Adelina receives Chicago tapped into this sentiment when he died, stop an index card with nine easy rules about personal finance. Space are mammals Half a million hits on Pollux Blog, the Washington Post picked it up all oh boy going, which I had never heard of actually life hacker, which I also had never heard of your bunch of these websites that actually have big fat rulings that I'm too old to be in the target demographic for really really grabbed it. The card was trans. It into Romanian, which is

you know I I hope the people in Romania find it useful, I'm not sure that they have for one case there. I suspect there we have to modify it a little bit. It was you don't. You started showing up all over the place if there's a guy who played for is it. I found a Youtube video of some sort of a life coach who just wrote out. Card. It was word for word exactly what I wrote and he spoke it as if he had made it up and that all the financial advice you're ever going to need written on this index car It was hilarious to listen, took as he or she has a great voice, but he added you are completely. Though in the idea, there was just something about it for a lot of people where you all of us. Facing this very intimidating task. How do I save retirement word when best, my money? How do I deal with all these questions about budgeting and went to buy a house and all this kind of stuff? Oh, I just have to look at these nine rules on this card. Pollack never pretended that he does

covered some amazing new rules of financial behaviour. When my colleagues at the business school saw this, and they saw what these rules work, they were just like you're kidding, but that didn't stop him from turning his index card into a book. Co authored with the journalist Helene Owen. It is called yes, the index card, why personal finance, doesn't have to be complicated. Of course, it's kind of ironic that I say out, you know here's this index car, that's what you need and then, people single? Why is there a book in to me? It's a no bed, like you, know it, some sense. You could say all of religion comes down to the ten commandments, but a lot of us seem to need some commentary on those need to know how to execute those or, depending on your religious faith. You I sometimes refer to the book,

the mid rush to our index card for your jewish listeners and for our non jewish listeners amid rush is rabbinic commentary or teaching on a biblical text, not quite economical passage but revered nonetheless, and that's kind of what Pollack was going for with the index cards book. Ok, so, what's in it, Let's start with rule number one rule number one strive to save ten the twenty percent of your income because well if you're, not saving any money than everything else is a lot harder. One of the great things as one start to save this money. It really reduces. Stress in your life so amazingly fast. Now I must say that my original card said you should save twenty percent of your income and that's really hard. I got a book of emails that were essentially the following form? No dear professor Pollack,

I'm a twenty eight year old, single mom and I were he's a cashier. You have just told me, too, twenty percent of my money you and I responses to all of those email. It was. You know what you're told. Right. I totally see where you're coming from at this stage in your life, you cannot a twenty percent of Europe's gross income, and when you're. At that stage you, how can you man your credit card debt? How can you say something? How can you start getting on a good budget, you're doing that you're doing really well. So I think there My original card was really good for middle class people. Like me, it wasn't quite as good for people that word different stages in their life, and so I have to I brought to some humility by air. By the large audience that the inadvertently attracted rule number two rule number two pay your credit card balance in full every month

how important as this one you know, this may be the most important single rule on the card for a lot of people. If you're carrying a credit card balance I doubt that you paid down on that you're. Getting a risk free tax free return, that usually more than fifteen percent, because that's roughly how much you are paying the credit card company for the privilege abusing their money. Unless your name is Warren Buffett, huge snuck gonna get the kind of investment from anything else that you're doing and credit cards and other forms. High interest, loans are just a really serious trap for a lot of people. One problem is credit card companies or savvy, and they can make you feel like you're doing a great job just by paying off what they call the monthly minimum. You are doing a great job for them, because their collecting all that interest from you Pollack, warns us to beware of any deal that

First, to help you smooth out your cash flow. So if you belong to a German, they say you can pay five hundred dollars up front for the year or you can make twelve equal fifty dollar payments. If you choose that payment plan, the cost of your membership is now six hundred dollars. Therefore, when where possible, you try to use cash as much as you can and you pay off your credit card and and either way. One of the things that I recommend to people is if we ignore your credit card reward programme, all the search suggests that these reward programmes, Maybe spend more money. Rule number three: rule number three max out your for one k and other tax advantage. Savings accounts, a typical forum, k, is a retirement plan run by your employer. But there are a lot of options, including for self employed people. There are several reasons: why are for a one carrier? Equivalent is just the foundation of your saving for

of all very often your employer will kick in a matching contribution, and that is free money. You can also set up you're for Kay contributions to be automatic, singing ever have to touch the money. There are other tax advantage savings vehicles. So, for example, when there are two things that people can do to save money for their kids college that have tremendous tax advantages, one is called an essay. I won't go into the details Second, account is for the five hundred and twenty nine and the five hundred and twenty nine actually allows you to have a little bit more money or you have a large family that wants to contribute. You can actually put enough

fourteen thousand dollars a year on public works hard to not bring politics into his financial advice, but as soon as you get into tax advance savings plans you're getting into politics, because these tax breaks don't just happen. Summit in Washington had to draw up a plan that was meant to reward some kind of behaviour in the case of four one case and five, twenty nine, that is, saving for retirement and college respectively, but the tax code is full of breaks, many of which some people argue tend to help well off people become even better off the whole mortgage interest deduction, for instance.

So it is forced to do if you think the tax code is unfair for unless you ve got some friends on the House Ways and Means Committee or the Senate Finance Committee there, the people who read the tax code, maybe the best advice, is simply work hard to exploit the existing tax breaks. Sure you can complain that the tax code favours rich people or you could say, hey using the tax code to my advantage. Could help me become rich or moving on to rule number? Four, never buy

I also individual stocks and rule number five by inexpensive, well diversified index, mutual funds and exchange traded funds. We actually spend our previous episode going over this idea in some detail bottom line. Most people who picks stocks reliving do a worse job than a monkey with a dark board and they charge you a lot more than a monkey. Would how much to fund their beautiful offices and homes and boats. Even though again, your investment returns will likely be worse than if you just bought as Harold Pollack Notes, some low cost diversified index funds. This is a completely easy one there a ton of literature that suggest that people chase after shiny objects and the stocks We buy aren't particularly well chosen and the stocks that we so

more often saw them at the wrong times. So you know why do you want to get into that. We also spoke last week with Jack Bogle, the founder Vanguard, the world's largest universe of low cost index funds. Here's how Bogle summarizes the appeal What Pollack is preaching? You want to capitalize on the magic of compounding returns without succumbing to the tyranny of compound in costs, but that tyranny of compounding costs can be hard to resist, because the people who sell investment advice array

good at selling it they make. You believe that they alone know the secrets to the investing universe. They do it in tv commercials like this one, a complex global economy. It's just one republic's advice. Do not heed the siren call of slick fancy, expensive investment advisors, for what it's worth is to become quite standard advice, and it's backed up by acres of research. That research also suggests that, for the average investor, Diversification is a good idea, a few different types of stock index funds, growth, value, international, etc, and also some bond and maybe some other less sexy investments you want to have the right percentage of your investments in stocks and then the other classes that you invest in of the stock market drops twenty percent. You should be buying stocks after that not be ass, you think the markets now undervalued or anything like that, but just because the percentage of your portfolio, that is

stocks is now below where you wanted to be idle the idea of a little balance in your I said: allocation Jack, Bogle again for the youngest investors and when you first start obviously should be certain stocks, but as you build up a little assets, maybe by the time you're, twenty, five or thirty you're, probably going wanna, be fifteen twenty percent Bon funds and eighty five percent in stock funds, and, as you get older, probably want more in Bonn funds and lessen stock funds because yeah, the fear of loss is gonna, be greater whenever a large amount of money. Obviously it can be really hard for the average person to take in and execute all this investment advice on their own. So I consider hiring a financial adviser, but Pollack says not just any financial adviser rule number six make your financial adviser commit to the fiduciary standard, the fiduciary standard,

is a federal requirement designed to ensure that financial advisers don't sell clients, products that are better for themselves than the clients. It basically says all the advice, you're giving me and all the products at your offering me are designed to maximize my own financial, well, be you're not being paid by anybody except me, I understand, a transparent way. Your financial incentives- and, if you don't have the fiduciary it's a little bit like walking under the Ford Lot and saying: do you think new car yet or do you think I should keep driving the old one for another couple years? There was a wonderful study done by summer researchers at Harvard with, just send out actors who had different kinds of retirement savings in they would go into storefront financial firms, and they would you say, hey here's. What we're doing tell us if we should do something different in some of them had Chris the investments that we're gonna say all in the stock in their employer. Some of them had absolutely exe

investments that have been designed by financial professionals in low cost index funds and things like that, the ones that had excellent investments. The majority of the financial advisers. They talk to recommended that they actually not do that do something that is essentially more expensive. Imitation on that This is not meant to besmirch. The reputation of all financial advisers is also worth noting but sometimes it may be the advisers who try to keep their clients on the right track. So we get paid a percentage of assets. Very writ holds, writes about investing, but also runs an asset management firm, so the more assets we gather envy

better. Those assets perform the more revenue the farm sees rid holds his instituted, a clever incentive to address his clients, investing behaviour. If people maintain a portfolio for three years and don't do anything foolish with it- and there is a constant temptation to do something foolish, we will decide. Account fees in additional fifteen percent as sort of a a good reward for for good behaviour. The thinking is, to their own devices. After three years, people get bored and they'll start, especially in a market like we ve seen over the past few years. So they start looking for little. A little action and hey, maybe should rule out of this long term, conservative portfolio and start dabbling in Ipos in and venture capital, and we want to discourage that behaviour are moving on to the single biggest expenditure. Most of us will ever think about.

Rule number seven by a home when you are financially ready. Ok, so, let's pull that apartment, the buying a home peace, and be financially ready peace. I think we should think of our home as something that we use and consume and some helps us with our life, not as the major pillar of our wealth I think that we've been conditioned from birth, to believe that you're, not a full adult until you own a home- and you have to be careful about that. You know your your home is the most average than undiversified investment. You ever gonna make in your life and Oh you don't want to rush into buying a home and you want to buy a home in a very sensible way, sensible meaning what now, when you have a nice twenty percent down payment which lets you get, good terms on your loan. It means getting a sort of vanilla, ice cream, fixed rule. Fifteen year a thirty year alone, rather than too

do something like an adjustable rate mortgage and it means I hope that you can afford and still have a strategic reserve, if you move in, and your hot water heater breaks or Iraq, who needs its way through your room for all the things that can happen to a home, buying a home also represents what economists call a commitment device. It's a waiter lock yourself into a behavior. You need some help getting locked into. In this case, your mortgage payment is a forced savings plan. Pollack sees the value in this thinking, but the lock he says can be fairly flimsy. A home is a good commitment, ice, although it's a less effective commitment device than at once was because of home equity loans, home equity loans used to be called second mortgages there was a certain stigma getting them. They were not common and one challenges we discovered in the air for closure crisis was the result.

People there were trying to dip into their homes, equity and when their value, their home dropped boy that could really blob on you so well you gonna use it as a commitment device. You have actually commit to it and not try to dip into your home equity in various ways to that's by home, when you're, financially ready, rule number, eight rule number, eight insurance make sure your protected, ah insurance. So many types so much pressure and fear. Honestly, that's a topic for a whole other episode. Some day may well get today. But for now here's Pollux thumbnail, take the purpose of insurance is to make sure that you are protected. If you have a life, changing a meant you don't insurance for the five hundred dollar problem. When somebody hit a baseball through your kitchen window, you do need insurance when the tree falls and as a fifty thousand dollar problem. You know in your whole kitchen gets taken out

life insurance in case the people that depend on you need you after you dine. You need liability insurance when you're driving you need to make sure that your life wouldn't change. If there was some sort of an adverse event, one of the things that we advise people in general is get the largest deductible that Can you want the homeowners insurance with the five thousand, our deductible? If you can get it? First of all it costs. If we then sure to honour all these smaller claims that you really want to being having to pay for that. But secondly, the people who get the high deductible insurance are the people. Who know that their pretty unlikely to use their insurance, so you're putting itself insurance pool, that's likely to be more super than the ones with the low deductibles, and so so. Insurance is important to guard against the big things, not the little things Pollux next rule he admits is in a different category than the others

It is not actually about personal finance. Rule number nine do what you can to support the social safety net. Pollack has heard from a lot of people who don't play cruel number nine. They said you were giving all this sensible investment advice, and then you got all political on me but thought it was essential to include this. For a few reasons, why there's a lot of people who need help can lead to the extent that my story is is a part of our book. It would not be fully honest the left off rule number nine used at the beginning conversation. I talked about how my brother Lump Vincent moved into our home and what a challenge that was because of his intellectual disability and his medical challenges we would have absolutely gone bankrupt without his security, Medicare and medicate that prevented our family from losing everything taken care of him and we have to have each other's backs and what the social side

it does with social insurance does. Is it allows us to protect each other against these risks that, just crush any one of us. If we had to face it alone- and I think it's really important as individuals. We should do everything we can to be prudent investors and to say for ourselves and our families and to follow the rules laid out, but you know you can on guard against everything in life. I dont partition enjoy paying my taxes on April fifteenth, but I do feel that the amount can taxpayer had my back when I had a crisis, and I be doing the same thing for other people. As you may recall, Harold Pollux index card had nine rules, but his an Helene Allans book called the index card. Has ten rule number ten remembered the index card? Ok, admittedly, this one is kind of matter. The idea here is you know why I hope that this card is helpful. You not taken out put it in the refrigerator. It's a reminder.

A lot of recent social science, research suggests that reminders like these nudges, like these are pretty effective. Also one reason people often fail to make good decisions, financial or otherwise is because those decisions are too complicated or intimidating. So simplicity is a thing to strive for and devalue will a simplified choice always lead to optimal outcomes, of course not, but will it generally produce a better outcome than either avoiding the problem or doing something really stupid? Yes, it will. Experience is also pretty valuable. I guess it goes without saying so. To conclude, this primer on personal finance maybe makes sense to hear a bit more from the most experienced investor I know,

Vanguard, founder Jack Bogle. Almost eighty eight years old and I might be most blessing man than the United States of America moguls. Longevity was not preordained in nineteen sixty I had my first heartening I was only three years old. Thirty one years old had non Tennis Court and I almost died and I have disease that never undiscovered who fight scabbard years later in France, but I was a mystery. Mad and the doctors looked at me on a funny and when I got a pacemaker, inserted, wonder you said to me- you know you really probably don't have that much time left so what once you go up to the cape and just dunno walk out on the beaches every day

Take it easy enjoy the remaining time and on this earth. Bobo did not follow that doctors advice a few decades later. He did need heart. Transplants the transplant took place twenty one years ago and I think a broken a lot of records for anybody. Sixty five years of age who gets a transplant and not many sixty five year olds get twenty one extra years. So let's hear your quick, it is for a primer on personal finances. Aside from investing in index funds, we know you're gonna, that we know you're going to advocate that, but it sounds like you: ve got a personal philosophy in terms of personal finances. Well, yeah. A year on its basically am pretty simple minimum avoid ammo. Since and concentrate on the economics, its invest for the long term and dont trade, the ups and downs in the markets are unpredictable and foolish,

in the short term. You say that is someone who's successful at avoiding emotions, but you have to know the most people aren't whether we're talking bout, investing saving versus spending or politics or whatever. How did you either get to be the kind of rational thinker that you are or how do you advise people move in that direction, because plainly, it's not so easy for most people no answer and let me be ass, it's not easy for me: and when we get one of these fifty percent declines. I've based, I think, three of them in my career. It's not fair, and I get a knot in my stomach. A lifetime of experience. Sixty five years of experience in this field has taught me that emotions evil and therefore you really ought to fight to keep them out of the equation, because the day your most concern is the day the market, his body, and that's said day you wanna get out and the day no you're gonna that we know, it's a new high or both

may buying the markets new, high and selling out the markets. Violence is a very go away to make money. What about spending versus saving. And how would you council some one to think about that? Well, every family is different. Given me distribution of income, twenty percent of the families can't possibly invest they're trying to stay alive in I'll, keep the wolf from the door and keep the children fed and housed and warm. So when you get up the scale of living you're able to afford more- and I think people should pay themselves first out of every paycheck time and a contribution to attention blind and just keep putting away. Don't even look at it don't peak, and when you open your envelope when you're aged sixty five and retired be sure- and you have a good

cardiologist worthy of his you're gonna faint, faint, with happiness, not was shocked, vain with happiness right. You won't believe it believe it and if you still have questions about your personal finances. This good NEWS, Harold Pollack, will be answering your questions during a one hour. Facebook live event, we're hosting on Wednesday August night at two p m eastern time. You can post your questions ahead of time on the frequent mix, Facebook page, or you can email them to radio at for economics that come with the subject line, personal finance

economics. Radio is produced by W and my c studios and Dublin productions. This episode was produced by Gregg resolve ski our staff. Also includes Alison Hockenberry Stephanie Tam Merit Jacob Eliza Lambert Emma Morgenstern Harry Huggins and bring you tear, as we had help this week from SAM bear most of the music. In this episode, composed by Luis Gara, you can subscribe different, almost radio on Apple podcast sticker or where every get your I guess you should also check out our archive at for economics, dot com we can stream or download every episode we ve ever made can also be the transcripts find links to the underlying academic research. You can also find us on Twitter, Facebook or via email at radio at for economics. Dotcom thanks for this.