Advertisement
savings

How Useful Are Financial Rules of Thumb?

These guidelines are often touted as gospel truth. Do they point you in the right direction -- or lead you astray? Take our quiz to find out.

Making financial decisions often involves a lot of "on the one hand, on the other hand." But sometimes you just want a fast answer -- a simple guideline to point you in the right direction.

That's where rules of thumb come in: They aim to break down a complex financial choice into a quick one-liner. You know, "Never spend more than 36% of your income on housing," for example, or "pay off debt with the highest interest rate first."

Advertisement - Article continues below

They may be touted as gospel truth, but when it comes to money rules of thumb, some are more helpful than others. Many are time-tested words of wisdom that set you on the right path. Others are downright wrong and could wind up costing you, no matter how well-meaning the giver of advice. The misleading guidelines may be outdated, impractical or simply a misunderstanding. The trick is evaluating these oft-quoted principles to see if they make sense for your personal situation.

Just how useful are the financial rules of thumb? We've pulled together a QUIZ to see if you can sort the most truthful advice from the misleading.

Of course, the one solid rule of thumb you can count on is that there is no one-size-fits-all answer to most financial decisions. But if you can zero in on the best rules of thumb, you're one step closer to making good choices with your money.

Advertisement
Advertisement - Article continues below
Advertisement

Most Popular

Chiropractor Trying to Get Business the Wrong Way – Illegally
careers

Chiropractor Trying to Get Business the Wrong Way – Illegally

A new chiropractor’s fledgling business plan to attract patients may sound reasonable at first look, but it’s actually against the law, and the same p…
June 30, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
13 Luxury Goods That Are Cheaper at Costco
spending

13 Luxury Goods That Are Cheaper at Costco

You could be missing out on huge savings: Costco sells a limited selection of luxury goods at discounted prices, both in-store and online.
June 27, 2020

Recommended

Resources for alternative forms of transportation needed by many older adults
retirement

Resources for alternative forms of transportation needed by many older adults

For many older adults, having an alternative mode of transportation may be the difference between independence and social isolation.
June 29, 2020
The Answers to More RMD Questions
retirement

The Answers to More RMD Questions

The CARES Act made 2020 required minimum distributions optional. But what are your next moves?
June 12, 2020
Property Tax Breaks for Retirees
retirement

Property Tax Breaks for Retirees

Planning to buy a home in a different state? Property taxes should be examined closely, because they can be quite a bit higher than income taxes in ma…
June 10, 2020
Don’t Let COVID-19 Derail Your Retirement
retirement

Don’t Let COVID-19 Derail Your Retirement

Yes, many of us have taken a big hit. Stick to your principles — and be flexible.
June 8, 2020