Dilbert’s ‘Unified Theory of Everything Financial’

Paul Farrel at MarketWatch.com argues that Dilbert creator, Scott Adams, deserved to have won the Nobel prize in economics for his ‘Unified Theory of Everything Financial’. In nine simple points, Adams’ reveals “everything you need to know about personal investing.” in his book, Dilbert and the Way of the Weasel.

His formula:

1. Make a will
2. Pay off your credit cards
3. Get term life insurance if you have a family to support
4. Fund your 401k to the maximum
5. Fund your IRA to the maximum
6. Buy a house if you want to live in a house and can afford it
7. Put six months worth of expenses in a money-market account
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

Would I word it differently? Are there things missing I would put on the list? Would I change the order of some of the items? Sure. But have I taken care of all the points in my personal finances? No. It is easy to throw stones. It is harder to actually practice what you preach. You can spend so much time planning and searching for the ‘correct’ way to do everything that you never do anything. In sales we call this “aggressively getting ready”, you spend all your time honing your sales presentation but never actually get out in front of people. Having the perfect plan is not near as important as actually doing something.

HatTip: Scott Adams: In Over My Head