Consumer Financial

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Financial rules to live by:

Ideas for financial educators

Consumers can simplify financial 

choices by using shortcuts or “rules 

of thumb.” These are guidelines 

a person can use to make 

complicated day-to- day financial 

decisions easier.

Examples of common rules of thumb include “save 

ten percent of your income” and “pay down the 

loan with the highest interest rate first.”

In our research, we found that many consumers 

know about common financial rules of thumb, but 

few act on those rules. There is a gap between the 

rules of thumb and actual behavior, suggesting 

the popular rules of thumb may function more as 

aspirations than guidelines for action. Finances 

are complicated and individualized, and the “right” 

decision can vary by person and circumstance, 

making one-size-fits-all rules difficult to identify.

To help consumers find financial rules that they can 

live by, we explore some of the barriers to using 

common rules of thumb, and suggest ways that 

financial educators can help consumers create their 

own financial rules to live by.

Challenges to applying financial 

rules of thumb

To gain insight into why it may be difficult for 

consumers to apply common rules of thumb,

we listened to consumers talk about their 

perceptions about financial rules of thumb.

Here’s what we heard:

§ Many consumers know about common financial 

rules of thumb. 

ABOUT THESE IDEAS

The Consumer Financial Protection Bureau worked 

with a contractor to conduct focus groups with 

consumers to understand the common opinions, 

beliefs, and values that they hold. In summer 2014, 

we held 32 focus groups with 308 consumers in 

four cities—Boston, St. Louis, Atlanta, and Seattle. 

Focus groups are not intended to give us statistically 

significant data that can be generalized to all 

consumers. However, they can give us valuable 

qualitative information about what consumers 

think and feel in general. The information we have 

gathered through these focus groups is intended 

to inform the work of the CFPB and of others in the 

financial education field.

To read more about the focus group findings, go to 

Consumer Voices on Financial Rules to Live By. To see 

consumer worksheets on financial rules to by, go to 

My savings rules to live by, My credit rule to live by, 

and My spending rule to live by. These and all of 

CFPB’s tools and resources can be found on the 

Resources for Financial Educators webpage at

www.consumerfinance.gov/adult-financial-education.
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Protection Bureau Visit consumerfinance.gov/adult-financial-education 2 of 2

§ Many are frustrated by what they see as 

unrealistic goals stated in common rules, as they 

struggle with competing priorities across many 

different dimensions of their financial lives. 

§ There is a sense that financial rules cannot be 

applied equally to all people in all circumstances. 

But many commonly held rules are too broad or 

ill-defined to offer clear guidance to anyone.

§ Consumers are most likely to change their 

financial behaviors when they are confronted 

with major changes in their lives or financial 

trigger events. 

§ When they consciously apply rules, many 

consumers rely on them to guide savings and 

other planning-related financial decisions more 

than for day-to-day financial tasks. 

§ People learn rules of thumb from families and 

other trusted relationships, personal experience, 

and the financial media. 

Inspired to help?

Rules of thumb can focus consumers’ attention on 

areas of their financial lives that are important, e.g., 

“take advantage of your employer’s full retirement 

match” or “have three months of salary in a rainyday fund.” As a financial educator, you can help 

consumers understand the basic principles behind 

common rules of thumb, and modify the rules to fit 

their own resources, circumstances, and aspirations. 

Helping people develop their own rules that they 

can live by can get consumers started on meeting 

their own financial goals.

Below are some ways you can help consumers 

figure out rules of thumb that work for them.

§ Review what rules of thumb consumers know and 

how they’re using them. Share common rules 

of thumb with the people you serve. Help them 

identify the underlying principles in these rules.

§ Reassure consumers that these traditional rules 

of thumb are just starting points in financial 

goal-setting. You can let them know they are not 

the only ones who have had trouble sticking to 

common rules of thumb; they need to set their 

own realistic targets to match their aspirations.

§ Explain that it’s more important to establish 

realistic goals than to try to adhere to 

generalized rules of thumb that may not work

for everyone.

§ Have consumers modify common rules of

thumb based on their financial goals and 

situation. Work with them to select just one or 

two rules that encourage positive financial habits 

in areas of their lives that are most meaningful

to them. Focusing on future-oriented goals

(like retirement or education) may be a good 

starting point.

§ Brainstorm with consumers about how to make 

their personal financial rules concrete, visible, 

and handy (i.e., posted on their refrigerator or 

near their computer, written on their credit or 

debit card sleeve, etc.).

§ If consumers have had major life changes such 

as unemployment, unexpected medical bills, or 

emergency home repairs, encourage consumers 

to use these events to adopt new financial rules 

to live by.

§ Encourage consumers to periodically review 

their progress and adjust their rules of thumb.