5 Old-School Money Advice From Your Grandma That You Shouldn’t Follow Anymore

Nowadays, money can be a touchy subject, and you really have to be careful of what you say and who you talk about it with. There’s no problem with finding guidance when it comes to the ever-changing matter, but money rules can differ over time. With that being said, certain things that grandma learned back in her day may not be up to speed in today’s society. Here’s some of the advice you shouldn’t listen to anymore.

Advice #1: Don’t Discuss Money with Friends and Family

For many people, talking about their salary has always been something that didn’t belong to a casual conversation. However, sharing your budgeting strategies, financial goals or struggles with your family and friends is a big opportunity to learn from each other. The sooner you break this taboo, the faster you realize how much you can gain from other people’s experience.

Whether it’s budgeting, tax files, or mortgage, today’s technology allows you to share tips and ideas and discuss money with dozens of people who might inspire you or help you plan your financial goals effectively. And this is something we should take advantage of in this age. Just remember – don’t get specific with exact numbers and never, ever brag.

Advice #2: Pay off Your Mortgage Early

Although reducing interest charges when financing a house sounds like an ideal plan, you don’t need to feel obligated to do so. In today’s economy, we are currently living in a low-interest environment, compared to when this advice was meant for higher rates of about 6% to 8%. “Those extra payments can do more work for you by being placed in other investments”, says Paul Moyer, founder of SavingFreak.com, “Even if you only get 6% over the life of the investment, you will beat the interest you are paying on your home mortgage”.

Advice #3: Cash is Better than Card

The fear with credit cards is that they can lead to major debt if not paid off right away. While cash is great to control spending, the credit card comes with other benefits cash can’t compete with. For example, cards help build credit, and there are many rewards you can get (such as cashing in points for travel, groceries, and cash back).

Credit is also typically necessary for booking hotels or airfare. And carrying too much cash has the risk of getting robbed and losing all your money. If anything, a credit card can be a great backup.

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Advice #4: Prioritize Saving for your Child’s Education

Some parents believe it’s their responsibility to help their child pay for their college education. While this is a great gesture, parents tend to forget about saving for themselves. It is encouraged to prioritize saving for retirement. You can finance your child’s education with college loans and other funding courses, but you shouldn’t let your retirement plans slip away. A balance is needed.

Advice #5: Taking Out a 401(k) Loan is a Good Idea

Your 401(K) savings are not known as your “rainy day fund,” meaning although it’s tempting to borrow from your 401(K), your plan may actually not allow you to make contributions to your account until the loan is repaid. Essentially, this means you’d be putting your retirement savings on hold if you were to take out from them. Plus, you’ll also be taxed twice to pay off your loan, meaning you’ll pay taxes to withdraw the funds for the loan, and then you’ll pay taxes on the money again once you retire.