When it comes to personal finances, your parents’ advice—solicited or, more often, not—probably reflects wisdom from a simpler a time. The money mantras that helped your parents don’t necessarily hold up in the modern inflation-and-debt-ridden landscape. Even if you don’t actively turn to your parents for financial advice these days, you may have internalized their teachings from years (and years) ago. Here are some of the most common money-related teachings your parents likely passed on to you that should only be taken with a hefty grain of salt in the financial hellscape of 2022.
“Buying is always better than renting.”
Call it conventional wisdom, call it the “American Dream,” but homeownership is the ultimate, unexamined goal for many. Unfortunately, buying a home is no longer the unimpeachable investment it once was.
The decision to buy versus keep renting is not one-size-fits all. The New York Times has a useful interactive calculator that considers all of the factors that go into whether your should rent or buy, like rental costs, mortgage rates, where you live, and how long you plan on living there.
If you know that homeownership is an attainable goal for you, here’s what you need to know before buying a home.
“You’ll always have a car payment.”
This one isn’t even just from our parents; it feels like an accepted fact of life. But it shouldn’t be. Overriding this advice can be as simple as buying used, or realizing that once you’ve paid off your current vehicle, you can stick with the same ride for a few more years instead of trading up for a shinier model.
Of course, it helps that now is a terrible time to buy a car. But if you do, it’s important to do your research ahead of time and be decisive once it’s time to pull the trigger. Knowing ahead of time what your loan terms are means the dealership can’t fool you by focusing on monthly payments instead of interest rates or total cost of ownership. As we’ve previously covered, walking away as a negotiating tactic is no longer a savvy move—by the time you return, your car will most likely have been sold to someone else—so know before you go.
“Never use a credit card because you’ll end up in debt.”
Depending on your parent’s personal experience with debt, they may have instilled in you a blanket fear of credit cards. However, as Nerd Wallet puts it, “using credit cards does not mean going into debt.” Using a credit card is the number one way to build your credit score—assuming you actually pay it off in full at the end of each month. If you have credit card anxiety as a result of your upbringing, you can break free by using a credit card to make small, regular purchases without racking up a high balance.
“You have to stay at your job for at least two years.”
While older generations could count on staying at the same company for decades, millennials and Gen Z aren’t facing that same guarantee. This is more career-related than strictly money advice, but it’s still important to unlearn for your bank account’s sake. The current reality of “job hopping” is that (1) candidates with bounce around jobs are no longer viewed with suspicion, and (2) you aren’t exactly being rewarded for your job loyalty. In fact, moving to a new company is typically the fastest way to make significantly more money. Here’s more outdated career advice you should ignore.
“Never talk about money.”
Your parents probably felt that money talk was taboo. Now, the pendulum is swinging toward transparency. Whether it’s between friends or coworkers, talking about money gives you a better understanding of whether or not you’re being paid what you deserve. Plus, increased openness about money can also help you resist financial peer pressure from your spend-happy friends. The more we talk about money, they more we can learn about debt, savings, and budgeting.
At the end of the day, your parents want what’s best for you, but you’re navigating a different financial reality than they did back in the day. Your ability to unlearn their approach to money comes down to self-awareness about what is and isn’t practical these days.