Credit Sesame dives into money advice from grandparents and whether it still applies today.
Our grandparents are often our first financial role models. They’ve lived through economic ups and downs, from the Great Depression to the rise of credit cards, and their wisdom has shaped how many of us think about money. But let’s be honest—while some of their financial advice is rock solid, other tips might be… a little outdated. In honor of National Grandparents Day on Saturday, 8 September 2024, here is some of the best and worst financial advice passed down through generations.
Timeless money wisdom from grandparents
- Save for a rainy day. This is one piece of advice that never goes out of style. Whether it’s a medical emergency, job loss, or unexpected car repair, having a financial cushion can keep you afloat when life throws a curveball. Grandparents knew the importance of an emergency fund long before the term was trendy. Build an emergency fund with 3-6 months’ worth of expenses. It’s still one of the smartest things you can do to avoid debt when surprises hit.
- Don’t buy what you can’t afford. Many grandparents believed in saving up for big purchases rather than relying on credit. They paid in cash or avoided buying something altogether until they had the money. This old-school mindset helped them avoid the debt traps that many people fall into today. While credit cards can offer rewards and convenience, using them responsibly and avoiding carrying a balance is smart. Stick to this golden rule: If you can’t pay it off in full when the bill comes, don’t buy it.
- Live within your means. Grandparents were pros at budgeting—often out of necessity. They didn’t upgrade their lifestyle with every raise, nor did they spend to impress others. Living within their means helped them save for the future and avoid financial stress. Budgeting is key whether you’re earning minimum wage or a six-figure salary. Apps and tools make it easier than ever to track spending, so take a cue from grandma and keep your finances in check.
Outdated money advice from grandparents
- Hide your money under the mattress. It’s a good idea to save money, but keeping your cash stashed away at home? Not so much. Many grandparents grew up distrusting banks, particularly during the Great Depression, which led to a habit of hoarding cash. But today, with inflation eating away at the value of your money, this method just doesn’t make sense. Keep your money in a high-interest savings account or invest it. Let your money grow over time, even if the idea of stocks or online banking seems too modern for Grandma.
- Pay everything in cash. Paying in cash can keep you from overspending but can leave you missing out on credit-building opportunities. Many grandparents avoided using credit cards, which was fine back when credit wasn’t a central part of financial life. Today, however, building a good credit history is crucial for major purchases like buying a home or car. Use credit responsibly. A healthy mix of cash and credit will not only help you build a good credit score but can also give you access to rewards and consumer protections.
- A home is always a great investment. This one was true back in the day, but times have changed, and now it is more nuanced. Many grandparents believed that buying a home was the ultimate financial goal and a guaranteed way to build wealth. But today’s housing market is much more volatile, and homeownership comes with unexpected costs like maintenance and property taxes. Homeownership can be a great investment for many people, but it is not the only path to financial success. Renting can be a smart option, especially if you’re not ready for the long-term commitment of a mortgage. Weigh the pros and cons before diving into real estate.
Listen to grandparents’ wisdom but adapt to modern times
Our grandparents had a wealth of knowledge about money, but not all of it holds up in today’s credit-driven world. The key is to balance their tried-and-true advice with the realities of modern finance. Incorporate their wisdom—like saving for emergencies and living within your means—while updating strategies around credit, investing, and spending.
If you enjoyed The best and worst money advice from grandparents you may like,
Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.
Read the full article here
