Money-Saving Tips From Grandma That Don't Work Anymore

Grandmother and granddaughter

FG Trade/istockphoto

Cheapism is editorially independent. We may earn a commission if you buy through links on our site.
Grandmother and granddaughter
FG Trade/istockphoto

Grandmas Don't Always Know Best

Grandparents often have an impulse to endow grandkids with savvy ways to save money.  But as valuable as their advice once might have seemed, some conventional wisdom doesn’t stand the test of time. From outdated rules of thumb for investing to irrational fears about credit cards, here are some of the most common money-saving tips that just don’t work anymore. 

Sponsored: Find a Qualified Financial Advisor

Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Stacked credit cards

Avoid Credit Cards

From points to cash back, there are surprisingly profitable rewards programs offered by major credit card companies. People who have trouble paying their debts should avoid credit cards, but if you’re going to spend, there’s no reason not to earn money back in the process. 

Related: 12 Best Credit Cards for Seniors 

savings bonds

Invest in Savings Bonds

Long gone are the days when EE savings bonds were guaranteed to double in value every eight years or so. Now, the fixed interest rate for an EE savings bond is just 2.5%. Consider other long-term financial investments instead.

Related: Early Retirement Secrets and Strategies You Need to Know

college students
Couple buy new house

Prioritize Home Ownership

The housing crash of 2008 demonstrated that housing isn’t as safe an investment as many thought. A perceived benefit of investing in housing is the tax deduction received on mortgage interest. But this amount is often underwhelming, especially since the 2017 tax law, and can be a pain to calculate.

Related: Buying a home? Ignore This Outdated Advice

retirement planning
Young finance expert analyzing financial charts on smart phone

Follow the 100 Minus Your Age Rule

Another outdated financial rule of thumb says that the percentage of your portfolio that contains stocks should be equal to 100 minus your age.  In theory, this minimizes risk over time. The reality is that traditional investing strategies aren’t as rewarding as they once were, and it might be necessary to be more aggressive in planning for retirement.

Money stuffed in mattress
Jill Battaglia/Shutterstock

Hide Cash at Home

There have always been people who prefer to keep their savings in cash, especially now that distrust of banks seems to be rising. But cash is vulnerable to fire, flood, and theft. Instead, store savings in an FDIC-insured bank account that covers each individual up to $250,000.

Related:  Money Mistakes You're Probably Making and How to Avoid Them

Rental Sign

Buy, Don't Rent

Old wisdom might hold that buying is better than renting, but that’s not always true. Renting a home allows the freedom to move, a more diverse portfolio, and lower upkeep costs. Although buying might build equity over time, sometimes renting affords critical financial flexibility.  

Related: It's Still Better to Buy Than Rent in These Cities

local bank
Joseph Sohm/Shutterstock

Trust the Only Local Bank

The small bank down the street may have been the best option in Grandma’s day. But size may not matter depending on what your needs are — while a small bank may have lower fees, it might not have the long menu of financial services some customers require. Choose a bank based on individual desires, not generalities.

Looking forward to their future

Student Loan Debt is 'Good Debt'

Student loans have relatively low interest rates and are tax-deductible, but to refer to them as “good debt” is misleading. There’s no guaranteed return on the investment, and students who don’t secure a high-wage job soon after graduating might feel crippled by the repayment plan. 

Related: 10 Things You Need to Know About Student Loans Right Now

Gold ingots

Store Money in Gold

Grandma might see gold as a safe, time-tested hedge against inflation. But data suggest gold is just as prone to bubbles and wild swings in valuation as stocks are. Some analysts posit that the price of gold has been sustained by old-fashioned beliefs about its value, indicating a possible bubble. 

Find more smart Cheapism articles on personal finance right here.