Grandmother and granddaughter
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11 Money-Saving Tips From Grandma That Don't Work Anymore

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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 From outdated rules of thumb for investing to irrational fears about credit cards, here are some of the most common money-saving tips that just don’t work anymore. 

Related: 100 Top Money-Saving Tips for 2021

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.

savings bonds
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 and can be a pain to calculate.

Related: 25 Home-Buying Myths Debunked

retirement planning

Plan to Withdraw 4% a Year in Retirement

Financial advisors used to tell clients to plan to withdraw 4 percent every year after retirement. But that plan was popular in the 1990s, when interest rates were considerably higher and life expectancy was lower. It’s best to ignore this bit of outdated wisdom and aim for a more personalized retirement plan.

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Another outdated financial rule of thumb says that the percentage of your portfolio that contains stocks should be equal to 100 minus your age.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: 11 Tips for Saving Money in Your 20s

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.

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: Student Loan Debt Across America: Where Does Your State Rank?

Gold bars

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.