While it is commonly suggested that you should take personal finance tips from elders, it is very important to understand that times change and with time the tips should change too. A lot of this gyaan is not relevant anymore and can lead to a number of problems for you on the financial front.
To help you out, we have created a list of some personal finance gyaan that is just not relevant anymore.
Save just 10% for your retirement
While this might have been true in the past, it certainly won’t work anymore. However, modern financial experts suggest you need to save more than 10% (20% to be accurate) to enjoy a comfortable retirement with options. Two of the major reasons for this is the increasing wish for early retirement and longer life spans.
Avoid using credit cards
It is important to understand that debt problem of credit cards all over the world is not because of the credit cards themselves, but the way in which people use them. In reality, there are a number of benefits of using credit cards when you use them responsibly. They are very useful while struggling with short-term financial problems and many of them come with rewards and insurances as well. Moreover, they are also an excellent way to improve your credit score.
Home loans are better than renting a home
A lot of people believe that renting a home is just a waste of money and you can use the same money to buy your own home. But it is important to know that even home-owner’s need to spend a lot of money on things, like loan insurance, maintenance costs, property taxes, etc. Moreover, a home loan is a very long-term commitment which needs to be handled carefully. While buying a home of your own is definitely one of the most important milestones of life, only do so if you are ready to live at the same place for years and if the monthly EMI is atleast 20%-30% lesser than your monthly rent.
Why save when you can’t even take a single penny with you
Then there are spend-happy elders and friends who just believe in living the moment and would force you to do the same. While it is indeed true that you cannot take a single penny with you when you leave the world, this is a completely irrational reason to spend everything that you earn without saving. There is a major possibility that your habit to overspend money will catch up much before you actually “cash out”. And if not for you, just think about the financial stability of your loved ones when you are no more and start working on a sound saving plan.
These are some of the personal finance tips that might have been relevant in the past, but are surely not useful anymore. With changing times, you should change your finance habits too, to make sure that you are able to enjoy every single phase of your life.