Remember when storing money under your mattress and balancing your checkbook with a pencil and calculator were the smartest ideas? While doing so may have been helpful back in the day, you’ll likely find that this advice is as intelligent as lending money to your family. In other words, don’t do it!

Following money advice that was created during a completely different economic situation will hit you where it hurts the most: your bank account. Instead, update your money plan and you’ll likely find that your confidence, and bottom line, will soar.


While the old adage “you should never spend more than you make” is still true, not every financial belief has stood the test of time. Financial advisors are finding that spending isn’t always a bad thing, especially since doing so can actually increase your profit margins.

Outdated advice: You should only ever buy.

Updated advice: Renting and leasing has advantages, too.

Buying a home is the American dream, but it’s not a good idea for everyone. The Michigan State University Extension points out that many buyers purchase homes they can’t afford and end up defaulting on loans and hurting their credit score as a result. Renting, on the other hand, allows you to live on your own and have access to a landlord who will likely undertake most of the expensive repairs needed on the home.

According to car information website Edmunds, leasing instead of buying a vehicle also has attractive rewards, as you aren’t tied down to having the same vehicle for several years. The money you put into maintaining an older vehicle is often equivalent to having a payment each month. This is important to keep in mind if you travel a lot for work and rack up the miles. You’ll need to determine if having a well-working vehicle at all times under a lease is more advantageous for your situation than driving a vehicle that is older and may need frequent, expensive repairs is.

Outdated advice: You shouldn’t spend more than 30 percent of your income on rent.

Updated advice: Cut costs elsewhere.

Your parents and grandparents may have lived by the rule that you shouldn’t spend more than 30 percent of your income on your mortgage or rent, but that doesn’t mean you should.

In fact, with the cost of living these days, it’s fairly common for homeowners and renters to spend that much or even more on their rent or mortgage payments. However, it may be a good idea to look at your spending habits and determine where you can cut costs, if you’re having financial trouble.

Paying Off Debts

Although carrying a huge amount of debt on your back is never a good idea, having a little isn’t a deal breaker. In fact, experts agree that having some owed money on your record is actually helpful, and can result in great rewards.

Outdated advice: Credit cards are bad.

Updated advice: They can be helpful if used properly.

Credit cards are a tricky area for many consumers. On the one hand, they allow you to purchase items that you may not have the available cash for. On the other, they give you the opportunity to rack up a large amount of debt.

Carrying some balance on your credit card and making the payments on time can boost your credit score, according to Huffington Post. But if you’re late on payments or have a hard time paying more than the minimum balance, you can find yourself with a plummeting credit number and debt that is hard to erase.

Try paying the balance in full each month and look for a card that has a utilization rate of 30 percent or less.  

Outdated advice: Pay off your mortgage ASAP.

Updated advice: Hang onto it.

It makes sense to pay off the bill that is likely the largest you have. However, making extra payments during the course of your mortgage may not be such a great idea after all, claims Mortgage Insider.

The value of the U.S. dollar is declining, which means you may not get your full dollar’s worth if you pay extra now.


If you’re not planning on living with your children for the rest of your life, you’ll need to come up with a good retirement plan. The idea of saving up enough to live off of for the rest of your life can be seriously frightening, but when you ditch the old school way of thinking and adhere to modern advice, you can do it successfully.

Outdated advice: Invest as much as you can into your 401 (k).

Updated advice: Only invest as much as your company matches.

Pouring out all of your extra money into 401 (k) sounds like a great idea. After all, you’re saving for your future and the more you put in, the more you get, right? Unfortunately, this isn’t always the case.

Only contributing what your company will match could prevent you from losing money in the event of an economic downfall.

Outdated advice: Take the same amount out of your retirement account each year to live on.

Updated advice: Decide each year what you should use.

For years, retirees lived off of a 4 percent withdraw from their retirement accounts each year. Instead of following this outdated rule, U.S. News and World Report recommends that you look at what you need each year and base your withdraw on that.

Taking out a set number each year without looking at current market conditions can prevent you from running out of money.


Investing can seem like dangerous and daunting territory, even to the most experienced investors. Picking and choosing where and how much of your hard-earned cash to invest is challenging, as the market can change each day. However, you can increase your chances of success when you follow these new rules:

Outdated advice: Put almost the same amount of money in stocks and bonds.

Updated advice: Tailor your percentage based on the market.

For years, financial advisors recommended that clients use a 60/40 ratio when it comes to investing in stocks and bonds. The idea was that placing 60 percent of their money in stocks and 40 percent in bonds would help to build their money without much risk.

Nowadays, however, an 80/20 split is more advisable, as is splitting up your assets based on your comfort level.

Outdated advice: “Set it and forget it” when it comes to stocks.

Updated advice: Reevaluate your stocks often.

Checking on your stocks and bonds often can seem arduous, but doing so is really in your best interest. Leaving your stock contributions the same each year can result in lost money.

Instead, evaluate your portfolio yearly or twice a year, recommends Time magazine, and determine with what you feel safe

Outdated advice: Invest in your home.

Updated advice: Invest in yourself.

Homeowners often drop thousands of dollars to update their homes. They do this in the hopes that their home will sell for more when it is time for them to move. With the unreliability of the housing market, however, it may be smarter to spend that money on yourself, instead of home renovations.

Rather, use the money you were going to spend and put that towards education or another endeavor that increases your chances of earning more money down the road, says Woman’s Day magazine.

Outdated advice: Saving a lot of cash in the bank is the best idea.

Updated advice: Banks aren’t always the safest place to store your money.

When you’ve got the Federal Deposit Insurance Company (FDIC) in your corner, it’s normal to feel protected and safe. After all, the FDIC insures deposits up to $250,000 and has a $25 billion insurance fund.

While this sounds like adequate protection, the value of all insured deposits in U.S. bank accounts and credit unions exceeds $9 trillion—far more than what the FDIC can cover, claims Business Insider.