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Financial advice from parents you should rethink

They say that with age comes wisdom – but does it always?

Like many new moms, I’ve received a lot of unsolicited parenting advice from my parents and in-laws. Most of it turned out to be old wives’ tales and very outdated advice. This made me wonder whether my folks have given me advice in other areas, like finances, that may have become outdated or were rooted in fear. Here are five money tips you may have heard that have grown stale and warrant some reconsideration.

1. Stick to traditional banks

About 51% of people choose their first checking account because their parents bank there, according to Finder’s Consumer Confidence Index.

Graphic source
While brick-and-mortar banks have traditionally offered large ATM networks and in-person banking, you can get more in fewer fees and higher savings rates from digital banks. Plus, many online banks offer 24/7 customer support via chat and phone, and they partner with large networks of ATMs. So, if you’re looking for better rewards and perks, you have a higher chance of finding them at an online bank.

2. Digital banks aren’t safe, so avoid them

There’s a misconception that digital banks aren’t safe. My parents make up the 63% of Americans who keep their money at traditional banks versus the 19% who keep it in an online bank. If you’re concerned about where your money will go after a bank failure, make sure your bank is FDIC-insured for at least $250,000. If you’re keeping more than the insured amount in your bank, it’s time to split that money across other banks.

3. Cash your check in person

Most traditional and online banks offer mobile deposits. But 15% of people, including my dad, are skeptical due to mobile deposit safety concerns, according to Cornerstone Advisory’s 2023 Mobile Deposit Benchmark Report.

But depositing money through your bank’s app on your phone is both safe and convenient. When you take a photo of the check using the app, the data is encrypted for security. The only risk is if you become a target of a scam.

The most common scenario involves depositing a check from a scammer and later receiving a call claiming they’ve sent you too much money and to send back the excess amount. The original check you deposited was invalid, so if you send back the excess amount, you’ll end up sending them real money. Scams like this are also common for peer-to-peer money transfer apps like Zelle.

4. Avoid credit cards

Some parents used to tell us to steer clear of credit cards, but that advice is stale. The real issue isn’t getting a credit card; it’s how it’s used. Instead of simply saying “No” to credit cards, parents should have taught us how to use them responsibly.

Nowadays, parents have better credit-building options to help their kids – no matter what age — learn how to use a credit card responsibly. One example of this is Step, a free secured card with no credit check, no fees or interest charges, and it only lets you spend what you have in your account, eliminating the risk of overspending.

5. Combine your finances once you’re hitched

There’s nothing wrong with a joint bank account. A joint account can help you and your spouse get a clearer picture of your finances and work together to meet your goals. But before you open one, make sure you trust your partner. It might also be wise to keep a separate personal account as well. You wouldn’t want to be one of the 36% of people who fell victim to financial abuse.

Bottom line

A lot has changed over the years with digital banking, but our parents might be hesitant to adapt due to fears of the unfamiliar and a preference for sticking to what they know. As their kids, we can step in and lend our advice to help them overcome their fears and clear up any outdated information or misconceptions they may still have.

About the Author

Alexa Serrano Cruz is a personal finance editor at Finder, specializing in consumer and business banking. She has worked with publishers and magazines in New York City and Miami. She has extensive experience editing articles, and helping readers make informed decisions on their money.

Alexa is a certified anti-money laundering specialist, and her editorial and personal financing expertise has been featured in top publications, including Nasdaq, Best Company, U.S. News & World Report, MSN, Yahoo, and ValueWalk. She has also made appearances on Winnie Sun TV, money podcasts such as LifeBlood, and broadcast news publications like Fox News and NBC News.

Alexa holds a bachelor’s degree in English from Wesleyan College and enjoys reading memoirs in her spare time.

This article originally appeared on Finder.com and was syndicated by MediaFeed.org.

Image: Getty

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