5 Pieces Of Money Advice That No Longer Apply (And Updated Advice)

Tue, April 19, 2022

The world has changed A LOT in the past two years, and money advice that worked in 1978 doesn't work today. So here are five pieces of advice I think we all need to say goodbye to, and what to do instead.

1. Old School Money Tip: Always share your money with a married partner.

Common financial advice says that splitting bank accounts, investments accounts, and every day spending 50/50 with your spouse is the only way to go. The thinking is that shared accounts provide greater transparency and that once you're officially married, you stop being separate financial entities and become one. You should be working together on all financial goals and joint finances allows that. 

Why It's Time to Say Goodbye: A recent survey found that almost 70% of millennial women who responded had experienced some form of financial abuse.

2. Old School Money Tip: Always put 20% down on a house.

How many times have you had a parent or family member tell you that you *need* 20% down for a house? 20% is the amount that allows you to bypass PMI, aka private mortgage insurance, an additional fee that's tacked onto your monthly payment if you don't put 20% down. Here's the thing though: in this market, 20% is often north of six figures. A $600,000 house means 20% down is $120,000.

Why It's Time to Say Goodbye: Prices are rising so fast you get priced out trying to do that.

According to a recent study from Redfin, "5,897 homes in 50 of the biggest US metropolitan areas by population have sold this year for at least $100,000 above their listed price, more than double a year ago." And while the Federal Reserve interest rate increase should help slow the demand for housing, the lack of housing available is still pushing prices up.

Waiting to have 20% of an ever-increasing housing price is likely to price you out of the market. There are many loans available where you can put down as low as 5%, leaving you with more money available for home repairs or to increase your bid if need be.

And on the PMI front, your credit score, debt-to-income ratio, and loan-to-value ratio can all affect your PMI rate, so if you have a great credit score and low debt amounts, your PMI may be low enough to make it well worth putting less than 20% down.

To continue reading, please go to the original article here:

https://www.yahoo.com/lifestyle/5-outdated-money-rules-die-164602133.html