The New Rules of Personal Finance

In today’s economy, some of the old pieces of financial wisdom aren’t as helpful as they used to be

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Some money rules — the most obvious, most important standbys — will never change. Save for retirement. Stick to a budget. Spend less than you earn to build wealth.

But other pieces of long-held financial wisdom just don’t make as much as sense as they used to. In today’s post-recession economy and rapidly changing job market, some may not make much sense at all.

“Save six months’ worth of living expenses for an emergency,” for example, is reasonable advice that has become slightly outdated. Don’t get me wrong — you definitely need an emergency fund—but with today’s rates, many people question the six-month rule. It’s worth pointing out that most people have trouble saving even $1,000 for an emergency. But your emergency fund can also be too big: If you have tens of thousands of dollars in a traditional savings account, you’re missing out on the potentially higher earnings you’d get by investing that money instead. With most banks now offering less than one percent interest, you’d be better off putting some of that money somewhere that will get you a better return.

Money is just one resource when it comes to investing, and time is the other.

In other words, while the golden rules of personal finance may never change, not all rules are built to last. From buying a home to paying off student loans to finding a way to save for retirement, here are a few pieces of traditional money advice that could use an upgrade.

Old rule: Buying a home is better than throwing away money on rent.

Homeownership was once the core of the American dream. Even with extra costs like property tax, maintenance, and interest, at the end of the day you were putting your money into your own investment instead of your landlord’s pocket, and that meant you made a smart financial move. Or at least that was the prevailing logic.

And then the housing crisis happened, and banks encouraged borrowers to buy homes that were way more than they could afford, eventually…