In case you haven’t noticed, financial literacy is infamously absent in America. We don’t just receive inadequate money lessons in school, we go on to fail simple financial quizzes as adults. If we want to learn about money, we have to educate ourselves, or at least observe how family members handle their finances. Unfortunately, they may also be teaching us the wrong things. Let’s take a look at the three worst money lessons you may have learned from your parents.
1. Ignoring bank accounts
Gone are the days when you could build an actual relationship with your local banker and not worry too much about extra banking fees looking to squeeze every last drop of profit. Today, we live in a world of fees. The latest semi-annual MoneyRates.com checking account fee survey finds the average monthly maintenance fee is up to $13.29, or $159.48 a year. That also doesn’t include overdraft fees or out-of-network ATM fees, which average $32.38 and $1.73, respectively. Only one in four bank accounts offer free checking these days.
You can start to get a handle on your money by auditing your own bank accounts. Take the time to find out how much you’re paying in fees and ways to avoid them. Many banks have minimum balances you can carry in order to waive fees, though these are also on the rise. Other forms of banking can help you avoid fees too.
While your parents shied away from online banks and credit unions, they can be the best places to deposit your money. About 53% of online banking accounts have zero fees, more than double brick-and-mortar accounts. Bankrate finds credit unions are also more than twice as likely as banks to offer free checking, and none of the 50 largest credit unions in America require more than $100 to open an account.
2. Mindless spending
Our parents used a default road map for life that looked something like this: go to college so you can find a good job, reward yourself with an expensive car, find a spouse, buy a house, have kids, and enjoy a company pension after a long, successful career. However, these things cost money in an increasingly uncertain financial world, and they shouldn’t be taken so lightly. What worked for your parents may not work for you.
For example, college debt can sink your finances before you even find that good job. Wage growth can be hard to come by. Home ownership isn’t placed on a pedestal like it once was. Having one kid can supposedly set you back a couple hundred thousand dollars. And, company pensions are going the way of the dodo, meaning individuals are more responsible than ever for their own retirements.
The good news: The younger generation is adapting. Technology is revolutionizing how we view money. Apps from Mint and Personal Capital can help you track and manage your money so you’re less susceptible to mindless, unaccountable spending. Owning a car is more optional thanks to disruptive companies like Uber and Lyft. Buying a house can still be a tedious process littered with commissions and fees, but at least the stigma with renting has dropped – the worst housing crisis in history has a way of doing that. The Great Recession looks set to have a lasting impact on how younger generations view money and so-called normal spending habits.
3. Not talking about money in a relationship
How often do your parents talk to each other about money? How often do they talk to you about money? Probably not enough. For some reason, money is considered a taboo topic. Yet we use money in our daily lives and its secretive nature has the potential to destroy relationships.
If you’re not talking to your significant other about money topics, it could eventually become a deal breaker. A survey from GoBankingRates.com finds that being secretive about finances is the second most popular financial deal breaker, behind only overspending. Almost 36% of respondents said hiding financial matters was the most significant relationship killer. Other deal breakers such as carrying too much debt (32.6%), being too cheap (19.8%), and having poor credit followed (18.2%).
Although women selected more financial deal breakers than men did, men are significantly more concerned about their partner’s overspending habits than women are (27.2% versus 20.2%). Furthermore, Creditcards.com finds 13 million Americans have committed financial infidelity by hiding a bank or credit card account from their live-in spouse, partner, or significant other.