The Personal Finance Playbook Has Changed

Personal finance has evolved.

It is not uncommon to see young professionals taking advice from their parents when it comes to finances.

In all honesty, this is not necessarily a bad thing at all! But what’s important is to recognize that the landscape has completely changed.

Trying to emulate a path that doesn’t exist can be really tough. For previous generations, their idea of financial independence and their path to achieving it may look wildly different from what may work today.

At the end of the day, living within your means, saving, and investing hold true. This is always sound advice. Every now and then, I’ll meet someone whose parents are heavily against something like investing or 401(k)s or anything outside of CDs and cash under the mattress.

This is where things can get dicey. The way your family handles money is likely ingrained in you to some extent. Of course, we want to be respectful of their opinions. They usually just want the best for us. However, we must be aware of the environment we are operating in.

Here are a few examples of what I mean when I say the landscape is different:

Health Savings Accounts (HSAs) weren’t even around until 2003.

The very first ETF in the US didn’t make its debut until 1993.

If we look back just 15 years, you might have been paying $7 to $10 for every single trade you made.

Online high-yield savings accounts (HYSAs) didn’t really become a prominent part of the landscape until 2021.

Roth IRAs were not available until 1998.

Deferring Roth dollars to a 401(k) plan was not an option until 2006.

Some of the most impactful personal finance tools did not even exist as our parents and grandparents navigated their careers. They may be unaware that some of these vehicles even exist.

I’ll never forget my dad telling me the brokerage fees he used to pay to place a trade. Imagine paying $10 every single time you wanted to place a trade? On a $100 trade, that’s a 10% haircut!

Nonetheless, I’m not telling anyone to discount their family’s advice. Rather, be aware of the options that are currently available to you. While the principles may hold true, the tools have changed.

Advice from family can mean well, but it can neglect the differences in the environment we find ourselves in.

This is for informational purposes only and is not intended as legal, tax, or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of publication and are subject to change without notice. Past performance is not indicative of future results.