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Published: Aug 30, 2023 7 min read
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Rangely García for Money

This is an excerpt from Dollar Scholar, the Money newsletter where news editor Julia Glum teaches you the modern money lessons you NEED to know. Don't miss the next issue! Sign up at and join our community of 160,000+ Scholars.

I recently visited Italy for the first time. It was amazing: I ate all the pasta, drank all the Aperol spritzes and soaked up all the art. And while I was doing that, I found myself continually struck by just how innovative everything is.

Walking around, it’s easy to see how Italians changed their minds over time based on new information. For instance, did you know ancient Romans started out building lots of lead pipes — but once they realized the material was poisonous, they began preferring ceramic aqueducts for drinking water? (Meanwhile, much of the U.S. still uses lead pipes today.)

Or that Michelangelo initially sculpted David to sit on top of the Duomo in Florence — but once it was complete, the committee in charge decided the statue was too heavy and too beautiful to be hauled up there?

I’m impressed by Italy’s ability to realize when an approach is no longer working and needs to be adjusted. Now that I’m back on American soil, I keep wondering whether that applies to personal finance, too.

What outdated money "rules" don’t apply anymore?

Here’s what experts told me:

I need three to six months of expenses in my emergency fund.

“Actually, you need enough money in your emergency reserve to cover expenses over the time period it would take you to find a new job. The higher your job ranking and income, the longer it will take for you to find a job (the process is just longer for senior positions),” says Niv Persaud, managing director at Transition Planning & Guidance.

“For single-income households, your emergency reserve should be at least nine months of expenses. For dual-income households, your emergency reserve should be at least six months of expenses. Adjust [it] based on the dynamics in your industry and role.”

Owning a house is better than renting.

“Even if you can afford to buy a home in your area, it doesn’t mean you should. Renting can be an especially wise choice if you need to stay flexible due to career uncertainty or you aren’t sure which city/neighborhood you want to commit to yet,” says Andy Baxley, senior financial planner at The Planning Center.

“You’ll know it’s the right time to buy when you’re fairly certain that you plan to stay in the home for at least five years. Anything less than that, and your home purchase decision has the potential to set you back financially rather than move you forward.”

I should save 10% of my income.

“People want to retire at younger and younger ages, and yet we're living for longer and longer. The expansion of our non-working years is wonderful from a lifestyle perspective — but it puts massive strain on your assets, especially if you've been following old guidelines to save 10 to 15% of your income each year,” says Eric Roberge, founder of Beyond Your Hammock.

“Even if you are very dedicated and always meet that target, it might not be enough to support a retirement that might last 30, 40 or even more years. We recommend a baseline rate of 20 to 25% to our financial planning clients ... the more aggressive their financial goals, the more we recommend they save today in order to build the wealth they need to fund what they want.”

All young people should invest aggressively.

“That may be true for retirement, but young people also need to build an emergency fund (that shouldn't be aggressive), pay down debt (that's not investing at all) and save for upcoming major life events (wedding, down payment, etc.),” says Nick Holeman, director of financial planning at Betterment. “Those major life events are so short-term that they shouldn't be aggressive either.”

I should max out my annual IRA contribution no matter what.

“Depending on the person’s situation, [this] may be suboptimal or even detrimental. Many investors don’t realize there are phaseouts in their eligibility to make Roth IRA contributions or take a deduction for traditional IRA contributions,” says Matt Garasic, president of Unrivaled Wealth Management.

“Someone who files single on their tax return cannot contribute to a Roth IRA if their Modified Adjusted Gross Income is over $153,000 in 2023. If they aren’t aware of the rule and they make Roth contributions, they’ll be charged with a 6% penalty on the excess contribution(s) each year until it’s fixed. If that same person is also covered by a workplace retirement plan (like a 401(k)), they can’t take a tax deduction for their traditional IRA contribution if their MAGI is greater than $83,000.”

Homeownership is a critical part of achieving the American dream.

“Americans value homeownership and view it as a key life achievement of greater freedom and prosperity. While I don't deny these feelings or the fact that homeownership can be a part of a wealth building strategy, you're also faced with the financial challenges and burdens associated with buying and owning a home, including mortgage rates, home prices and the related costs and time to maintain,” says Tracy Sherwood, president at Sherwood Financial Management.

“Over the years, I've worked with clients to help them achieve their goals, which more times than not include downsizing or simplifying their lifestyle so they can pursue happiness — often defined as travel, time with friends and family, hobbies and helping others.”

The bottom line

Just because something used to work doesn’t mean it still does. I have to stay flexible and up-to-date on the best modern money practices.

More from Money:

Which Money 'Rules' Can I Safely Ignore?

Is My Money Safe in the Bank?

What’s 'In' and 'Out' for Your Money in 2023?