Because teaching kids about money isn't required in most schools, parents play a crucial role in cultivating sound money management skills in their children.

In fact, personal finance is one of the most important lessons moms and dads are faced with passing down, right up there with the "birds and bees" talk and multiplication table. But let's be honest: Not everyone is a great teacher. For the same reason I thought babies came from the sky (that is, until I watched a very eye-opening educational video), not every child grows up learning the skills needed to develop into a money-wise adult. Even the most loving and wise of parents can mess up sometimes and it's often because there was no one willing or able to teach them, either. And then sometimes the economy implodes, making all previously known rules about personal finance suddenly obsolete. Whatever the case, it's likely your parents taught you a lesson or two about money that just isn't true today.

5 Bad Money Lessons

1. Credit cards are for emergencies only.

I followed this golden rule of finance throughout my early adult years, avoiding credit cards like the plague. Then I started thinking about moving into my own apartment and realized that I wouldn't be able to pass this mysterious thing called a "credit check," which most landlords required, without any actual credit. Credit cards can be a strategic tool used to build up credit and earn rewards. Avoiding them completely will stunt your ability to borrow money, secure a place to live or open utility accounts -- affordably. Many people successfully avoid credit completely, but I'd rather not go through the hassle. And as for a financial emergency, it's much smarter to have an emergency fund saved up to handle it on the spot, rather than go into debt (and possibly remain there) for an unplanned expense.

2. Getting a good education will guarantee you a good job.

Another lesson I unfortunately took to heart was that the better your education, the higher-paying the job you'd land after graduating. Like many students, I equated "better" with "expensive." The rising price of college combined with a dismal job market means this lesson no longer holds true. In fact, though might sound like blasphemy to the ears of older generations, many young adults are probably better off (financially) skipping college completely and focusing on becoming a part of the workforce.

3. Investing is risky -- keep your money in the bank.

Saving money in a liquid savings account or similar deposit product is crucial for meeting day-to-day financial needs. However, when it comes to long-term savings -- think retirement -- there's no way you will reach your goals if you keep your money out of the market. "Saving money in a bank or money market account is a sure way to lose its buying power to inflation," said Leon Shirman of Emerald Hills Capital. He explained that investing your money in riskier assets like stocks or real estate is, in most cases, the only way to ensure a comfortable retirement. Assuming risk is the only way to enjoy reward, and shying away from risky investments only holds back your wealth potential. According to Shirman, from a long-term perspective, "saving is a lot more risky than investing."

4. Work hard for your money and it will pay off.

Rachel Hernandez, author of "Adventures in Mobile Homes: How I Got Started in Mobile Home Investing and How You Can Too!" told me that as a child, her father would advise that in order to make money, she had to work hard for it. "In working hard for money, I could buy anything I wanted," she explained, "Though, I was never taught how to save or preserve money and make money work for me." Consequently, Hernandez did, in fact, work hard for her money, but it never accumulated. "It wasn't until I actually took the time to learn about personal finance and investing that my life changed for the better. Looking back, I wish I had been taught the fundamentals and basics of personal finance at a young age." A lot of people work hard, but without some education and skills in personal finance, they don't know how to channel that effort into lasting wealth.

5. Money can't buy happiness.

Maybe you can't physically exchange money for positive emotions, but it turns out a higher level of wealth really does equate to an overall higher satisfaction with life. Economists Betsey Stevenson and Justin Wolfers of the University of Michigan examined Gallup poll world data to discover that the more money people around the world have, the more satisfied they are. Ron Nawrocki, fund manager of B. I. Solutions Corp. and host of the Wealth DNA radio show advised, "Money can't buy health or happiness, but neither does poverty ... I've had a chance to try both -- and I prefer wealth." I think I will have to agree with Nawrocki -- I'm a lot happier when there's money in the bank and I'm not stressing about how to pay the bills.

Related Articles
  1. Budgeting

    How To Save Money When Moving

    Moving doesn't have to be as expensive as you think. Here are some great ways to save money on moving costs.
  2. Investing

    10 Ways to Effectively Save for the Future

    Savings is as crucial as ever, as we deal with life changes and our needs for the future. Here are some essential steps to get started, now.
  3. Investing Basics

    Investing $100 a Month in Stocks for 30 Years

    Find out how you could potentially earn hundreds of thousands of dollars by just investing $100 a month in stocks during your working years.
  4. Budgeting

    Key Questions to Ask Before Moving in Together

    Moving in together is a big step. Here are some key financial questions to ask your partner before you make the move.
  5. Savings

    Passing Down Values and Money to the Next Generation

    Amassing wealth to pass down to your kids is great unless your values don't come with it. A priceless gift is teaching them to be financially responsible.
  6. Budgeting

    How to Save Money on Your Disney Vacation

    Understand why Disney Parks are attractive vacation destinations and why they are expensive. Learn five money-saving tips for Disney vacations.
  7. Budgeting

    Top 7 Money Saving Tips for Eating Out

    Discover seven money-saving options available to consumers who are looking to partake in the luxury of dining out while cutting down on cost.
  8. Insurance

    4 Ways to Find Good Health Insurance

    Follow these 4 steps to get the best coverage at the most affordable price.
  9. Savings

    Top 7 Money Saving Tips For Buying Groceries

    Understand why it benefits grocery shoppers to shop intelligently with money-saving tips, such as staying away from prepared foods and looking for coupons.
  10. Professionals

    How to Separate Emotions from Investing Decisions

    With stock market volatility, financial advisors are finding they're doing more hand-holding to help clients navigate turmoil.
  1. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  2. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  3. What is the importance of residual value in an automobile lease?

    The residual value of a car is often used by banks and auto dealerships to determine how much to charge per month for a lease. ... Read Full Answer >>
  4. When is an expense ratio considered high and when is it considered low?

    A number of factors determine when an expense ratio is relatively high or low, but a good, low expense ratio is generally ... Read Full Answer >>
  5. What is the difference between residual income and savings?

    Residual income, or recurring income, is income earned on a continuous basis for completed work. It differs from linear income, ... Read Full Answer >>
  6. What is the most effective way to write a successful budget?

    Before you begin writing a budget, gather all of your bank statements, bills and credit card statements for a given month. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!