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Experts examine classic advice; Financial guidelines may no longer apply in this new reality

As hard times grind on, many Americans are taking a fresh look at the money lessons they learned from their families. But while some of the personal finance advice from prior generations holds up, some no longer applies and sometimes it wasn't on target to begin with.

Even an adage as seemingly sound as "Watch your pennies and your dollars will take care of themselves" can be called into question these days.

A modern twist of this advice has made buying a daily latte the poster child for financial frivolity. That makes perfect sense to Mark Boyer, CEO of Foundation Financial Group in Jacksonville, Fla.

"It's all about the four bucks here, and the 10 bucks there," he said, adding that not only does he make his own coffee at home, he also packs his lunch.

Boyer looks at it as simple math: If buying lunch each day costs $7, over a year that adds up to about $1,800 of post-tax earnings. Someone earning $30,000 a year can give themselves an 8 percent raise by packing their lunch, he said.

But not everyone's on board. Ramit Sethi, who blogs about personal finances at iwillteachyoutobe-rich.com, thinks telling people they can't have their daily half-caf-extra-foam fix can derail the good intentions that inspire the advice.

"When the first thing you hear is what you can't do," he said, it makes you dislike thinking about money. Furthermore, he believes that focusing on small numbers takes energy away from bigger ones, like the impact of maintaining a good credit rating. "Excellent credit versus poor credit can make a $100,000 difference" on a home purchase, he said.

Who's right?

Both, in a sense, said Jason Alderman, director of financial education for Visa Inc.

"It's totally fine to buy your latte, if you've budgeted for your latte," Alderman said. The problem for many with such spending habits is, the prospect of being restricted by a budget is unpleasant, so most don't make one. That would likely mean there's no designated amount set aside for eating out, "mad money" or whatever other category a daily indulgence might fall into. "If you're spending $700 a year, and you have no idea where that money is coming from, you've got a problem."

Before you pass some of these financial nuggets on to your kids, consider whether they ring true:

*"Buying a home is always a good investment."

Given the state of the housing market, many would immediately question this assertion. It's not just that many markets saw housing prices cave in, proving that homes can depreciate as well as gain value. But for many potential buyers, the costs associated with a home are also higher than they realize.

Sethi calls them the phantom expenses, such as the closing costs and fees associated with signing a mortgage, filling lots of new rooms with furniture, and taking care of a backyard. What's more, Sethi said, buying a home can limit mobility, especially for younger buyers, which may in turn limit job prospects and earnings potential. "For many, it's not the best financial decision," he stated.

But that doesn't negate the fact that owning a home is the primary goal for many, and is still likely to be the biggest purchase most Americans ever make. The issues that should be considered are how long you plan to stay and what kind of mortgage you get, said Darryl Dahlheimer, program director for LSS Financial Counseling Service, a credit counselor based in Minneapolis.

"A home is the best investment for a long-term purchase, if you don't plan to move," he said. "And you have a fixed-interest-rate mortgage."

*"To build credit, pay down your debts over time."

Carrying debt month-to-month does not help build a credit score, and in fact can hurt it if the total owed climbs high enough. That's because you're using a higher percentage of your available credit. The percentage is one of the main components of a score, and a high ratio is considered a negative.

"You can use your credit card once a month, for a purchase you'd already make. Pay it in full, not the minimum, and your credit score soars," said Dahlheimer. In fact, the most important factor in a score is whether you pay your debts on time, not if you're carrying some debt over from month to month.

And getting too comfortable with carrying a balance can also blur the lines between wants and needs, said Jim Stovall, the speaker and author, most recently, of "The Ultimate Financial Plan."

"Debt can be a very dangerous trap, and I think you need to enter into it with great fear and trepidation," he said, warning that using debt to buy things you otherwise wouldn't be able to afford will more likely set you back than improve your financial standing.