Some 'classic' money advice is actually pretty new—and not all of it is worthwhile, says historian

Key points

• Historian Joseph Moore says much classic money advice is actually recent, not timeless.
• Moore says the current housing crisis is neither the first nor the worst in US history.
• Moore says compound interest and budgeting are modern ideas, not how most Americans historically built wealth.

Historian Joseph Moore, author of "How to Get Rich in American History," published in April, says many personal finance lessons presented as timeless are actually recent. In an interview with CNBC, Moore said the idea that the same money advice has always worked is wrong. "It turns out, what 'always' worked is always changing," he said.

Moore identified three common misconceptions in American personal finance history: that today's housing affordability problem is unique, that compound interest has always been the path to wealth, and that budgeting as we know it is a long-standing practice.

Housing crisis not unprecedented

Moore said the current US housing shortage is real but not historically unique. He pointed to 1948, when the ratio of people wanting to buy a house to available inventory was about double what it is now, and to 1981, when the median new mortgage consumed more than half of the median household income.

He said historical personal solutions included moving more often and sharing housing. For most of US history, between 1 in 3 and 1 in 5 Americans moved every year, compared with about 1 in 13 now, he said, citing research by historian Yoni Appelbaum. In 19th-century America, homeowners often rented out rooms to help pay the mortgage, he added.

It turns out, what 'always' worked is always changing.

— Joseph Moore

Wealth and budgeting myths

Moore said compound interest is a relatively new way to build wealth. For most of American history, less than 10% of Americans owned stocks, and people got wealthy by concentrating efforts in small businesses, careers, real estate and job tools, he said. Index funds and fractional shares did not exist, he noted.

He also said household budgeting as commonly taught is a recent phenomenon. In the 1800s, people did not budget the way we talk about it, he said. Instead, they divided money into big buckets, such as husband's and wife's income or survival needs versus leftovers. More complex budgeting schemes emerged in the early 20th century, he said.