Ask your teacher for more details about what makes your guitar 'bad'. Understanding his objections to it will help you to decide whether or not you need to change it for a new one, and what to look out for when choosing guitars in the future.
Also, go to a music shop and try some guitars, or ask your teacher and other players to let you try out their instruments so that you can feel the differences. A lot comes down to personal taste, but by trying a few different guitars you'll get a feel of what makes for a good playing experience for you. Ask yourself questions like whether the guitar is comfortable to play, does it balance well, does the neck feel comfortable in your hand, etc.
It may be that your guitar simply needs adjustment, rather than replacement. Electric guitars are highly adjustable; acoustics less so, but there are still things that can be done to make them easier to play easier and/or sound better. Mainly, these are adjusting:
- action (the height of the bridge, and therefore the distance between the strings and fretboard)
- intonation (position of the bridge pieces, and therefore length of string, so that the guitar stays in tune on the higher frets)
- neck relief (whether the neck is dead straight, or has a slight bend in it)
With experience, these can be adjusted yourself, but for a beginner I'd recommend taking the guitar to a good guitar shop; or since your teacher makes guitars he may well be able to set-up your guitar himself. This is a service in addition to your lessons, so expect him to charge for it.
If you choose to buy a new guitar, you don't need to spend a lot a of money to get a highly playable instrument. I play bass professionally, so don't need an expensive 6-string guitar, but a I do have an Encore Strat copy that I bought second-hand for GBP£60 and set up carefully myself - one guitar player commented that it plays better than his £500 Fender Strat! The sound isn't as good as a more expensive guitar but, like you, I'm don't need killer tone right now, just an instrument that plays well.