The 10 Biggest Financial Regrets & How To Avoid Them
Everyone has financial regrets but some financial regrets are more prevalent than others and today I wanted to share the 10 biggest financial regrets people have that you can avoid as you make progress on your financial journey. Already experiencing these regrets? You can turn things around with a little effort. The last thing you want is to look back later and feel (more) regret in regards to the decisions you made about your money!
These 10 biggest regrets are based on survey by Claris Finance that was completed by 2,000 people across the US and is super insightful to what money mistakes you should be avoiding - Let's talk through them!
The 10 Biggest Financial Regrets & How To Avoid Them
Regret #1: Not saving enough of your monthly income
This regret is all too common. Not saving enough typically happens when you feel like you work so hard and you deserve to be able to buy what you want, not really having any concrete financial goals, thinking you'll have plenty of time to save in the future or simply paying yourself last.
One way to get around this is by clearly defining your short and long term goals, establishing the habit of creating and working with a monthly budget and making it a point to save at least 10% of your monthly income every month before you spend anything. Consider automating your deposits to your savings account too - this will make sticking to your savings goals so much easier.
Regret #2: Living large in your 20s
Ah your glorious 20's! This is when you started earning your first real paycheck and this means you have more money to shop, hangout, travel and do all the fun things the typical 20 something year old does. Once thing to keep in mind is - everything in moderation!
It's easy to get carried away when you first start earnings money - the new car, the designer handbags etc but don't forget to think about your future. Yes you might be young and yes you might have time to save but nothing can replace lost time and the power of compounding so learn how to budget and prioritize your future financial well being over your wants.
Already made this mistake? Well now you know better and you can catch up by focusing on creating a plan for your finances, reducing your spending, expenses & debt load, increasing your income (by getting better paying job, getting a part time job or starting a side hustle) and making saving money for your future self a priority.
Regret #3: Racking up debt on unnecessary purchases
A lot of credit card debt comes from buying things you don't really need. From that awesome clothing sale to eating out everyday, those small transactions can rack up pretty quickly and before you know it, you are left with a pretty hefty credit card balance.
Avoid this regret by reminding yourself that credit is really debt and the available balance on your credit card isn't really money! It's money you are borrowing and will have to pay back.
If you currently have debt, commit to stop using your credit card, establish a debt repayment plan, share your goal to become debt and become accountable so you stay on track towards paying it off.
Regret #4: Not saving at all
This essentially means living from paycheck to paycheck which means if an emergency or unplanned life circumstance comes up then you end up having to rely on credit to bail you out which equals debt and is a vicious cycle.
The number one excuse people make is that they don't have enough money to save but starting with as little as 1% of your paycheck and then increasing that savings amount by another 1% each month is very easy to do. You probably won't miss the money and before you know it, you'll have a nice sum of money in your savings account.
Regret #5: Not paying off your credit card
Holding on to credit card debt and not prioritizing paying it off means you'll be paying the maximum amount of interest on your debt over time. This could be as much as 50% of your debt or even more over time depending on your interest rate if you are only making minimum payments throughout the life time of your loan.
Why not save yourself interest payments, get rid of your debt as quickly as you can and start repurposing that money towards saving and investing? Check out my blog post on how to pay off your debt HERE.
Regret #6: Not making more investments
If you really want to build wealth over the long term, investing is the way to grow your money. Putting money in a savings account for your long terms goals is not going to cut it especially with inflation!
when it comes to investing, you can either choose to invest in the stock market, real estate or business - whichever route you choose or if you decide to go with all three, it is critical that you do your research and understand the basics of what you are putting your money into.
Regret #7: Not paying off your other debts
Things like your student loans, medical bills, car note and mortgages will fall under this category. Once you get done paying off your credit cards, your next focus should be paying these loans off this way you can enjoy a debt free retirement...because no one wants to retire in debt right? Again, paying more than the minimums is important to paying off these loans as quickly as possible.
Regret #8: Not investing in the stock market
The stock market can seem like gambling or a big scary place but not if you know what you are doing and have investment objectives. The returns on the stock market average about 8% over the long term and is one of the most popular forms of investing out there. Learn to get started with investing in the stock with this blog post HERE.
Regret #9: Spending your money on alcohol
For the most part socializing with friends, dinners and nights out might involve a few glasses of wine but the mark up costs on alcohol in bars and restaurants is ridiculous, I'm talking 300% which makes it more than ridiculous, it's crazy!
My advice, stick to a glass or two, avoid drinking completely or go to a BYOB place and save your money. It's not worth the regret.
Regret #10: Spending your college money on miscellaneous things
Yes college can be tough, not just because of the classes you have to take but also financially. It's all too common for people to use their loan checks for books and rent and even more so for traveling and shopping. However keep in mind this comes at a high cost, not only are you increasing your student loan balance but you will be paying interest. If you must use student loans to get through college make sure they are specific to your study and if need be get a part time job to support your other needs.
If you already have student loans and are working to pay them off, prioritize aggressively paying off any credit card debt first as they typically have higher interest rates and then shift your focus to knocking out your student loans. Here is a great blog post to help you plan out your student loan debt repayment plan HERE.
Whether or not you've made money mistakes, now is a great time to making the commitment to turn your finances around, address any financial regrets you might have and get on the path to building wealth.
Bola Sokunbi is the founder of Clever Girl Finance and she's passionate about helping women take control of their money so they can live life on their own terms.