Americans may be divided on many issues, but there’s one place where we still share common ground. Most of us wish we were better at managing our finances.
Eight-five percent (85%) of respondents to a Bankrate.com survey admitted having at least one regret about how they handle their money. As a financial planner and host of WSB’s Money Matters radio show, I can attest that Bankrate’s ranking of the most common regrets is spot on. I hear similar tales of woe from clients and callers on a regular basis.
Failure to start saving early enough. Nearly one-fifth (18%) of those surveyed wishes they had started earlier and saved more for retirement. While this regret was most common among those approaching 65 (25%+), younger Americans also expressed concern about it. I urge young people to start saving for retirement on the first day of their career via their employer’s 401k or some other automated savings plan. Time is a powerful element of the savings equation. You want it on your side, not working against you.
Not having an emergency fund. I can’t overstate the importance of stashing 3-6 months of living expenses for use in case of a major upheaval, such as job loss, major illness or massive home repair.
Taking on too much credit card debt. Another 9% of Bankrate respondents regret wearing out the plastic. Really? Just 9%? I suspect a lot of folks are in denial on this topic. Over the past several decades, we Americans have largely forgotten how to live within our means and delay gratification.
Excessive student loan debt. Sadly 9% of the Bankrate survey participants regret how much they borrowed to get an education. Let’s be honest. College has become crazy expensive. While higher education is still a good investment in that it boosts your long-term earnings prospects, students and their parents must put a sharp pencil to the costs associated with various schools. It’s perhaps more important to ask whether a four-year college degree is even necessary for success in the young scholar’s chosen field.
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Buying too much house. This can seriously hamper your efforts to secure your financial future. Think carefully about how much house (and how trendy of a neighborhood) you really need. The extra $500 or $800 you pay every month for unneeded space or status could be used for many other purposes, from saving for retirement to paying off student debt.
Not saving enough for children’s education. Parents who want to help their kids avoid student debt need to start early. Open a tax-deferred 529 educational savings account when the stork visits and contribute to it every month. Encourage family members to make contributions, too, as birthday or holiday gifts.
“Something else.” I can think of lots of stuff that might fall into this category: Attempting to day-trade in stocks. Buying expensive cars every couple of years. Falling for a get-rich-quick scheme. Co-signing a loan. The list is endless.
Interestingly, 17% of the Bankrate respondents claim they have no money-related regrets. My eyebrow is arched. But if that’s true, I tip my cap to those folks for their intelligence, discipline – and good luck.
As for the rest of us, we shouldn’t feel bad for making one or more of these mistakes. It’s called learning and growing, also known as being human. With a bit of discipline and work, you can overcome any one of these miscues and get back on track to achieving your goals and dreams.