National Financial Awareness Day – Top 10 Financial Regrets and How To Avoid Them
National Financial Awareness Day is coming up in the middle of this month. Did you even know about it? Most people aren’t aware of this date. However, it’s actually a really terrific holiday. The entire day is set aside to raising awareness about finances. You can mark it on your calendar right now: it’s August 14th. Then you can use that day to review your finances, look at some new choices that you want to make, and generally make moves to improve your finances. What’s the number one thing that you can do to set yourself up for success? Avoid financial regrets that most people live with. Here are the top ten:
1. Avoid Financial Regrets By Learning to Talk About Money
You won’t find this on every list of how to avoid financial regrets. However, we believe it’s the number one key to financial success. Everyone has some kind of money issue. Moreover, everyone is in some kind of financial relationship with others. We end up mixing money in some way with spouses, children, parents, ex-partners, business partners, lenders … the list goes on. Therefore, if we don’t learn how to talk honestly, openly, and often about money then we create countless problems in our lives. If you can proactively learn how to have difficult, challenging, important, authentic conversations about money then you can avoid financial regrets in so many, many ways. Make this a priority!
2. Mistake: Letting Someone Else Handle Your Money
You absolutely need to understand your money. Sure, it’s nice when your spouse is great with money and handles a lot of the hard work. Certainly it helps to have a CPA or an investment broker to guide you in making your choices. However, you should ask a lot of questions. Make sure that you understand every aspect of your finances. You can avoid financial regrets by putting in the hard work up front to understand why it’s good to make the choices other recommend that you make.
3. Mistake: Failure to Capitalize on Retirement Investments
Young people in particular may make this mistake. It’s hard to think about the money that you’ll need in your seventies and eighties when you’re just starting out in your career. However, that time comes around sooner than you expect. The more money you put towards retirement as early as possible, the better. Make sure that you capitalize on employee matching programs. Take advantage of all opportunity to set yourself up for a terrific retirement. You’ll never regret having that money when you reach retirement age. Therefore, you can avoid financial regrets by taking this seriously from an early age.
4. Mistake: Not Learning to Live Within Your Budget
I’m the first to admit that I struggled with this for years. Sometimes I still struggle with it even though I know better. It all started with that first college campus when I was 18. The credit card companies were out there luring me with tempting offers. I wanted them all. Like many people, I lived on credit for a very long time. I was always responsible about making my minimum payments, so I kept accruing more credit. I never had to learn to live on my own income because there was always more money to access if I needed to. Do you know what this means? I was ALWAYS behind financially. Avoid financial regrets like this one. Learn to live within your means. If you haven’t mastered this, start now. It’s not easy, especially if you’re used to accessing credit. But it is so worth it for your financial stability, security, and future.
5. Avoid Financial Regrets By Prioritizing Saving
As you learn to live within your means, don’t forget about saving money. Incorporate a steady savings goal into your money budget. You need to set aside money for a variety of different things. If you don’t have an emergency fund, you need one right now. If you don’t save money for big expenses like vacations, then you’re making money mistakes. Money intelligence means that you know about earning, spending, investing, and saving. Cover all of these bases to avoid financial regrets.
6. Mistake: Buying The Wrong Things
We have a whole list right here of things most people regret buying. Although there are exceptions, people often regret buying:
- Timeshares. They’re usually not worth it.
- Exercise equipment. However, this may have changed during the pandemic when people actually use it more often.
- Fad items and As Seen on TV items.
- Sale items. If you don’t actually need it then it’s not a good bargain regardless of the price.
- Cheap used cars. After all, they end up costing more in the end.
- Luxury items. You don’t need to keep up with the proverbial Joneses.
Obviously, everyone has different purchasing needs and desires. If you ask yourself honestly why you’re buying what you’re buying then you can avoid financial regrets.
7. Mistake: Investing Without Understanding
Investing is a very important way to grow your money. However, you have to understand investing if you’re going to make good choices. You can definitely work with professionals to help you decide what and how to invest your money. But as mentioned before, you shouldn’t let them do the work for you. Instead, you should make sure to have a thorough understanding of what you’re doing. Even if you end up letting someone else do the bulk of the work for you, know why. For example, a lot of people could avoid financial regrets in 2021 if they better understood their cryptocurrency investments.
8. Avoid Financial Regrets with Smart Estate Planning
Everyone has an estate. Moreover, everyone should plan ahead with what to do with that estate. This means learning about your options. If you have minor children, you need to make plans for them. If you have other heirs, then you should talk to them about the estate. It’s important to name more than one beneficiary. And it’s important to review your estate plan regularly to keep it up to date.
9. Mistake: Skipping the Prenup
This one is controversial. People have strong opinions on prenuptial agreements. However, NBC News is one of many sources that lists skipping the prenup among the top five financial regrets. That’s something to take into consideration if marriage is in your future.
10. Mistake: Being Too Frugal
You definitely need to make sure that you know how to handle your money responsibility. The things we’ve covered above are critical to help you avoid financial regrets. However, don’t get too stingy. You can become so afraid of “not doing money right” that you get into a scarcity mindset. As a result, you never let yourself indulge. And that’s a mistake as well. You can plan for your indulgences. Or you can allow yourself opportunities to take advantage of treats that came along. Whatever you’re approach, make sure that you aren’t so careful about money that you forget to also have fun in the moment. Money is a tool. Use it wisely. But do use it. Letting it sit in your toolbox while you never do anything isn’t the right way either.
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