I have always heard the definition of insanity is repeating the same action but expecting different results. While this can apply to many areas of our lives, if we don’t learn from bad experiences then what was the point? Today’s blog will discuss money regrets people have that should never be repeated.
Money Regret #1: Not saving enough money! One of most people’s biggest money regrets is not saving money. Just imagine how much you could have saved and how much interest you could have earned if you saved only $50 per month since the age of 15! For illustrative purposes, we will assume you have invested $50 per month for 30 years. How much do you think the balance in your savings account would be at the end of year 30 with only a 3% average interest rate? Based on calculations from the Bankrate.com simple interest calculator, your $50 per month investment for 30 years would have grown to $29,139.30 with a 3% interest rate compounded monthly! The total of your monthly contributions were only $18,000. The additional $11,139.30 is the interest you would have earned. Compounding interest would have played a key role in building your savings over the years.
Money Regret #2: Not staying out of debt! Another financial regret for many people is not avoiding debt. We live in the world of instant gratification and we want what we want now, not later. This type of mentality is what keeps us deeply in debt. We have to come to the realization that it takes time to build wealth and to be able to afford certain things, so patience needs to be part of our overall attitude. It is not necessary for you to have a new car every two years or so. It also isn’t necessary to have the latest and greatest expensive toys on the market especially if you cannot afford to pay cash for them. Remember, you aren’t what you own. You are separate from the things you have. It would be great if we could all come to grips with the fact that everything we own could be gone in a matter of seconds. Would we then want to be known for what we own? I know I wouldn’t. I want to be known for who I am, not for what I possess. Avoid judging people by what you think they have. Most people owe for what they have anyway so simply missing one paycheck could cause them to lose what they have.
Money Regret #3: Not contributing enough to a retirement account! It would be a frightening thing to wake up the day before retirement and realize you hadn’t contributed enough to cover your minimum expenses much less enough to live comfortably. To me, this is one of the regrets I hope I never have. It would be quite devastating to realize all the hard work you had put in over the years wasn’t enough because you didn’t contribute enough to your retirement account. I find it so sad to see retired people living meagerly and not even being able to afford basic medical expenses. It is important to factor in the cost of inflation when planning for retirement. Also realize that medical expenses can add up quickly as we age.
I hope you avoid these money regrets and don’t have any of your own to add to the list. We cannot go back and change the past but we can certainly change the future. It is not too late to begin avoiding financial actions that can cause regrets. Set aside an hour or so today to go over your financial situation and make changes that keep you on track for financial independence!