Everyone has made at least one financial decision they wish they could take back. Whether it’s buying too much house, racking up too much debt or something else. The good news is you can always bounce back. Here are the biggest financial regrets in America and how to correct them.
Not saving more for emergencies
The biggest regret most Americans have is not saving enough for emergencies. A recent Bankrate survey revealed that 51% of Americans had less than three months’ worth of expenses saved in an emergency fund. Twenty-five percent of those people had nothing saved at all. Even if you think you can’t afford to save much, you at least need to start. Don’t say you’ll do it when you earn more money because chances are when you earn more, you’ll just start spending more. Start saving $10 now from each payroll payment, then bump it up when you have more wiggle room in your budget. Setting up automatic transfers with your bank can make saving effortless.
Not saving more for retirement
Some people want to work forever because they love their jobs, others do it because they have no choice. Nineteen percent of Americans regret not saving more for retirement. Even if you’re young and think you have all the time in the world, do yourself a favor and start now. You’ll be able to save more money and reap the benefits of compound interest. Aim to save 10-15% of your annual pre-tax income. If your employer offers a company match, make sure you’re contributing enough to receive your full match. It’s free money and you don’t want to miss out. For 2021, the contribution limit is $19,500 for a 401k and $6,000 for an IRA. Depending on your age, you may be able to make catch-up contributions to your retirement accounts. Those aged 50 or older can contribute an additional $6,500 to a 401k and $1,000 to an IRA annually.
Drowning in credit card debt
Digging yourself of credit card debt isn’t easy which is why many people regret putting themselves in that position to begin with. It’s hard to pay off your debt when the interest accumulates so quickly. Plus, some people just won’t stop shopping. The good news is if you’re ready to make a change, there are things you can do to break the cycle. First, you need to put your credit card on ice until you’re debt-free and learn how to use it responsibly. Second, find a debt repayment plan that sounds do-able and give it a try. The debt snowball method is popular amongst people on their debt-free journey. Here’s how to get started: Grab a sheet of paper and list your debts from the lowest to highest balance. Make the minimum payment on all your debts then focus on paying the smallest balance. Once it’s paid off, you’ll move on to the second smallest balance and repeat the process.
Too much student loan debt
Taking on too much student loan debt can derail your future plans. You may be forced to live at home longer, turn down your dream job because it doesn’t pay enough or delay having kids. Rule of thumb is not to take out more in student loans than you expect to earn during your first year out of college. If the damage is already done and you’re looking to pay off your loans faster, you need to add more money to each monthly payment. Anytime you get extra money from your tax refund, birthday or work bonus, put it towards your debt. Call your lender and make sure they know to apply the overage to your balance, not your next month’s payment.
Not saving enough for their children’s education
Many parents dream of sending their kids to college, but not everyone can afford to foot the bill. Don’t beat yourself up if you didn’t save enough for your child’s education, there are things you can do to make college more affordable. While they’re still in high school, they can take AP or IB classes and earn college credits. They can also apply for grants and scholarships. There are opportunities available for college students so do your research. Also, be sure to apply for FAFSA every year, so your child can receive financial aid.