Financial Regrets? Use Them to Plan a Better Future.
June 26th, 2018 by Bunch & Brock
As you look back on past financial habits and decisions, you may have some significant regrets – choices that continue to impact your lifestyle today. Maybe your savings are frighteningly meager and monthly debt consumes much of your paycheck.
Mistakes can be life’s greatest teachers. While it may be tempting to reprimand yourself for financial missteps, it’s more constructive to learn from these mistakes as you move toward improving your future.
Common Financial Regrets
If you regret money errors, know that you are not alone. In fact, a new study polling 1,000 people revealed that three out of four adults admit to financial regrets. According to the Student Loan Hero study, about half the respondents said they regret neglecting to save money and wish they had saved more for retirement.
Many of these survey respondents also indicated regrets about the credit card debt they had taken on. Of those who regret past purchases, 38% mentioned entertainment purchases, 33% cited clothing, and 13% said they spent too much on a vehicle.
Learning to Manage Expenses
It’s very common to bite off more than you can chew and accumulate too much debt. Recently, car dealers have offered attractive financing with lengthy payment terms, and millions of Americans are now struggling to pay off loans for expensive new cars. Many people find it easier to spend on impulse purchases when they use credit, then are surprised at how quickly the payments become unmanageable.
If you regret the amount of debt you owe, you can resolve today to do three things:
- Spend less than you earn – Track your monthly expenses and write out a budget plan, allowing for a minimal amount of “extras.” Then stick to this plan as you look for ways to increase your income and gain greater financial freedom.
- Avoid using credit cards altogether – A credit card in your wallet can be an irresistible temptation. It may be best to cut yours up or lock just one away for emergencies.
- Consolidate your debt – You can often roll your existing debt into a single loan that offers a better interest rate. This will help you reduce your monthly payments and pay more toward the principal balance.
Plan to Save
Lack of savings is a mistake that many people make and often live to regret. Bankrate.com recently reported that 23% of Americans currently have no savings at all, and only 29% have the recommended six months’ worth of expenses stashed away. In case of an emergency, such as illness, property maintenance issue, or loss of employment, it is easy to deplete on-hand resources very quickly. If you lack savings, you may be forced to begin charging expenses on credit cards — and accumulating high-interest debt.
To save money, you might try the well-known 50/30/20 plan, which divides your take-home pay into three amounts: 50% to cover needs, 30% for wants, and 20% for savings. Once you determine your needs and allow for savings, the remaining income is for desired extras. A 50/30/20 plan might look something like this:
- 50% — Housing, utilities, insurance, groceries, health co-pays and medication, loan and credit card payments, child care, child support/alimony…
- 30% – Cable or streaming entertainment, smart phone data plans, evenings out, gym memberships, clothing, salon treatments, vacations, gifts…
- 20% – Savings account, retirement accounts, 401k plan…
Serious Financial Regrets
If your past money mistakes are causing problems that seem impossible to handle, you may need professional assistance to secure your future. Bunch & Brock attorneys offer financial counseling and, if necessary, representation for bankruptcy protection.