Today’s post is a guest post from Michael. Micheal blogs at Super Millennial.
Regret..it’s an awful feeling to have in your life. I’m not quite 30. I’m lucky to not have much regret, however this Business Insider article got me thinking of how much financial regret some people will have in their life. The article mentions five financial experts and the money regrets they look back on in their life.
Business Insider Financial Regrets to Avoid
- Failure to do research to make an educated decision
- Not listening to your gut if it doesn’t feel right
- Not investing sooner
- Living beyond your means & getting into debt
- Ignoring a collection item
These are all very legitimate regrets and sure a lot of people are currently suffering from, or currently leading a life that will lead to these regrets. Let’s take a look at these five financial regrets and the necessary steps to take to make sure you never feel this type of financial regret in your future.
Failure to do Research
The article references a CPA who didn’t do his research when he bought their first house. Buying a home is most likely you’re biggest purchase ever and need to do your research. Before you even begin looking online at houses, do RESEARCH the following information:
· Use a mortgage calculator to find out what you can afford & the monthly payment amount (make sure to include taxes, insurance & HOA fees)
· Will you have any savings or will all your money be in your home?
· Evaluate if the house needs repairs, if so do you have the additional money?
· Is your credit score high enough to secure a low APR loan?
· How does it compare to other houses in the neighborhood?
· Would you be okay living there 5-10 years?
There are 100 additional questions to ask before buying a house but the same applies to buying or leasing a car. Make sure to do your research! These high-ticket items will be around in your life for a long time so make sure you really want it and can afford them.
Not Listening To Your Gut
The article references someone feeling pressured when meeting with financial advisors and the bad feeling they got during the encounter. Listening to your gut in most situations is usually the best solution; whether you’re unsure about taking a new job, feeling pressured by a salesman for a “limited time offer”, or hiring a financial advisor. In most situations you should at least sleep on big decisions for a night. If your gut still doesn’t like it the next day, don’t do it.
When it comes to financial advisors I think if you’re net worth is under $100,000 then you can manage your own finances. Paying someone to do it may be convenient but if you don’t learn now you may never. Most people who acquired wealth have had a solid understanding of their finances. That includes how much money they save, how much they spend, and where they invest. Here are some other ways to stay on top of your finances:
· Invest Enough in your 401K to match your employer match
· Open a Roth IRA to maximize retirement savings
Not Investing Sooner
I’ve always been a saver but didn’t begin investing until I was 25. As the article mentions Jeff Rose, fellow blogger of Good Financial Cents said “if only I had started a Roth IRA at 18.” But let’s get real, from 18-22 the last thing on your mind is learning about low cost index funds and tax sheltered accounts.
Unfortunately after that age people then get busy with work, additional education, having a family, and keep up the same excuses. “I don’t understand investing, I don’t have the money right now, or I’m not going to retire for like 40 years.” While one or all of those may be true it’s important to take the time to learn about personal finance or investing earlier, rather than later. Not only will investing earlier compound your potential gains but it will create a habit for your brain to always invest a portion of your income and set up your older self for success. As mentioned previously start investing in your 401K and open a Roth IRA to ensure you can start benefiting from compound interest over time.
Living Beyond Your Means
How often do we all see this? People that make the same or less than you do but always seem to be living the life on Instagram…anyone can do it, but typically they’re just racking up high interest credit card debt trying to impress everyone.
Just STOP, do you need to buy bottle service every weekend? Or buy a car with a $500/month payment? Probably not. It’s important to understand how much you make, create a budget, and stick to it every month. Don’t rack up debt trying to impress everyone; you’ll create a vicious cycle that will be tough to climb out of when you realize how much interest you owe on your credit cards. Here are some other ways to stay on top of your spending:
Stop trying to keep up with the Joneses…they’re broke!
Ignoring A Bill
Finally the last example is ignoring a bill that eventually ends up in collection. If you get a bill, pay it off, no matter how small, get the receipt and store it away. Even one item can have a serious impact towards getting a loan or even negatively affecting your credit. Bottom line…pay the bills! To ensure you don’t miss any bills I also recommend setting up automatic bill pay for your cell phone,
Hopefully everyone can avoid financial regret by sticking to a few simple, easy financial rules. Always do your research for big purchases, listen to your gut (it’s rarely wrong), start investing, don’t overspend trying to impress people and always pay your bills on time.
What has been your biggest financial regret?
Michael L. is the creator of Super Millennial. He teaches millennials how to evaluate their financial situation, simplify money management & learn how to automate your investments to reach their financial goals. Subscribe for his personal finance “Keys To Success” and blog updates here. For additional updates, follow me on Twitter!