People Are Sharing Their Biggest Money Regrets

How many of these financial regrets have you experienced firsthand? Know that you’re not alone—and that it’s not too late to do something about it.

We’ve all experienced buyer’s remorse from time to time. When was the last time you splurged on something you didn’t really need or caved to an impulse buy? While buyer’s remorse can sting, it doesn’t compare to the lifelong financial regrets that some people experience.

Multiple surveys over the last three years reveal that people share the same basic regrets:

  • Not saving enough for emergencies
  • Failing to plan for retirement as early as possible
  • Not understanding how to invest
  • Taking on too much student loan debt

Not Having an Emergency Fund

According to a 2021 survey by Bankrate, the biggest regret of most Americans was not saving enough for emergencies. If they had it all to do over again, they would prioritize saving money for a rainy day. You could say the whole world experienced a rainy day for the last two years.  

“Emergency savings has long been the Achilles’ heel of financial security,” Bankrate’s chief financial analyst Greg McBride said, “with too many Americans ill-prepared for the unexpected.”

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Millennials were more likely than Baby Boomers to regret not having an emergency fund—likely because many people in their late twenties to mid-thirties are living paycheck to paycheck. However, it’s still possible to put money back even when you’re on a tight budget. Going forward, 25% of the survey respondents said they would start saving more for emergencies.

Ideally, you should have between three and six months of living expenses in your emergency account. Kevin Mercadante of Money Under 30 recommends that people who have more traditional salaried careers save three months at a minimum, while those who freelance or work in the gig economy should strive for six months of savings to tide them over during tough times.  In addition, homeowners should save between 1% and 3% of the house’s value for emergency repairs.

Not Planning for Retirement Earlier

The earlier you start saving for retirement, the better off you’ll be. Unfortunately, too many people wait until later in life to get serious about retirement. A survey by New York Life in 2019 found that the biggest financial regret among respondents was not saving for retirement earlier. The people surveyed wished that they would have started saving an average of 11 years earlier than they actually did—starting at 34 instead of 45.  

 “This data suggests Americans’ most regrettable financial decisions stack up to focusing on the near-term at the expense of the long-term,” said Brian Madgett, head of consumer education at New York Life.  “Building a thoughtful budget balances these two things, allowing Americans to afford the occasional luxury without dragging down their credit score or future quality of life.”

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The good news is that there’s always a chance to recover from financial mistakes—even if it’s harder to course correct the longer you wait. As G. Brian Davis points out for Money Crashers, “Few young adults fully appreciate the power of compounding. If you start at age 22 and want to reach $1 million by age 62, you only need to invest $179 per month at 10% returns.”

At 32, the monthly savings needed to hit that goal rises to 481. If someone waited another decade to start saving for retirement, they’d need to contribute $1381 a month to catch up!

If you have the option to participate in an employer-sponsored retirement plan, take advantage of it. If your employer offers matching funds, always contribute at least enough to get the full amount offered. You can also put money into a separate IRA or rollover funds from a 401(k). Read more about what happens to your retirement account if you change jobs—and learn why it’s such a bad idea to cash out your retirement savings even in an emergency.

If possible, try to max out your contributions to both your 401(k) and an IRA while you’re young and have relatively fewer financial commitments. That money will be quietly earning compound interest in the background while you journey through life’s milestones.

Not Investing Their Money

Were you ever taught about budgeting or investing? With the loss of home economics classes in public schools, many young people have graduated without much of a clue about how to manage their money. This has a long-lasting effect on women, in particular, as Real Simple reported that women count not investing as their number one financial regret.

In a survey by Merrill Lynch, the majority of women said that they were not using investing as part of their financial plan. Unfortunately, women who fail to invest will have a harder time reaching their goals and developing their wealth. Relying on clever budgeting and saving will never be enough because those measures won’t keep up with rising inflation.

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Currently, inflation sits at 7.9%, the highest it’s been in forty years. The average return rate on a savings account is just .06%. On the other hand, the historical average rate of return for investing in the stock market is 10%. A savings account should only be used for short-term financial goals or as a reserve of cash for an emergency.

It’s functionally impossible to build wealth by saving alone; you need to invest. So why are so few women doing it? Merrill Lynch noted two main reasons for avoiding investing: a lack of knowledge and a lack of confidence.

As Mia Taylor notes for Real Simple, “confidence in investing is not just about actual experience but also exposure, such as through education, says the report. All of the women surveyed said they wished they’d had more education around money and finance. And fully 87 percent of women say basic financial management should be a standard part of the high school curriculum.”

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The world of investing can be intimidating, especially for newcomers. However, it’s not impossible to get started—even without help from more knowledgeable investors. Tiffany Lam-Balfour and James Royal have an excellent rundown of the basics on NerdWallet. Figuring out where to start involves some introspection about your goals and your tolerance for risk.

Thanks to modern technology, you can invest directly in the stock market from your phone. If that sounds like more than you want to take on, however, you can invest in a managed account (for a small percentage fee) that will take care of everything for you.

Spending Too Much on College

Many Millennials were told by parents and teachers alike that getting a college degree was the best way to secure a stable financial future. Attending a good school was supposed to ensure that you’d get a good job. However, that generation graduated into a global recession and a seismic shift in employment.

Bethany McCarter told Yahoo! that she regrets spending as much as she did on her education. “I went out of state, accrued $50,000 in debt, dropped out and came back home to get certified as a teacher. I have more debt than what I make in a full year.”

“Don’t go to a university for its name brand. Don’t go to an expensive college unless your major will make you tons of money and you’ll be able to pay it off,” McCarter advises.

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Researching the career prospects of your chosen degree should be part of the college search process. In addition, young people need to be counseled on exactly how their student loans will impact their finances for years—and potentially decades—to come. For example, it will be more much difficult to buy a house if you’re carrying significant student loans, as your debt-to-income ratio will be unfavorable.

Bestselling financial author Zack Friedman explained for Forbes that the student loan crisis truly is critical. Young people are still being told that going to college after high school is their ticket to the American Dream. With increased access to student loans and rising costs at even state-supported colleges and universities, it’s no wonder that young adults are graduating with thousands of dollars in debt.

Friedman advises that “if you’re a student or parent considering student loans, make sure you understand the total borrowing costs (including compounding interest) and weight it against your ability to repay.”

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Students and parents should not borrow more than is absolutely necessary to get through school. Borrowers are typically offered more than the minimum to cover tuition and fees, and to young people in their late teens or early twenties, that can seem like “free money.” That mindset results in overborrowing and an increased rate of default. And if you thought that a high student loan balance made buying a house difficult, defaulting on that loan is much, much worse.

If you’ve already graduated with student loan debt, it’s sadly too late to make a different decision now. However, you can potentially refinance your loans or apply for an income-driven repayment plan to reduce the burden on your current paycheck. Depending on your situation, you might also qualify for forbearance or deferment—but keep in mind that interest will continue to pile up if you choose forbearance instead of deferment.

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