Brian O’Connell* says people who live with big financial regrets carry a big burden — one they may never be completely rid of.
Photo: photoschmidt
Not saving for retirement, not getting a marriage prenuptial, choosing the home to buy — all are on the list of financial regrets many of us make — and wish we could take back.
But those aren’t the only regrets.
There are plenty of other errors of omission on the list, too.
“By far the most heart-wrenching financial regrets I hear from people were those made in their twenties,” says Chad Zollinger, manager of the debt relief and tax blogs on BestCompany.com.
“The most prevalent of which would be either not going to university or going to the wrong one [too expensive], buying a house too soon or at the wrong time, and spending too much money on inconsequential things early on.”
“People rarely plan for the future — even when they do, they plan for a future that doesn’t end up coming to fruition,” he adds.
Some financial regrets are, well, more regrettable than others.
These errors of financial omission top that list.
- Not beginning your savings soon enough
Economic forecaster Mark Zinder says the “rule of 72” says at a 10 per cent rate of return (the S&P’s historical average) money doubles every 7.2 years.
“It’s the last double you can’t afford to miss out on, and when people do, they regret it,” he says.
When your savings increase from $250,000 to $500,000, and from $500,000 to $1,000,000, those are the saving cycles you don’t want to miss, Zinder says.
“The sooner you start and the longer your time horizon, the more money you have for that all-important savings double on the back side.”
“I often use this line: ‘You either live a life of discipline, or you live a life of regret.’”
- Not studying personal finance in high school
“I regret not having a clue about personal finance in high school,” says Antonn Park, owner of Blue Flower Editing in Boston.
“I earned a bachelor of science and an MS degree in crime and justice studies.”
“I’m still paying for loans, and probably will be for a long time.”
- Getting a payday loan
Getting a payday loan is something people always regret, says Sara Nelson-Pallmeyer, executive director of the nonprofit Exodus Lending.
“People take out one loan, thinking they can pay it back on their next payday, only to have to take out another to repay the first, a third to repay the second, and so forth,” she says.
“They are in debt for these loan for months, if not years, by the time we help them get free.”
“Payday loans are definitely a big regret.”
- Not getting life insurance
“Death can hit a family hard,” says Sonya Smith-Valentine, a personal finance specialist.
“When there is no life insurance to minimise the financial hit, regret shows up,” she notes.
- Toying with your investment portfolio
In January, Warren Buffett won a $1 million bet by doing better with a passive, low-cost stock index fund over 10 years than a top hedge fund manager did with his active fund over the same period.
“Instead of trying to time the market like his rival, Buffett simply rode out the market — even during the depth of the recession,” says Lauren Klein, a financial planner.
“The result: Buffett’s stock fund achieved a 7.1 per cent compound average return.”
“The hedge fund return: just 2.2 per cent.”
“Instead of trying to outsmart the market, build an investment strategy based on your long-term needs and goals and stick to it.”
- Not scooping up ‘forgotten’ money
“A financial regret I’ve seen a lot of in my time as an advisor is forgotten money,” says Krista Cavalieri, senior manager at Evolve Capital.
“Often people change jobs and leave their superannuation behind or they roll them over and just forget about the money.”
This means the funds, if invested, may not be invested appropriately, thus leaving a lot of opportunity on the table, Cavalieri says.
“Both of these situations can be devastating,” she notes.
“People made the good decision to invest, but did not see it through.”
The moral of the story?
Don’t procrastinate and let good financial opportunities fall by the wayside.
As the above stories attest, too many people do that already — and have major regrets for letting a money-making opportunity slip through their fingers.
* Brian O’Connell is a Pennsylvania-based freelance writer. His website is brianoco.contently.com.
This article first appeared at www.thestreet.com.
