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Personal Finance

4 Financial Regrets That Can Still Be Fixed – Are You Making One?

March 14th, 2024 | 4 min. read

By Advance Capital Team

man with financial regret

Let's face it – we’ve all made financial choices we wish we could take back. It turns out, feeling this way is pretty normal. A 2023 survey by Quicken, a personal finance software company, revealed that a whopping 80% of Americans admit to having financial regrets.

At Advance Capital Management, we meet people from every walk of life. We believe it’s always possible to work towards a brighter financial future, no matter your past decisions. To help, we offer clients comprehensive financial planning services.

So, maybe you haven’t put away a penny for retirement, or you’ve played it too safe with your investments. The good news? These missteps don’t have to define your financial journey. You don't need to let past choices hold you back or lose sleep over what can’t be changed.

Here, we’ll cover the most common financial regrets and provide practical advice on how to address them head-on, transforming them into stepping stones toward your goals.

Not having a big enough emergency fund

Topping the list of financial oops moments is the lack of a hefty emergency fund, with 28% of people sharing this regret, as reported by Money. Even more concerning, nearly half of those surveyed admitted they’d be in a financial pinch in less than three months if their regular paycheck stopped coming in.

This statistic is a wake-up call for the importance of having a safety net.

The Fix: Building Your Emergency Fund

Starting an emergency fund is simpler than you might think. Begin with a modest goal, such as saving $1,000. Automating your savings can make this effort nearly invisible, quietly building your fund with each paycheck. Additionally, look for small ways to cut back on your spending; even minor adjustments can free up cash that can be directed into your emergency fund.

Aiming for three to six months’ worth of living expenses as a target will give you a solid financial cushion.

Remember, the goal here isn’t just to save money – it’s to build a safety net that ensures peace of mind and financial stability, no matter what life throws your way.

Not investing aggressively enough

Investing involves risk, but risk is required to have a chance for growth. Being overly cautious with investments can significantly hamper your money’s potential to grow.

It’s interesting to note that our psychological makeup includes a bias toward loss aversion. That is, we tend to feel the sting of a financial loss much more than the pleasure of gain. This might explain why a quarter of survey respondents regret not being more aggressive with their investments.

The Fix: Finding the Right Balance in Investing

The key to overcoming this regret is discovering the appropriate asset allocation that marries the right level of risk with the potential for meeting your financial goals. This usually means embracing stocks, which, despite their volatility, offer greater growth potential compared to more conservative options like bonds.

For most investors, a handy rule of thumb is to adopt a more aggressive investment stance when you’re younger, as you have more time to bounce back from potential losses. As retirement approaches, it makes sense to consider gradually shifting to less risky investments to protect what you’ve accumulated.

Yet, it’s crucial not to swing too far towards caution, even in retirement. Maintaining a portion of your portfolio in stocks can potentially help your savings keep pace with inflation over time.

Not buying a house when they were younger

Owning a home is often viewed as a cornerstone of the American Dream, and it’s no surprise that over a fifth of survey respondents wish they had jumped on the property ladder earlier.

However, buying a home isn’t straightforward; it’s influenced by numerous factors like fluctuating market prices and varying mortgage rates. With the recent spike in both mortgage rates and home prices, many are regretting not purchasing when rates were significantly lower.

The Fix: Navigating Homeownership Wisely

Homeownership is widely viewed as important to building net worth, but it requires savvy mortgage management.

If buying a home is on your horizon, prioritize saving for a substantial down payment – typically around 20%. This approach not only reduces your loan amount but also demonstrates to lenders your seriousness about homeownership. Or, consider a fixer-upper if you're handy, as this can offer value for those willing to put in the work.

Additionally, refinancing when interest rates are low is a strategy to manage your mortgage effectively.

Ultimately, the best approach depends on your unique financial situation and homeownership goals, emphasizing the need for well-informed decisions. For some individuals and families, renting may make more sense.

Not planning for retirement appropriately

In the survey, respondents overwhelmingly agreed that saving for retirement is one of the most important financial decisions Americans can make, regardless of age.

Consider a different study that found over 60% of retirees wish they could get a “do-over” in retirement planning. Among those retirees, nearly 75% said they would start saving earlier, while 63% said they would save more.

The Fix: Making Up for Lost Time in Retirement Planning

While we can’t turn back the clock, there are strategies to help make up for lost time. For those 50 and older, catch-up contributions are a valuable tool, allowing extra savings into retirement accounts beyond the standard limits. Learn more about the difference catch-up contributions can make in this article.

No matter the amount, boosting your savings rate whenever possible is a smart move. Additionally, delaying your Social Security benefits can lead to larger monthly checks.

Consulting with a financial adviser could also uncover tailored opportunities to enhance your retirement readiness based on your unique circumstances. Check out our retirement planning services to learn more.

Bottom line

It’s never too late to adjust your sails on the journey to a secure retirement. Whether you’re just starting out, looking to catch up, or refining your existing plan, the right strategies and guidance can make all the difference.

At Advance Capital Management, we’re committed to helping you turn financial regrets into proactive steps toward a brighter future.

Schedule a free consultation with one of our financial advisers today to explore how we can assist you in pursuing your retirement goals and the financial peace of mind you deserve.

Advance Capital Team

Advance Capital Management is a fee-only RIA serving clients across the country. The Advance Capital Team includes financial advisers, investment managers, client service professionals and more -- all dedicated to helping people pursue their financial goals.