Avoid these financial regrets

Over the course of your life, you've probably had several different jobs and have maybe moved to another area at least once. While most working people put away a portion of their salary for retirement, when it comes time to leave the workforce, many have some financial and spending regrets they wish they could take back. Here are a few of the most common financial regrets of seniors:

Not saving enough
Whether it's a 401(k), individual retirement account or just a simple savings account, there are many ways to save a portion of your earnings while working. When it comes time to retire, having a large enough nest egg to carry you through retirement is crucial to maintain the same lifestyle and be able to receive and pay for health care throughout your life. Unfortunately, one of the greatest regrets when it comes to financial planning for seniors is not saving enough.

According to the Department of Labor, half of all U.S. workers have not calculated how much they will need to retire, while another 30 percent who are offered a 401(k) at their place of work have not participated in the savings plan. Without proper calculation, it's impossible to know how much you will need in retirement. Start saving as early as you can and take advantage of your employer's retirement plans whenever possible. Once you get closer to retirement, you can calculate about how much you will need per month to get a more accurate figure.

Overspending
As Americans, some could argue that we have been conditioned to be consumers for life. However, that doesn't mean you need to compulsively blow your budget and overspend on all the latest gadgets. If you've ever felt buyer's remorse over something you just purchased, you might need a shopping intervention of sorts. Many people shop for a variety of different reasons that go way beyond what they need. There is the emotional shopper who shops for "retail therapy" instead of addressing other issues; the shopper who buys everything during a sale, whether they need the items or not; and the social shopper who overspends when influenced by others. According to the AARP, here are a few of the most common spending regrets from seniors:

  • Handbags
  • Home parties
  • Monthly clubs

Instead of taking on one of these personas while shopping, you should only purchase items that you absolutely need to avoid overspending. You could then use the money you didn't spend to save toward retirement or travel. If you're an emotional shopper, consider other methods that can make you feel good without spending money. Exercise, writing or talking with a friend can be healthier methods for dealing with emotions. Your friends should also not influence you to spend more than you should, and if you find yourself buying in excess, avoid shopping with a certain person or group. Remember, there are other ways to have fun that won't break the bank.

Not buying a home
While this financial regret is somewhat more personal, becoming a homeowner is still very much a part of the American dream. However, buying a house is not necessarily the right financial move for everyone. According to the National Foundation for Credit Counseling, 10 percent of consumers said not buying a home was their top financial regret. The NFCC polled more than 2,000 consumers and determined that 5 percent also said buying a home was a spending regret, which means the financial commitment of homeownership weighs heavily throughout life.

There is no doubt that homeownership is a major commitment that affects both finances and senior wellness, and purchasing a home will largely depend on your financial situation and what you plan to do in life. When it comes to retirement, settling down in an area with a low cost of living can help you live out your dreams and give you more money to pick up hobbies you couldn't do while working. On the other hand, if you have wanderlust and don't plan on sticking to one state, buying a home may not be the best move.

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2014-07-24T03:15:44+00:00 June 24th, 2014|Finance & Planning|Comments Off on Avoid these financial regrets