If you’ve ever wished for a financial do-over, you’re not alone.
According to a StudentLoanHero.com survey, in the past year, 76% of Americans have some form of financial regret. Those surveyed said they spent the most on entertainment, clothes and cars.
The top three regrets reported were wishing more was saved for retirement, not saving more money in general and taking on credit card debt. For their money spend do over, 34% said they’d stash more into their 401(k) or individual retirement account. Fifty-one percent said they needed to cut back on dining out, 22% on buying clothes/shoes and 20% had plans to re-evaluate their mobile phones and service expenses.
Some mistakes are worse than others. Here are three experts say you should avoid.
A 401(k) loan: Unless it’s an emergency, it’s a bad idea. Not only are you reducing your retirement savings and not earning the compound interest, but if your employer lets you go, you’ll have to repay the entire loan or pay taxes and penalties. In addition, some plans suspend 401(k) contributions until the outstanding loan is repaid.
Children first, retirement later mentality: Parents will sacrifice everything for their child. However, saving to fund your child’s college education at the cost of your own retirement is short sighted. The earlier you start saving for retirement the better. Chances are your retirement expenses are going to be higher than you’ve anticipated. Do you really want to be a burden to your kids in your golden years? Take the “put the oxygen mask on yourself first” approach. If you have the ability to do both, then great. But if it’s a choice of your retirement fund or your child’s education, know that your child has other options available to cover those costs. There are scholarships, grants and student loans. There are no back-up retirement funding options.
Paying only minimum balance: According to CardRates.com, the total amount of debt carried as credit card balances in 2017 was $830 billion. The average household has about $6,577 in credit card debt. The amount paid in interest every year adds up, resulting in more and more debt.