Turn Financial Mismanagement Around, Live Regret Free - American Credit Foundation

Turn Financial Mismanagement Around, Live Regret Free

feeling of freedom from peace of mindFor many folks, a mantra of “No regrets” is a way of proclaiming they’re living their life to the fullest, free from worry, no matter the consequences. While this might be an effective way to navigate some aspects of life, it’s not necessarily the best tactic when it comes to your financial health. In fact, for the vast majority of us, poor money management definitely comes with consequences that can negatively impact all aspects of our lives.

That being said, I want to address some of the most common financial regrets people report experiencing and offer advice about how to avoid making the mistakes that cause them.

Retirement: It’s Never Too Early to Start Saving

When it comes to their top financial regret, most Americans are in agreement: They wish they had better prepared for retirement. That being said, it’s not difficult to understand why so many people find themselves in this predicament. After all, for many Americans, particularly those just starting off in their careers or those even into their 30s and 40s, the idea of retirement is something to do with old age. In other words, it’s not part of the here and now, making it easy for some people to push the idea of retirement saving to the back of their mind.

But the hard truth is that’s it’s never too early to begin socking away money that will see you through your golden years. However, if you haven’t yet started building your nest egg, forget the past and get started on your future. If your employer offers a 401(K), IRA, pension or other type of retirement plan, consider taking advantage. This type of steady, long-term saving is ideal as you usually don’t ever see the money in your regular paycheck and, as a result, won’t be tempted to spend it.

If you company doesn’t offer such plans or you are self-employed, then you are going to need to be more disciplined about saving. To determine what you can reasonably save each month, you’ll need to create a workable budget, perhaps a zero-based budget or any other monthly money plan that makes sense for your financial situation.

If you’re unsure of where to begin, consulting with a financial advisor is never a bad idea, but make sure to receive referrals from trusted sources before you decide. If hiring help isn’t a financial possibility, take note: As a general rule, it’s smart to allocate 20 percent of your salary toward retirement, future debt repayment and general savings, including emergency funds.

Big Spender? You’re Not Alone.

spending on credit card debtAnother common financial regret is overspending. It may sound obvious to avoid spending more than you make, but a surprising amount of Americans fall victim to this financial blunder all the time. And really, who can blame them? In the wise words of Madonna, “We are living in a material world,” and though Madge spoke those words more than 30 years ago, nowadays they ring more true than ever.

When you consider how easy it is to click and buy from your computer in the comfort of your own home, Americans’ buying power is literally at their fingertips.

If you find yourself falling into this trap more often than is good for you, it may be prudent to be aware of what triggers this behavior – and how to fight the urge. Here are four common types of over-spenders. Which one are you?

  1. The emotional spender uses purchases like comfort food, picking up a new bag or the latest gadget when you’re feeling blue?
  2. The slave to sales finds it near-impossible to say no to the clearance aisle.
    The social spender will throw down cash without a second thought when in the company of friends.
  3. Compulsive spenders spend beyond their means, just for the thrill of it.

Once you’ve nailed down what drives you to overspend, you can work to solve the problem.

If you’re ruled by emotion, look for better ways to cope than forking over cash. Turn to friends and family if you need a sympathetic ear. If the problem is deeper, you may consider professional help. However, sometimes writing down your feelings is just the trick for blowing off steam rather than blowing your budget.

If sales are your weakness, nix solo shopping. Oftentimes all you need is a coolheaded companion to keep you out of the bargain bin and your money in your wallet.

If you find yourself spending buckets of cash when in social situations, consider budget-conscious activities. Get active with friends or seek out one-the-cheap movie showings. Check out free entertainment, such as outdoor concerts or admission-free museum outings.

Finally, you’re a thrill-seeker, it’s time to look to something other than shopping. Think exercise, a night out on the town, an impromptu party with a few close friends, or anything else that feeds your need for excitement. If it’s budget friendly to boot, more so the better.

Debt, Debt, and More Debt

And last but certainly not least, a major and all too common financial regret is racking up too much credit card debt. And here’s the kicker: So many Americans these days are bogged down in it that it might not seem like such a heavy burden. But like your mother always said, if everyone jumps off a bridge, are you going to follow?

Too much revolving debt, particularly when it comes laden with interest charges, is no good for anyone.

If this is your situation, it’s time now to put a solid plan into place to bring your credit card balances down. Think interest-free cards if you qualify and research different options for debt repayment and choose which works best for your budget.

And remember, there are many situations which could result in financial regret, and if I haven’t touched upon any that are affecting you, I invite you to contact my team at American Credit Foundation. A no-obligation, personalized consultation could be just the ticket for fixing any financial woes you might have and putting your regrets to rest.