Everyone has a financial regret of some kind. Small financial regrets happen every day, impulse purchases, not being able to return something you don’t like or any bad experience that was a waste of money. Unfortunately, not all financial regrets are small. Some of them can haunt you for a long time and take time to pay off.
We’re going to look at some big financial regrets that are unfortunately relatively common today, how to avoid them and tips on what to do if you find yourself having already made one of these decisions.
This is probably the most common financial regret many of us have. It’s also the regret that can have the longest-term consequences when it comes to an emergency or saving for retirement.
It’s understandable why so many of us struggle with this, especially right now. With inflation up and all the essentials costing more it’s hard to put money away. If you have any kind of debt to pay off it’s even harder.
You will of course want to prioritize paying debts down, but that’s doesn’t mean you can’t try to save a little bit here and there as well. Our guide to saving or paying off debt will give you an idea of which you should do for your own situation.
If you need to save for an emergency fund the best thing to do though is to save ANYTHING you can. Doesn’t matter if it’s big or small, it’s the habit that is most important and any amount is better than nothing.
For retirement, if your employer has a RRSP match plan or some kind or pension plan pay into it as much as you can afford to each year.
Every little bit you put away for later will help you in the long run.
Credit card debt is one of the biggest financial regrets people have. It’s very easy to spend too much here and there on credit and end up wincing when you get the bill.
Ideally, you should try to pay off your card in full each month without running up any interest payments. But the majority of Canadians (56%) do carry a balance on their credit cards.
High-interest credit card debt is not only stressful but a massive drain on savings. If you only make minimum payments it will take you a very long time to pay off the debt and you’ll end up spending much more in interest.
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If you have credit card debt, always strive to pay more than the minimum payment. Make a plan for how long it will take you to pay off. Doing so will save you hefty interest payments.
What if your credit card debt is just too much for you to handle? Know that there are always options. Booking a free consultation with a Licensed Insolvency Trustee (LIT) will give you a better idea of your debt situation.
Sometimes a financial regret is not what you do, but what you don’t do. Many people think that financial planning is something that can wait until later. In reality though it’s best to start planning as soon as you possibly can.
If you have goals you want to achieve, financial planning is vital. If you want to retire, own a house, pay for your kids’ education, or have expensive trips, you need to plan ahead.
It can seem overwhelming but there are a few simple things you can do right now to give yourself a simple financial plan. The first thing you can do is to track your expenses and create a budget. You’ll very quickly see where you’re spending money you don’t need to and what you can cut back on.
Doing this will give you more money for savings and debt repayment and allow you to plan for your future.
Housing is a nationwide problem right now. Both homeowners and renters are dealing with never-before-seen increases in costs.
People who own a house will tell you it’s an investment and they’re right. Homeownership is one of the best investments someone can make. But many buy houses outside of their means and struggle to keep up with the costs. With higher interest rates, mortgage payments can be a drain on your household finances.
It’s recommended that you don’t spend more than 30% of your income each month on your accommodation. That’s of course difficult for many.
If you are house hunting or preparing to buy a house one day, think about all the costs involved: interest fees, utilities, maintenance costs, property taxes, etc. A key to success is living below your means. You want to avoid ‘buying too much house’ and overspending just to get on the property ladder.
Worried you can’t afford your mortgage payments? Here’s what you need to know.Click for mortgage repayment options
You know the kind: where you see something, and buy it on impulse because it feels good in the moment.
If you do this regularly, you’re probably spending hundreds or maybe even thousands of dollars a year on things you don’t need. It’s like going grocery shopping when you’re hungry, you always buy things you want and not what you actually need.
Non-essential spending is a serious drain on savings and can set you back. That doesn’t mean you should never treat yourself but you need to have limits. Good financial health comes from prioritizing long-term goals.
There are some simple ways to avoid overspending on things you don’t need. Firstly, set aside money for miscellaneous spending each week. When it’s gone you have to wait until next week to start again.
Always go shopping with a list. If you have a list you’re less likely to go ‘off script’ and buy things you hadn’t planned on.
When faced with a non-essential purchase, ask yourself if you should make a contribution to your savings account instead. Could you be saving to buy something more worthwhile?
Instead of thinking about satiating your desires in the moment, delay the immediate gratification. Your future self will thank you.
While these are common examples of regrets people have, they are by no means the only ones. Financial regrets are different for each person. If you’re struggling with debt there are options to help you.
Talking to a BDO Licensed Insolvency Trustee can help you take back control of your finances. Book a free consultation today.
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