A lifetime of good financial decision can all be undone by making poor choices that have a long term financial impact. For most people, their financial situation is driven by a few decisions rather than their daily lifestyle habits.
Why do most people make financial decisions that they will regret?
The primary reason is that they lack knowledge of other options or they don’t understand the long term consequences of the decision. Most of us make important financial decision on a very short term planning horizon and only consider the short term consequences.
What is a poor decision that people make with retirement savings?
The biggest is waiting to start saving for retirement and then they compound it by not aggressively reaching maximum savings as soon as possible. Time is the greatest asset we all have to exceed our savings goals without making other sacrifices.
Do people make poor decisions when it comes to their kids?
Probably the biggest mistake is the choice of where to send their kids to college. Parents need to be involved in the decision and include the financial impact when choosing a school. Paying for an expensive college that requires massive debt isn’t smart for the parent or child.
What are other financial decisions that people might regret?
Not building a financial plan that includes a budget and long term goals. Without a plan you are likely to not get anywhere. It is like driving to a new destination without a navigation app to guide you, the likelihood of arriving at the right place, on time, is extremely low.
What might be the biggest financial regret everyone should avoid?
Making poor choices with debt to fund a lifestyle their income doesn’t really support. If you are always taking the longest term to lower you payment on a loan or only paying the minimum on credit cards, the end results is that everything you buy costs you more because of interest. People often don’t realize this is one of the poorest decisions that they can make in life.