We've all made financial mistakes, but the nature of our regrets varies by age, according to a new monthly survey by Millionaire Corner.
Older investors lament their levels of retirement savings, while younger investors show the most remorse over their level of credit card debt, according to our survey of 1,400 investors conducted in May. Investors in their 40s and 50s rank “not saving enough for retirement” as the biggest by far of their financial mistakes. The concern outstrips such regrets as spending too much on consumer goods, putting too much money into a house, not making good stock picks and not having a diversified portfolio.
Too much credit card debt ranks top among the financial mistakes reported by younger investors, those under the age of 40, who express similarly high levels of regret over spending too much on material goods. Not saving enough for retirement ranks third.
“In a sense, these regrets are two sides of the same coin,” said Catherine McBreen, president of Millionaire Corner. “Investors who create a household budget and long-term financial plan are much less likely to take on consumer debt and put off saving for retirement.”
The average consumer with credit cards carries a balance of more than $7,000, according to the website Credit Loan. Carrying credit card debt is one of the most common financial mistakes made by Americans, but instant gratification, feelings of low self-worth and the need to maintain a lifestyle motivate spending, according to the website Stretcher, which notes that people tend to spend more when using credit cards vs. cash.
The humble household budget is one of the most effective tools for avoiding common financial mistakes of too much consumer debt and scant retirement savings.
“We know it can be tough to scrape together enough money to pay for a place to live, a car and other expenses each month,” according to Consumer New provided by the FDIC, or Federal Deposit Insurance Corporation. “But experts say it's also important for young people to save money for their long-term goals, too, including perhaps buying a home, owning a business or saving for your retirement (even though it may be 40 or 50 years away).”
The agency recommends “paying yourself first” by setting aside savings every paycheck before paying bills and other expenses. “Even if you start with just $25 or $50 a month you'll be significantly closer to your goal,” said the FDIC. “You have one huge ally — time.”
Investors who begin saving for retirement later in life forfeit the years of compounded investment gains – one of the most common, but easily avoided, financial mistakes.