The recent National Foundation for Credit Counseling (NFCC) online poll allowed consumers to select their greatest financial regret. Of more than 2,200 respondents, 53 percent indicated that habitually overspending was what they regretted most.
Overspending far outweighed other financial concerns such as inadequately saving (18 percent), insufficiently preparing for retirement (14 percent), not having bought a house (10 percent), or having bought a house (five percent).
“Although most people have financial regrets, it is important to not dwell on past mistakes,” said Gail Cunningham, spokesperson for the NFCC. “Instead, look forward and take action by constructing a plan that recognizes the realities of the situation, repairs financial damage, and moves in a positive direction toward financial security.”
The NFCC offers the following 10 tips for turning financial regrets into financial wins:
• Set financial goals – Both short and long-term goals provide a financial framework and create a vision that keeps spending on track. Put the goals in writing and display in a prominent place. Have sound reasons for establishing each goal, and when necessary, sound reasons for abandoning them.
• Create a budget – A budget is the cornerstone that a sound financial future is built upon. Without it, danger signals are missed and spending can easily spiral out of control. Get started by utilizing the financial worksheets on The Village’s website (www.helpwithmoney.org)
• Become a track star – At least once every six months, track your spending by writing down every cent spent for 30 days. This exercise will reveal any leaks and provide an opportunity to adjust spending to best meet objectives.
• Be financially organized – Create a cash-flow calendar, writing down all sources of income on the anticipated pay date. Next, record which bills are to be paid out of each check. If there is not enough money to satisfy all obligations during one period, call the creditor and request a due date change.
• Don’t wait to automate – Setting up automatic bill-paying provides protection against skipping a payment or paying late, both of which can result in a dinged credit report, a potentially lower credit score, and a late fee.
• Review your credit report – A credit report is a reflection of a person’s financial track record, and is the basis of the credit score, making it a must-read, particularly for those rebuilding credit. Consumers are allowed one free credit report every 12 months from each of the three bureaus. To access this free report, go to www.AnnualCreditReport.com.
• Build a high credit score – A high credit score equals a lower interest rate on loans and credit cards. For a higher score, put an emphasis on paying bills on time, not utilizing more than 30 percent of available credit, creating a mix of credit lines, not applying for more credit than is necessary, and responsibly managing credit over time.
• Realize that life happens – Life is filled with the unexpected, with the unplanned expense always occurring at the worst time, wrecking the best of budgets. Guard against this by creating a financial safety net. Even small amounts of money consistently deposited into a rainy day savings account can create enough of a cushion to make it through most short-term emergencies.
• Know that tomorrow will come – Even if retirement is a long way off, that’s no reason to ignore planning for it. Knowing that time is money’s best friend, provides the smart young investor a very long window of opportunity to turn a small sum of money into a fortune.
• Become a financial adult – This may involve making hard choices, changing attitudes, behaviors, and lifestyle, but it is unlikely that financial decisions made on auto-pilot will result in a smooth landing. Be financially mature by understanding the nuts and bolts of personal finance, and acting on that knowledge.
The actual May poll question and responses are as follows:
My biggest financial regret is that I…
A. Habitually overspent = 53%
B. Inadequately saved = 18%
C. Haven’t bought a house = 10%
D. Bought a house = 5%
E. Haven’t sufficiently prepared for retirement = 14%