Have you ever wanted the inside scoop on money regrets in order to afford them? As the boomer generation moves closer to retirement, they have gained a lifetime of knowledge and experience. In this lifetime of experience, they’ve likely had several financial ups and downs.
On the other end of the spectrum, Gen Z is just starting out with their finances. Likely they are filled with enthusiasm and eager to make the right moves with their money. Enthusiasm and wisdom make a powerful combination.
In this article, you will read about money regrets from baby boomers and the advice they would share with those just starting out on their financial journey. Whether you’re a member of the boomer generation or Gen Z, these money regrets and advice may apply to you!
Not Following Career Passion
As you’re just starting out in your career, it can be easy to take the highest paying job, even if it’s not in your ideal field. The longer you stay in that career and gain additional financial responsibilities, including perhaps a house and family, It’s easy to become tethered to a career path or industry you don’t particularly enjoy.
Jack, a retired CPA, regrets not following his passion for mountaineering while he was younger. While he earned a respectable salary and now has leisure time for recreational activities, his age and physical condition keep him from enjoying the long treks and altitude he loved in his youth.
“I took trips when I was young.” he said. “But I wish I could have put more time into it when I was fit enough to do some of the larger peaks.”
“I have friends who followed their passion and had these grand adventures when they were younger. They were able to gain the experience and reputation to retire into consultant roles.”
“I lived a good life.” Jack says, “But I still wonder what would have been if I had followed more of my passions when I was younger.”
Lesson: Don’t be afraid to follow your passion. Youth is for learning!
Not Saving Early Enough
It’s easy to put off saving! Financial advisors and educators tout the benefits of saving early and it is easy to see why. Thanks to the power of compound interest, the earlier you start saving, the less you will have to save over time. a disciplined savings plan takes dedication and intentional action.
Regardless of when they started saving, many members of the boomer generation regret not starting their savings plans earlier. Iris, a retired teacher, laments that she didn’t start adding to her 401(k) plan until she was nearly 30 years old.
“I wish someone had told me to start sooner!” she says. It was so easy once I set it up.”
Lesson: Start contributing to your 401(k) as soon as you can!
Not Standing Up for Themselves
If you’re starting out in your career, you might simply be happy to have a job. This feeling might translate into not wanting to “rock the boat” or make waves by asking for better working conditions or a raise based on your value to the company. Many people, regardless of age or length of time in the industry, don’t want to jeopardize their jobs by standing up for themselves.
Boomers have an interesting take on this situation looking back on a full career. Realize that life is short and you spend many hours at work. More than likely, boomers wish that they had stood their ground on important issues, such as salary or working hours. Learn from these money regrets and don’t make these same mistakes.
“I wish I had a better sense of my own worth,” says Dolores a retired administrative assistant. “I ran my boss’s life and kept the ship running smoothly. He was a difficult man to work for and I’m sure I saved him from some very embarrassing situations. I wish I had asked for a raise or two along the way!”
Lesson: Don’t be afraid to know your worth!
Raiding Retirement Accounts Early
Financial difficult is almost inevitable. Almost everyone will face some sort of financial hardship, whether from a job loss, a medical condition, or simple poor financial management. Because many people live paycheck to paycheck, it can be difficult to weather a financial difficulty. Depending on the situation, raiding a retirement account may seem like the only option.
However, many baby boomers will advise against this and encourage you to learn from these money regrets, as this action will have serious consequences down the line.
In addition to incurring penalties, fees, and taxes, if you raid a retirement account you will miss out on the compounding interest. The loss of this compound interest may add up to thousands of dollars or more over the years. You may also deeply regret not having those funds available to you in your later years. Regardless of the situation, reserve raiding a retirement account as a last resort. This money is for future you and your future you will thank you.
Lesson: Avoid raiding the retirement account at all costs!
More details – Building Wealth
Not Having a Large Enough Emergency Fund
Emergency funds are critical for withstanding financial hardship! While it can be psychologically difficult to set aside a pile of money to just “sit there” a healthy emergency fund is critical.
Some expenses are standard and predictable to a degree, but it can be challenging to pinpoint when they will actually occur. Simple, predictable inconveniences like having to buy new tires for your car, make routine upgrades to your home, or anything health-related can often derail even the best planned budget.
An emergency fund can alleviate a huge amount of stress associated with even small financial difficulties. In this respect, the boomer generation has much to share with their Gen Z counterparts. An emergency fund is essential not just for the day to day expenses, but for the larger expenses that incur over times.
“I have sinking funds for everything,” says Beverly. “My little savings pots have kept the financial inconveniences to a minimum”
Lesson: Save for a rainy day… especially while it’s sunny outside!
Having Too Much Credit Card Debt
Credit card debt is a plague for many! The credit card industry has a multi-billion dollar marketing budget behind it dedicated to making it easy for you to spend beyond your means. Excessive credit card debt can derail many a well-detailed financial plan.
Many boomers can share stories of credit card debt that ballooned out of control. Your spending doesn’t even need to be out of control to rack up debt. Simply carrying a mindless few dollars over from month to month can quickly add up. It doesn’t take much to add up that credit card balance.
Gerry, an auto mechanic, recounts his mounting credit card balance. “I had been really careful to pay off the full balance. It was a bunch of little things that all piled up. My wife decided to work fewer hours and then we had to replace the refrigerator. I can’t even remember what else.” He laments: “It took us a good 5 years to dig out of that credit card debt and that’s 5 years we could have had money in the market.”
Lesson: Don’t carry credit card debt!
Retiring Too Early
Many baby boomers will tell you that retiring early is their biggest financial regret. While retirement often becomes the goal and an early retirement is seen as a win, fewer people are actually considering what they plan to do within their retirement.
Often boomers will leave a rewarding career only to have free time on their hands and not a lot to do. While this is often seen as a problem of luxury, it’s always helpful to consider a situation from all angles. While retirement can bring a sense of freedom, many boomers regret leaving the routine and fulfillment of their hard won career gains.
Remaining in a career for even a few years longer will gather up a greater nest egg which will also enjoy the power of compound interest. While it’s never a good idea to allow money to make decisions for you, it’s also helpful to use your prime earning years to their fullest.
Regardless of where you are in your financial journey, hopefully you can learn from these money regrets.
Sources:
Good advice Christianna 🙂
“An early retirement is seen as a win”- but you shouldn’t just retire without a plan for what you’re going to do next! 😉