Life experience is the best teacher you meet with. Financial regret is like a friend about whom your parents warn, but you don’t see the truth until it is too late. Every single financial mistake small or big is the learning opportunity. Numbers of people commit errors not because they are stupid but because they do not know – ‘what they do not know’. The importance of sharing financial regrets is to stop people from making the same mistakes. There are three horizons of financial disappointments – I could have, I should have, and I would have.
Who Is Responsible For Financial Regrets?
All of us have financial regret/s in life, but we hardly have an emotional sting to these regrets because the funds in hand enable us to live with added comfort and it is almost impossible to “fix” a financial regret without earning more to compensate the loss. Besides, most the financial decisions are taken independently, so there is no one else to put the blame. According to Dean Sioukas, CEO of Magilla, “financial regrets keep you up at nights because your money is gone for a good.” Thankfully, all of us don’t commit the same financial mistakes;
Still, here are the six most common mistakes that you can probably commit:
1. Trusting Wrong People:
Some people develop relationships just because of expecting financial benefits. The person would not demand money at the beginning to appear very innocent but sooner; he starts revealing the real reason behind developing a relationship. Opening credit cards in your name, forging cheques, direct borrowing or making you guarantor for a personal loan are the most common trap types.
How to avoid: Listen that you don’t want to hear. Pay attention to the opinions of family members. Take the warnings as the red flags.
2. Not Buying the Own Home at Right Time
Having their own home in the UK is the biggest dream of limited earning households. Homeownership is the best way to generate wealth for a financially secured future; it is the supportive and protective hedge against ever-rising inflation. If you do not buy the property at right, you are sure to regret it. If you look back to assess how much you have spent on paying rent and how much costlier the bought out property would have become than that time, you will be at the suffering stage because of significant financial loss.
How to avoid: Having their own home is more accessible it is granted to be. In most cases, a buyer doesn’t have to pay more than 20% down payment. The financial consultant may help you arrange the funds for Govt. agencies or direct lenders. A financially disciplined life is sure to help you have your own house much earlier than you think.
3. Taking Too Much Student or Unemployed Loan
More than £16 billion education loan is granted to almost one million students in the UK per year. The outstanding education loan value had reached £105 billion at the end of March 2018. It means numbers of students fail to repay the dues even after starting earning. The names of graduates accept that the education loan is an emotional burden for them as it makes them anxious and frustrated when they review the reasons for getting or alternatives to avoid it.
How to avoid: Education loan is not a bad thing because it is a necessity for many but optimisation of needs and assessment of repayment capability is a must. Instead of taking to get no guarantor bad credit guaranteed student loan from online direct lenders, better you try for job seekers allowance. Working during the holidays, getting on a tight budget, educating yourself through free online resources are the easy ways to free yourself from repayment liabilities.
4. Not Saving and Investing Early:
The power of savings and investments is often underestimated because the ordinary households already struggle to meet out even the regular living expenses. People don’t value to set a savings goal at an early age when they can do it. Later, it is time to regret. More than 50% of people regret not saving when they could have done it mainly because of low confidence, lack of financial discipline and lack of knowledge.
How to avoid: Every day is the right time to start saving for the future. Each amount is right, to begin with. Do not start with big saving plans; keep the goals easier according to affordability. Try to save more by cutting down the monthly payments of debts and interests.
5. Not Investing In Retirement Plan:
All of us have to retire from regular earning by hectic working at an age. Investment at an early stage for the old age earning is a good way, but most of the salaried professionals or self-employed professionals neglect this realistic requirement. It is the common financial regret of old age people that they don’t have adequate funds in accounts to get required monthly income as a return.
How to avoid: State Pension from the UK government enables to get a regular pension from the day you retire at pension age. The monthly income depends on your National Insurance contributions. The maximum earning you can get £125.95 / week. Additional State Pension is another good option to invest small that too in instalments from an early age just when you start earning. It gives you extra at the top of a state pension. Invest in Pension Credit if you form the low earning community.
6. Buying Unaffordable That You Don’t Need:
Many times, we make big purchases that we don’t need in reality, or we can avoid investing. Every big purchase that you earn by borrowing from direct lenders, banks or by using the maximum limits of credit cards is going make you regret because the long-term repayment period not only keeps you in stress but also costs you a lot.
How to avoid:
Every big purchase on the instalments must have a logic. Try to avoid borrowing for luxuries if you can’t afford directly according to regular earning. Each debt comes at a cost; avoid borrowing from any source. For example, having more than one home just for renting the other may not be the right decision if you pay the interest, taxes and maintenance cost more than the rent.
Do not blame somebody else for having financial regrets; accept the fault and forgiving yourself. Educate yourself to eliminate the after impacts of committed financial mistakes; you can start doing financially better any day- the best time to save will never arrive.