With another year coming to a close, now is the perfect time to take stock of your finances.
Maybe 2016 was a banner year for your net worth, or maybe you had some unlucky breaks and made some bad decisions. Either way, there’s probably at least one thing you wish you’d done differently with your money in 2016.
In fact, about two-thirds of respondents from a recent Student Loan Hero survey selected one of the six financial regrets listed for the year. Regrets ranged from not saving or investing as much to making a major purchase that was unaffordable.
However, the six biggest money regrets of 2016 also point to where most Americans feel they have plenty of room for improvement. Here’s a look at what the biggest regrets are, and how you can do better in the New Year.
1. Not saving or investing enough
The biggest financial regret of the year by far was not saving enough money. 34 percent surveyed say this was their main mistake of 2016.
Saving money has a sensitive breakdown point: you. It all comes down to your ability to control your spending habits, get motivated to generate more income, or a combination of both.
How to save more in 2017
The good news is, any effort you made to save in 2016 has benefitted you. Building a regular savings habit takes time and practice, and your efforts this year have already got you started.
If you want to keep strengthening your savings muscles, try to start small. Maybe add an extra $10 to your monthly retirement contributions or savings account. Automating your savings makes it even easier.
2. Not paying off enough debt
After not saving enough, people are most likely to regret not doing more to tackle their debts in 2016. One in four people who selected a regret chose this as their money mistake for the year.
When you’re in a lot of debt, even just keeping up with minimum debt payments can be a challenge.
And if your living costs went up this year, or you had unexpected expenses crop up, that’s even less money available to tackle debt. You also have compound interest accruing and working against your efforts to pay off what you owe.
How to pay down debts faster in 2016
If you want to pay down your debts in the New Year, consider looking into getting a lower interest rate to help you along. That way, each payment you make will get you that much closer to a $0 balance.
And if you have student debts dragging you down, student loan refinancing can be an option for getting lower interest rates. Many lenders like SoFi and LendKey offer a variety of terms for repayment, too.
Besides these moves, watch for any “extra” money in your budget you can put toward debt repayment. Big windfalls like a bonus or tax refund can take a big chunk out of your debt balances.
3. Spending frivolously
From a latte-a-day habit to hundred-dollar shopping sprees, there are small and big ways we all spend frivolously. In fact, 20 percent of people surveyed wished they’d avoided spending frivolously in 2016.
And when you do spend money on unnecessary things, you prioritize today’s wants over saving for tomorrow’s needs. Plus, you’re not making much progress on high-priority financial goals.
How to get spending under control in 2017
If you don’t have a budget, that should be the first step when it comes to getting spending habits under control.
Setting a budget or spending plan helps you prioritize what’s important first. Then, if you have money leftover, you can use that for fun purchases.
Maybe you do have a budget but can’t seem to stick to it. If this is your situation, then you should focus on your spending habits. Find your spending triggers, watch out for them, and replace shopping with cheaper stress-reducers.
4. Making a bad investment
There are no guaranteed, risk-free investments. And unfortunately, about 9 percent of respondents found that out the hard way in 2016. They say that a bad investment was their worst money move of the year.
It’s no surprise, either. 2016 has been a year filled with a lot of uncertainty in nearly every sphere of American life. Making smart investing moves during times like these can be particularly tricky.
How to make smart investments in 2017
When it comes to investing, there are some important principles to remember. The first is to choose investments that match your personal risk tolerance.
Whether you like high-risk, high-reward investment opportunities or you’re looking for more of a sure thing, start by choosing investments that match your preferences. And, always keep in mind that no one gets it right 100 percent of the time.
5. Not paying bills on time
Missing a bill payment can result in late fees, delinquencies, and can hurt your credit. Seven percent of people surveyed say a missed payment is their biggest regret the year.
If you’re missing bill payments, take a step back and consider why. Are you forgetful, or do you have more bill payments than you feel like you can keep track of? Did you miss a payment because you didn’t have the cash to pay it at the time?
Figuring out the answers to these questions will help you do better when it comes to bill payments in 2017.
How to never miss a bill due date in 2017
To help manage bill payments, automate all that you can, either through your biller or through your bank’s bill pay tool.
If your issue is cash flow, it’s time to look for ways to stop living paycheck-to-paycheck. Invest a lot of time during the new year to raising your income, whether that’s through picking up overtime or getting a side hustle going.
You can also perform a spending audit to find extra money in your budget and use it to pay off bills.
If debt payments are your pain point, consider debt consolidation. You could change your loan term and lower monthly payments.
Or, if you’re having trouble keeping up with credit card bills, then credit card consolidation via a personal loan may be the route for you. Check out our credit card consolidation calculator to see how much you could potentially save.
6. Making an unaffordable, major purchase
In addition to those who spent frivolously in the past year, another five percent say they regret making a major purchase they couldn’t afford.
A major purchase could be anything from a new TV to a new house. Whatever it is, it will be a financial drain if it’s not something you can comfortably afford.
How to keep purchases affordable in 2017
If your regretful purchase is something you still have, consider reselling it to recoup some of your costs. And, to avoid making the same mistake next year, plan and save for big purchases.
Say you want to take a vacation over the summer. Now is the time to start figuring out what that would cost and set aside funds to cover it. Then you can afford this cost without wiping out your bank account or going into debt.
Whatever your biggest financial regret of the year is, it can be worth checking in with your finances and figuring out how you can do better.
But don’t let your money mistakes hold you back, either. Learn what you can from both your wins and losses this year. Then use your extra year’s worth of wisdom to take your finances further come next year.
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