5 Financial Decisions You’ll Regret in the Future
In this article you will know 5 financial decisions that you will regret in the future. If you know them, you can avoid them.
It is very common that at the beginning of our financial life we make many mistakes. Spending is very easy and with so many temptations around us, making good decisions with our money is more difficult than it seems.
The good news is that we can learn from other people’s experiences to help us make better decisions today, since you won’t want to regret it in the future.
Below are the 5 financial decisions you will regret, and how to avoid them.
Prioritize material things over experiences
Advertising attacks us everyday and everywhere (mobile, TV, laptop, billboards, radio, etc.). It is difficult to avoid new product announcements and irresistible promotions. This is a big problem and although everyone knows it, it is very easy to get attracted.
There is a lot of research showing that spending money on material things not only makes people unhappy but also makes us feel really miserable.
Don’t define your values
This may not sound like one of the regrettable financial decisions. But understanding your values can have a direct impact on how you use money and how happy your buying decisions make you.
When you understand your values, you can make sure that spending and the way you use your money aligns with what is most important to you. This can help you avoid making mistakes with your money. The pressures of your family, friends or social expectations are real and massively influential. When you don’t know your own values, it’s easier to make inappropriate financial decisions.
For example, if you know that you value adventure and personal growth, you are in a better position not to feel pressured to buy a home before you are ready. Without those priorities in mind, you may end up buying a home because everyone says it’s better than renting, even though it doesn’t suit your particular needs.
Determine what is important to you, define your values, and align financial goals to avoid bad decisions you may regret.
Withdraw money from pension or severance funds.
Drawing money from these funds will always be a bad decision. The best advice is: just don’t do it.
Instead, create an emergency fund that you can use, if you need to pay an unexpected expense, such as an accident. Your emergency fund will help you avoid getting into debt and provide you with a cash cushion that you can use freely. Without interrupting your retirement savings. If you are employed, make sure your employer is making the necessary contributions to these funds. If you’re self-employed, make sure you’re making payments to secure your financial future.
Give in to the inflationary lifestyle
Do you have a good income and consider that you can give yourself a lifestyle that many cannot? After all, you work hard and deserve it.
“I deserve this” can be a gateway to lifestyle inflation, or to the slow lifestyle; which is when your expenses are steadily increasing to keep pace with your earnings. Unfortunately this becomes a circle, where you can never get close to your long-term financial goals.
Increasing your expenses prevents you from saving, investing and earning even more money. It’s not enough to avoid spending more than you earn. Minimizing your expenses gives you more to save and invest, along with more options, freedom and flexibility in the future. By practicing frugal habits today, you can do more with the money you choose to save and invest.
Don’t save today
When you are between 20 and 30 years old, you have a big advantage on your part: time. The sooner you start, the more you can benefit from the combined returns on your investments, the power of compound interest.
Not saving is one of the financial decisions you will regret for the rest of your life.
If you want to avoid monetary decisions you may regret later, start by saving and defining your values. You can then prioritize which experiences you want to invest in. And finally, create an emergency fund and don’t give in to the inflationary lifestyle.
Hope this information will be of great help to you 🙂
Hi, I am Nikesh Mehta owner and writer of this site.
I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business.