10 Common Money Mistakes People Secretly Regret Later

I love reading about how people think and feel about money. It’s an area some people find boring, but it’s actually full of interesting stories and insights into what motivates us as people.

For example, I find it fascinating that as a group, we’re often embarrassed at how we’ve spent money in the past. Looking back, we can see all sorts of flaws in our judgement or lack of self-control that kept us from making the choices we now wish we had.

If you’ve read my blog for a while, you know that I don’t think it’s ever too late to start turning things around and adopting a new mindset. But even if you hold on to a kernel of regret, it’s clear to me from reading research that by sharing these stories, we can learn from each other and pass on this wisdom to others.

Going into this process of self-discovery a bit further, I’ll share with you 10 common money regrets and the lessons I think can be learned from them. These observations are drawn from my own experiences and the experiences of friends and my online community.

Buying too much house

It feels great to buy a large, beautiful house that will impress your friends, but it’s a lot of money to tie-up into something that doesn’t actively improve your life. Financial margin is one of the few ways to buy more happiness, don’t lock it all up in a house.

Waiting too long to invest

For most people, investments are scary and hard to understand at first. But if you want to eventually retire someday, you owe it to yourself and your family to at least learn the basics and begin investing as soon as you can. The power of that money to grow compound over long periods of time will surprise you.

Holding on to expensive debt

The longer you hold on to debt with an interest rate over 5-6% APR, the harder it becomes to pay off. That’s because the debt is growing faster than your regular savings can keep up with. I learned this the hard way with credit card debt that my wife and I eventually got out from under, but had to pause all the other ways we might have been enjoying or using our money to do so.

Not learning how to budget

I always used to think budgeting was for the undisciplined— I could just keep a loose tally in my head and live within my means. That worked for a while, until we hit a few thin financial patches and my wife and I found ourselves overspending each month and dipping into savings. The only way we got control of our finances was to make a written budget and begin tracking every penny we spent. I only wish we had done this sooner.

Saving for college too late

At one time I was pretty skeptical of needing to save for my children’s college education. I thought they could just take out loans like I did. But as I’ve gotten older, I’ve come around to the idea of launching them into the world with a strong financial foundation. Unfortunately, that leaves me a little behind in my savings, and needing to make up for lost time.

Letting lifestyle creep

Like many middle class families, my wife and I had a pretty low-key wedding. We went to a state park for our honeymoon and ate lots of home cooked meals together. Money was tight, but we were happy and grateful for the simple things. As my income grew, I noticed a temptation to spend more money in order to enjoy life more, but honestly, the happiest we’ve ever been was those years when we were just starting out.

Living without an emergency fund

It’s all fun and games until you need money fast and life throws you a curveball. Having an emergency fund isn’t a sexy piece of financial advice, but it’s probably one of the most important things you can do for your peace of mind. Start now, even if it’s just putting aside $10 per paycheck and build that habit. It’s never too late.

Wasting money on impulse purchases

One of my most vivid money regrets is looking at my spending history and seeing how much money we spent on fast food when we could have been cooking at home or spending time with friends or making a special meal together. It’s easy to let these impulse purchases get out of hand because there’s rarely an immediate consequence to doing so. But the bigger opportunity cost is that you’re not using those resources for things that would make you happy or give you joy.

Relying on one income stream

As a family with 4 young kids, we’ve been lucky to avoid any major financial troubles. But when Covid hit back in 2020, we saw how close we came to losing my job and how quickly our income could have dried up. It was only then that we realized how foolish it was that our whole financial life was tied up in one income stream. Since then, we’ve been working to diversify our income so that we never have to feel that particular fear again.

Not talking about money in your marriage

The most common financial blunder I see in the relationships around me is a failure to be transparent with their partner when it comes to spending money. We all develop our own expectations from our past and what we saw growing up, but you can’t assume that your spouse or future partner will have those same expectations. Failure to communicate in this area is a huge source of tension and one that should be avoided at all costs.