"Regrets? I've had a few …" Frank Sinatra, one of the most famous entertainers of the 20th century, did things his way, but he was also familiar with remorse.
He's not alone, of course. We all deal with regrets — and financial ones are among the most troublesome.
Here are the leading financial regrets, according to a recent survey by Bankrate.com, along with some suggestions for avoiding them:
•Not saving for retirement early enough — This was the top regret expressed by survey respondents. Saving and investing early for retirement offers you two key benefits. First, the more time you give growth-oriented investments, the greater their growth potential. And second, by saving and investing for retirement early in your career, you will likely need to put away less money each year than you would if you waited until, say, your 40s or 50s. Therefore, if you aren't already doing so, contribute as much as you can afford to your IRA and your 401(k) or similar employer-sponsored plan. And increase your contributions every time your salary rises.
•Not saving enough for emergency expenses — You can't plan for all expenses. Your furnace might die, your car may need a major repair, you may incur a sizable doctor's bill — the list goes on and on. If you don't have the money available to meet these costs, you might be forced to dip into your long-term investments.
That's why it's important to maintain an emergency fund, containing three to six months' worth of living expenses, in a liquid, low-risk account.
•Taking on too much credit card debt — If you don't overuse your credit cards, they can be handy and helpful in many ways. Try to keep a lid on your credit card debt, though, keeping in mind that your debt payments reduce the amount of money you have available to invest for your long-term goals, such as a comfortable retirement.
•Not saving enough for your children's education — This may be perhaps the most difficult regret to address — after all, it's not easy to save for your own retirement and simultaneously put money away for your children's college educations.
However, if you can afford to save for college, try to do so in as advantageous a manner as possible. For example, some college savings plans offer tax benefits.
•Buying a bigger house than you can afford — If you tie up too much money in mortgage payments, you will have less to contribute to your various retirement accounts. While home equity certainly has some value, it generally does not provide you with the same liquidity — and probably not the same potential for growth and income — as an investment portfolio that's appropriate for your needs and risk tolerance. So think carefully before purchasing that big house; you might be better served by scaling down your home ownership and ramping up your investments.
You can't avoid all the doubts and misgivings you'll encounter at various stages of your life. But if you can reduce those regrets associated with your finances, you could well increase your satisfaction during your retirement years.
This article was written by Edward Jones on behalf of your Edward Jones financial adviser.