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According to a recent survey conducted by bankrate.com, Americans have at one point or the other had one of the following five regrets when it came to their money habits.

  • Not Saving for Retirement Early Enough

Speak with any young American about retirement and chances are you’ll hear one of the following responses: “I’m young,” “I have a long time until I have to worry about retirement,” “I don’t have the money.” Unfortunately retirement is becoming a more costly affair than in years past due to a combination of rising health care costs and increased life expectancies. According to a survey conducted by the Financial Security Index, 27% of Americans aged 65 and older regret waiting too long to start their retirement savings. Worry not because simple steps can easily mitigate the stress of saving for retirement. Putting aside anywhere from $100 to $300 a month into a retirement account at young age may initially seem fruitless but by the time of retirement will have accumulated into a comfortable nest egg.

  • Not saving Enough for Emergencies

Impromptu home repairs, medical bills, and automobile expenditures can pile up at any given moment. Although there is no way to predict when such an expense may spring up, having an emergency fund will certainly keep you better prepared for whatever emergency life throws at you. A good rule of thumb is to have enough cash put aside to cover 6 months’ worth of essential living expenses. Living expenses would include anything critical such as housing, food, health care, utilities, personal expenses, debt, and whatever else is essential in daily life. Emergency funds need not include nonessential costs and should only be utilized in emergencies. Having such a fund will certainly go a long way in maintaining financial security even in the face of unexpected expenses.

  • Taking on too much student loan debt

U.S. News reported that in 2016 student loans totaled $1.23 trillion with a delinquency rate of 11.6%. In fact, according to a study done by bestmedicaldegrees.com, the average pediatrician will pay back their student loans in their 40s. Granted most college graduates may not be as indebted as doctors, a college education is still a very costly investment and like any other investment should be thoroughly examined. On average, yearly tuition is $21,000 more at private institutions than at public institutions. Due to the fact that both institution types have their merits, prospective students and their families should give careful consideration to cost and tuition alongside all the other relevant factors when deciding on an institution. Students should use resources such as scholarships.com to help find prospective scholarships or grants. Students should be encouraged to seek out employment or “work-study” opportunities either on or off campus when possible to not only make some money on the side but to also develop a sense of financial discipline. Furthermore, students and families should plan out total costs and only take out student loans when absolutely necessary and for as a little as possible. Ultimately if student loans are taken out, students should fully understand the responsibilities which come with a loan and also devise a plan to pay off the loan as soon as possible.

  • Not saving enough for your child’s education

While parents may hope that their child’s education will be funded through scholarships and financial aid, the fact is that students often have to look for other financial resources to pay for school. While some students have no choice but to take out loans, some students turn to parents to ask for help. In order to help their children out, parents can begin saving while a child is still young to help offset future costs of school. One of the most tax efficient ways to save for college is to open up a 529 plan. A 529 plan is an education savings plan operated by a state or financial institution designed to help families set aside funds for future higher education costs. Although contributions are never federally deductible, they are deductible in some states. Assets in these accounts grow tax-deferred as long as funds are used for higher education purposes. This is more tax-efficient than traditional vehicles, such as custodial accounts, in which investors are subject to a capital gains tax and taxes on interest and dividends. Moreover, if a resident does not like the plan which is offered in their home-state, then they are free to save in whatever plan they find attractive throughout the other 49 states.

  • Taking on too much credit card debt

With the massive incorporation of credit cards or “plastic money” into everyday life, it should be no surprise that the Federal Reserve for Outstanding Debt reported an increase in the average annual credit card debt per household over the last 6 years. Exercising responsible credit habits such as paying off monthly balances in full can improve credit scores making it easier to open up future lines of credit. Simple things such as paying more than the minimum balance per month will not only help by reducing the amount of principle due, but by also increasing credit ratings. However, in some cases, credit scores can be adversely affected by high usage rates especially for 0% interest credit cards according to article published by creditkarma.com. So although you may not be paying interest on your 0% interest credit cards, carrying a high balance will still be deleterious to your credit rating turning away potential lenders. Practice tracking down all your costs as a way to deter future charges to your card and in extreme situations, leave your credit card at home and shop with cash.


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