If you’ve ever wished for a financial do-over, you’re not alone. On average, 75% of Americans have some form of financial regret. The top three regrets reported are wishing more had been saved for retirement, not saving more money in general, and taking on credit card debt. While these are the most common regrets, there are some mistakes that are worse than others. Here’s what the experts say you should avoid.
A 401(k) loan: This should be your absolute last resort. Unless it’s an emergency, leave your 401(k) alone! Not only are you reducing your retirement savings and not earning the compound interest, but you’re probably paying a penalty in addition to paying interest. Some plans will also suspend contributions until the outstanding loan is repaid.
Mentality is so important when it comes to finances! We’ve talked before about making sure you pay yourself first – this remains true. When you have children you immediately change your mentality to think “children first, retirement later,” but that is one of the biggest financial mistakes you can make. Parents will sacrifice everything for their child. It’s what we do. However, saving to fund your child’s college education at the cost of your own retirement is short sighted. The earlier you start saving for retirement, the better. Chances are your retirement expenses are going to be higher than you’ve anticipated, and you don’t want to be a burden on your children during your golden years. Take the “put the oxygen mask on yourself first” approach. If you have the ability to do both, then great! But if it’s a choice between your retirement fund and your child’s college fund – know that your child has alternative options available to cover those expenses (scholarships, grants and student loans). There are no back-up retirement funding options.
Paying only the minimum balance: Ever notice on your credit card statement the little section that shows you how long it would take to pay off your debt if you only pay the minimum balance? And that’s assuming you do not add any additional balance to the card. It’s usually many years and a lot of interest. The rule of thumb should always be, “don’t spend more than you can pay.” Paying only the minimum balance will just get you stuck in a never-ending cycle of debt.
For more financial tips, visit your local credit union. HealthNet Federal Credit Union has proudly served Baptist Memorial Health Care employees and the health care community throughout the Mid-South for more than 60 years.
For information about the credit union, please call 901-226-1111 or visit www.healthnetfcu.org.
