New York Times bestseller and personal finance expert Ramit Sethi has spent the last 20 years helping ordinary people get rich. During that time, he’s heard many times about people’s biggest money regrets.
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“After 20 years in personal finance, this is the thing people regret the most,” he told his over 1 million subscribers in a recent YouTube episode about these regrets.
Here are the eight biggest money regrets Sethi has heard about the most and what to do instead.
not investing early enough
Sethi said money regrets are difficult, not because of the potential money loss but because of the time and relationships affected by the decisions.
During his 20 years in personal finance, a common regret Sethi has heard is that people didn’t invest sooner. He explained that there is no right time to invest and not investing is usually driven by fear.
To overcome this fear, Sethi encouraged his audience to start now. He said start small, even $50 a month will make a difference. The idea is that the earlier an investor starts, the sooner he can take advantage of compound growth, which is based on timing, not time, in the market, Sethi said.
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buy a big house
Sethi said the next common regret regarding money was buying a big house. Sethi suggested that hopeful homeowners run their numbers to determine whether a home is truly affordable, taking into account additional expenses like taxes, insurance, maintenance and other fees.
Of course, housing has become out of reach in many areas. According to Realtor.com, the average monthly housing cost can reach $3,500, which is equivalent to 49% of the average gross monthly income of first-time home buyers between the ages of 25 and 44 in the US.
Instead of buying a house that eats up a large chunk of monthly income, Sethi recommended considering other options, including selling.
Crypto FOMO
The next big regret was the one that caused people to lose thousands of dollars, Sethi said. This includes regretting not investing in Bitcoin or other cryptos or investing in a scam. He explained that this may be limited to people who see someone else becoming rich and want the same.
However, he cautioned, “Speculation is not the same as investment.” He told his followers that it is okay to invest 5% to 10% of a well-diversified portfolio in speculative investments, but they should follow the basic principles of investing by automating savings, investing in low-cost funds and giving it time.
loan
The next regret expressed by many was taking on too much debt. Individuals took out thousands of dollars in student loans and credit cards, only to later regret it.
As reported by Best Colleges, the average student loan debt in the US has risen to $39,375. Credit card debt is also increasing. According to Experian, credit card debt is set to increase 3.5% to $6,370 from 2023 to 2024.
Sethi encouraged his followers to avoid the temptation to spend money on credit cards just to get points. He discouraged viewers from going into debt for things like home renovation, noting that it is a luxury, not an investment. Instead, he said people should focus on paying off debt, develop a payment plan and then work to stay out of debt over the long term.
No savings for big events
Further, Sethi said that many people regret not being able to save for big events like weddings and holidays. Saving for events large and small, especially the inevitable ones, can help prevent financial hardship in the future.
Don’t know how to spend it
According to the author, not knowing how to spend money is a regret that can “steal the joy from everyday life”. He explained that people often have “spending guilt”, driven by things like money scripts established in childhood, scarcity mentality, and “confusing frugality with virtue.” He said that instead of carrying the guilt, use the money to live a prosperous life.
Never teach children about money
Unfortunately, talking about money at the dinner table is often considered a taboo subject. For generations, parents have remained silent on the subject of finances, never teaching their children money lessons. Instead, Sethi encouraged parents to strengthen their relationship with money and adopt healthy habits for their kids, as well as teach them about finances.
letting your partner do everything
The last regret people expressed to Sethi was that they were letting their partner do everything. The personal finance expert encouraged viewers to be honest about finances in order to create an equal partnership, which can help prevent feelings of resentment or alienation by one partner.
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