Survey Reveals 43% Of Americans Agree This Is The Biggest Financial Mistake Of Their Lives
This is the top financial regret that haunts Americans.
Irene Miller | Shutterstock We've all made financial mistakes. Not saving enough, getting into debt, and even making impulse purchases that we know we shouldn't. A new survey even found that "1 in 8 Americans have 'wasted' $5,000 or more in a single day on impulse spending." If this sounds like you, you're not alone.
In this survey, nearly half of Americans admitted to making a multitude of financial missteps, but one of them stood out from the rest. In fact, they found one so egregious that they called it the biggest financial mistake of their lives.
A recent survey found that 43% of Americans regret not investing earlier.
When thinking of financial regrets, taking on unnecessary debt or opening too many credit cards might be the first thing that comes to mind, but surprisingly, the general consensus among respondents was not allowing their money to work for them earlier in life.
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Lending company Clarify Capital surveyed 1,000 Americans, with an average age of 41, and found the number one reported mistake was not investing earlier (43%), followed by overspending (38%), having too much debt (29%), and not enough savings (29%).
Americans who felt they hadn't invested early enough estimated that they lost tens of thousands of dollars by waiting.
For the people who regretted not investing earlier, the average estimated net worth loss was $48,000. Writing for Clarify Capital, finance expert Emma Parker explained, "On average, they [Americans] estimated their net worth would be $40,000 higher today if they had avoided their biggest financial mistake, while 1 in 3 believed they'd have $100,000 more in their accounts."
On the list of investments that participants regretted not making earlier, the number one answer was retirement accounts at 48%. In second place, 34% wished they had invested in stocks sooner. Not investing in crypto was another common regret, and according to Parker, those interested in crypto, "estimated they could have $125,000 more in net worth today."
Starting retirement savings early certainly makes sense, but like with everything, hindsight is 20/20. The fact remains, however, that as life expectancy grows, saving for retirement early is vital. To put it into perspective, NerdWallet suggested a common expert-approved approach called the 80% rule. They argued that if your goal is to keep your current lifestyle or close to it in retirement, you need to save enough to spend 80% of your preretirement income each year.
They used the 100K example. If your salary is $100,000, you'll need $80,000 a year in retirement to maintain your current lifestyle. For anyone who feels they can barely pay the bills, let alone save, thinking that far ahead and thinking about that much money is daunting. It's understandable why so many survey respondents were kicking themselves for not starting earlier.
Many Americans said their financial regrets have taken a toll on their mental health and overall well-being.
Feelings of guilt, stress, or shame can weigh heavily on your mind if you have financial regrets. 1 in 3 Americans said they spent money to keep up or fit in with others, and many regretted this overspending. According to U.S. News & World Report, excessive overspending may signal an underlying emotional or psychological factor, and being aware of these patterns can help curb the habit.
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The majority of survey participants (55%) said their financial regrets have increased their stress and anxiety, and "34% admitted to feeling stuck or hopeless about improving their situation."
Financial mistakes have also gotten in the way of relationships, according to the survey. Out of the 1,000 participants, "About 1 in 5 said it has led to fights with a spouse or partner, and 15% admitted to keeping purchases or debt a secret from loved ones."
It's not too late to recover from your money mistakes and take control of your finances.
The survey revealed that "Nearly 1 in 4 Americans avoid financial planning because they feel like it's too late to fix past mistakes," but this is far from the truth. Twenty-six percent of participants said their financial regrets have served as a wake-up call, motivating them to make better decisions.
Taking the time to figure out why these mistakes happened and what steps you can take to avoid them can still set you up for financial success in the future. Start planning as soon as you can to maximize the amount of money you can potentially earn.
If you're unsure where to start, it may be beneficial to meet with a financial advisor or coach to get personalized advice. They can often assist with setting up a budget or help create a roadmap to getting out of debt. There are also lots of great free resources online to get you started. Take small steps and set achievable goals, and remember that consistency is key.
Kayla Asbach is a writer currently working on her bachelor's degree at the University of Central Florida. She covers relationships, psychology, self-help, pop culture, and human interest topics.
