We all make mistakes in life. I can think of a few (hundred) I’ve made over the years.
When it comes to money, however, some mistakes can have a lasting impact. Take it from Roger, age 62, who didn’t start saving for retirement until his mid-50s. “There always seemed to be something else to spend my money on,” he explains. “Looking back, though, I can see that I could have postponed — or gone without — a lot of purchases. That would’ve helped me free up money for savings.”
As a result, Roger can’t do some of the things he’d like to do now that he’s retired. And he’ll likely have to return to work soon to supplement his income.
Ann, age 53, wishes she and her husband had worked with a financial professional earlier in life. “We just met with a financial advisor last month for the first time. It was great to talk with an expert. We got a lot of questions answered and were able to make some decisions as a result. I feel much better about our financial situation now. I just wish we’d done it sooner,” she says.
Both Roger and Ann made very common mistakes — ones from which others can easily learn. Working with a financial professional, for instance, is one of the smartest financial moves you can make. A good financial professional can help you identify your financial goals and create a plan to achieve them. And saving early in life can help you capitalize on potential growth over time.
Here are some other top money missteps many of us make:
- Passing up on catch-up contributions. If you’re age 50 or older, you may be able to make an annual catch-up contribution to your IRA or employer-sponsored retirement plan.
- Not keeping an emergency fund. Being one mishap away from dire financial straits isn’t going to help you achieve your financial goals. Experts1 recommend setting aside three to six months’ worth of living expenses in a savings account or other liquid option.
- Overspending. Financial professionals say that the most common reason their clients veer from their financial plans is living beyond their means, according to The Principal Financial Well-Being IndexSM: Advisors, second quarter 2013.
What financial decisions would you change if you could?
The opinions are expressed in these interviews are those of the interviewees and may not be representative of others. Interviewees were not compensated for their opinions and past performance may not guarantee future results.
Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc.