My biggest financial regret (and the 11 easy tricks I wish I had known!)

I don't know about you, but I have a lot of financial regrets. Prior to taking a job at Money Management International, I thought I knew everything I needed to know about finances. But boy was I wrong!

The more I learn, the more my financial mistakes of the past stand out. And my biggest financial regret is actually something I am still tempted to do on a regular basis. 

But the game-changer — for myself, at least — has been my acute awareness of my financial weaknesses. And as it turns out, I’m not alone in my struggle. In fact, according to a recent online poll by the National Foundation for Credit Counseling (NFCC), the majority of respondents have the very same regret I do: habitually overspending.

Of more than 2,200 respondents, 53 percent indicated that habitually overspending was what they regretted most. Overspending far outweighed other financial concerns such as inadequately saving (18 percent), insufficiently preparing for retirement (14 percent) or not having bought a house (10 percent).

The most important lesson I’ve learned as I come to terms with my own financial downfalls is to avoid dwelling on the past. The mental energy and effort it takes to obsess and worry about everything you could have done differently is counter-productive. Rather than focusing on the “coulda, woulda, shoulda” of the situation, it’s far better to accept your past mistakes and use them to motivate your future actions.

And once you’ve pegged your specific weaknesses, you can use them to develop an action plan that will actually work for you. MMI offers the following 11 tips for turning financial regrets into financial wins:

  1. Know where you're going. Both short- and long-term goals provide a financial framework and create a vision that keeps spending on track. Write down your goals and post them in a prominent place that will act as a constant reminder. Use your goals to hold yourself accountable. But make sure you have sound reasons for establishing each goal, so you’re less likely to abandon them when the going gets tough – and trust me, it will!
  2. Discover where you are now. It can be difficult to create a realistic budget if you don’t know how you're really spending your money. So begin by tracking your spending for 30 days. I recommend carrying around a pad of paper and a pen (or you can utilize one of the many budgeting apps available for smartphones) and recording every last cent you spend. This exercise will reveal your biggest budget pitfalls, and will provide an opportunity to adjust spending to best meet your new objectives.
  3. Create a roadmap for success. A budget is the cornerstone for your financial future. Without a solid budget, you can miss warning signs, which means spending can easily spiral out of control. Get started by printing this free budget worksheet.
  4. Keep your path clutter-free. This may sound like a throwaway tip (pun intended), but I’ve found that keeping your finances organized is just as important as creating a budget. Create a cash-flow calendar, writing down all sources of income on the anticipated pay date. Next, record which bills are to be paid out of each check. If there is not enough money to satisfy all obligations during one period, re-evaluate your budget and consider reallocating funds. This will help you avoid late payments, overdraft fees and the headaches that come with them!
  5. Take advantage of shortcuts. Setting up automatic bill payments provides protection against late payments or missed payments – both of which can result in a dinged credit report, a potentially lower credit score, and a late fee – but remember to keep track of the date each of your bills is scheduled to be drafted from your account so you can ensure the funds are available.
  6. Review your credit report. Your credit report is a reflection of your person’s financial character – it’s also the basis of your credit score, which makes it a must-read, especially if you’re looking to rebuild your credit.
  7. Boost your credit score. A high credit score equals lower interest rates on loans and credit cards. In order to increase your credit score, put an emphasis on paying bills on time, not utilizing more than 30 percent of available credit, creating a mix of credit lines, not applying for more credit than is necessary, and responsibly managing credit over time.
  8. Prepare for the unexpected. Unplanned expenses always seem to come at the worst possible time, wrecking even the best of budgets. Protect yourself from potential budget-busters by creating a financial safety net. Even small amounts of money consistently deposited into a rainy-day savings account can create enough of a cushion to make it through most short-term emergencies.
  9. Accept that tomorrow will be here before you know it. Even if retirement seems like it’s a long way off, failing to plan for it will only make it that much further away. Remember that time is your money’s best friend. The longer you have to save, the larger your money will grow.
  10. Become a financial trailblazer. Becoming financially mature will involve making hard choices, changing your attitude or even changing your lifestyle, but be reassured that the changes you make now will make your financial road a lot less bumpy in the future. Continue to expand your financial knowledge and consistently challenge yourself, and you may just be surprised at how much you can accomplish!
  11. Don't be afraid to ask for directions. Remember that everyone gets lost or stuck every once in a while. Even the best money-managers can find themselves in a situation where they could benefit from seeking help from a professional organization, such as MMI. After all, our services exist to benefit you, so take advantage of them! Learn more about how our financial experts and certified counselors can help put you on the speed-track to financial success!

Note: The NFCC’s June Financial Literacy Opinion Index was conducted via the homepage of the NFCC website from June1 to June 30, 2012, and was answered by 2,205 individuals.

Jessica Horton is a former copywriter and community manager at MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.