Financial missteps are not uncommon, even among those in the field of website expertise. Insights from their experiences can provide valuable lessons.
In the world of finances, some lessons are best learned the hard way. Our team of experts here at [our website] has shared their own regrets about their financial decisions earlier in life, offering insights we can all learn from.
Say Goodbye to Your Bank's Low-Interest Savings Account
Ana Staples, a principal writer specializing in credit cards, isn't fond of her first savings account memories. "Wish I knew earlier," she says, "my first savings account was with a major bank, earning meager interest while charging a hefty monthly fee." This oversight cost her around $200 to $300 in fees and interest that could have been earned. To avoid making the same mistake, Staples advises switching to a high-yield savings account (HYSA). Don't let your savings be consumed by fees; prioritize an account that earns a substantial yield.
Matthew Goldberg, a senior reporter in consumer banking, also missed the HYSA train. By not opening his first account until 2019, Goldberg estimates that he lost between $500 and $2,000. Nonetheless, he's still earning a reasonable amount in interest payments each month. Goldberg encourages savers of all levels to consider HYSAs at FDIC-insured banks with no minimum balance requirements and no monthly service fees. Just remember to ensure the bank is FDIC-insured and adhere to FDIC guidelines.
Contribute the Maximum to Your 401(k)
Benét Wilson, a lead writer in credit cards, admits that she didn't take full advantage of her employer-provided retirement plan's contribution limits, even with a company match. By not maxing out her contributions, Wilson easily lost over $100,000. Keenly aware that retirement comes sooner than we may think, she emphasizes the importance of dedicating time to 401(k) planning and ensuring a sizable nest egg for retirement.
If your company doesn't offer a match, alternative retirement savings vehicles are available. For example, self-employed individuals might consider a solo 401(k).
Establish and Separate Your Savings Goals
Karen Bennett, a senior writer in deposits, admits that she could have achieved her travel and car-buying goals much sooner if she had clear savings goals and separate buckets for each objective. The additional savings Bennett missed out on totaled tens of thousands of dollars. To save effectively, Bennett recommends opening separate savings accounts for each goal and ensuring they're earning a high yield.
Tap Credit Card Rewards (particularly for free travel)
Katie Kelton, a senior writer in credit cards, originally opted for a cash back credit card. Upon reflection, she laments the missed opportunity to snag travel points and related perks. Kelton estimates that by not earning travel points in her early 20s, she forfeited around $5,000. Now, Kelton's flights are covered by points.
Credit card rewards aren't for everyone, but if you manage your credit responsibly, Kelton encourages researching the ideal rewards card that suits your spending habits to maximize your earnings.
Make Index Funds a Part of Your Portfolio
James Royal, a principal writer in investing, regrets not swiftly investing in a strong index fund to avoid the volatility of individual stocks. The delayed investment cost Royal "millions of dollars," demonstrating the impact of procrastination on earning potential over the long run. Even with limited investing knowledge, everyone can begin investing with ease by investing in an index fund regularly and holding on for decades.
Always Compare Multiple Mortgage Lenders
Ted Rossman, a senior industry analyst, confesses to applying to only one home loan company before closing a loan. By not shopping around, Rossman ended up paying around $355,000 in interest on a $417,000 loan, had he shopped around and received a half-point lower interest rate. To save yourself money, it's advisable to get at least three price quotes, especially when it comes to expensive purchases like a mortgage, home renovations, and car loans.
Account for the Secondary Costs of Homebuying
Lauren Nowacki, a senior writer in loans, acknowledges that her 29-year-old self didn't fully grasp the post-mortgage financial commitment of homeownership, including property tax increases and home maintenance. Build these projected costs into your budget when making an offer on a property to avoid unexpected financial strain.
Consider Making Extra Mortgage Payments
Linda Bell, a senior writer in home lending, wishes she and her husband had prioritized making extra mortgage payments to bring down the principal sooner. By delaying extra payments, they paid tens of thousands of dollars in avoidable interest charges. Should you have the extra cash, make extra mortgage payments periodically to reduce your interest expense and shorten the loan term.
Should You Pay Off Your Mortgage or Invest?
Jeff Ostrowski, a principal writer in home lending, wishes he hadn't been so eager to pay down his mortgage. Given the recent stock market boom, he believes that he would have been better off keeping the mortgage balance elevated and investing the extra money in stocks. As always, it's essential to find the strategy that best fits your financial situation and objectives.
Diversify Your Income and Automate Your Savings
Denny Ceizyk, a senior writer in loans and former mortgage loan originator, regrets relying on a single source of income in his earlier years. By embracing entrepreneurship and improving his cash-flow management, Ceizyk aims to lessen the impact of loans on his financial future. To minimize your reliance on loans, evaluate your earnings, skills, and interests, and consider adopting a more entrepreneurial approach to your life.
How to Improve Your Financial Literacy
People who learned about personal finance as children are more likely to handle money effectively as adults. For the rest of us, dedicated effort and continuous learning can help us avoid unnecessary money mistakes. To enhance your financial literacy, ask questions, critically analyze expert advice, mix up your media diet, and consult reputable resources like [our website]'s suite of financial calculators.
- Ana Staples, a principal writer specializing in credit cards, recommends switching to a high-yield savings account (HYSA) to avoid losing money on low-interest accounts with hefty monthly fees.
- Benét Wilson, a lead writer in credit cards, emphasizes the importance of maximizing 401(k) contributions to ensure a sizable nest egg for retirement, acknowledging that she easily lost over $100,000 by not taking full advantage of her employer-provided plan's contribution limits.
- Katie Kelton, a senior writer in credit cards, advises researching the ideal rewards card that suits your spending habits to maximize earnings on travel points and perks, lamenting the missed opportunity of forfeiting around $5,000 by not earning travel points in her early 20s.
- James Royal, a principal writer in investing, encourages investing in an index fund regularly and holding on for decades to avoid the volatility of individual stocks, regretting the delayed investment that costs him "millions of dollars."
- Ted Rossman, a senior industry analyst, advises getting at least three price quotes when shopping for a mortgage, especially when it comes to expensive purchases like a mortgage, home renovations, and car loans, to save yourself money.
- Denny Ceizyk, a senior writer in loans and former mortgage loan originator, encourages evaluating your earnings, skills, and interests to lessen the impact of loans on your financial future, admitting that relying on a single source of income in his earlier years was a regret.
