Three-quarters of all Americans wish they handled their money differently – here’s how to avoid making their mistakes.

Before we toast to 2024, we like to reflect on the past year and take stock of the good, the great, and things that could’ve been better. For many Americans, their wallets were a sore point. 

Regret #3: Not saving enough for emergencies

The general rule of thumb is to have at least three months’ worth of living expenses saved. And it’s good advice. Being financially unprepared to deal with emergencies can leave a person vulnerable to relying on credit cards and payday loans – both of which can carry steep interest rates. Sadly, most Americans don’t have that much saved. Two-thirds of Americans wouldn’t be able to cover a $400 emergency and a fifth don’t have any savings at all.

How to avoid this money regret:

• Create a separate savings account and don’t touch it unless it’s for a true emergency
• Make saving automatic. Divert a small portion of your paycheck directly to this savings account. You can’t miss what you didn’t have.
• Create a budget. Identify what unnecessary purchases can be cut like entertainment subscriptions or takeout.

Regret #2: Taking on too much credit card debt

Credit card debt rose to new record highs this year with American consumers owing a total of nearly $1 trillion. Fueled by pandemic stimulus spending sprees, approximately half of all cardholders went on to carry a balance. Bad news considering that credit card interest rates also hit a record high this year, reaching an average of 21% (but some with rates as high as 30%).

How to avoid this money regret:

• Create spending alerts. Get notified when you spend over a certain threshold
• Don’t spend more than you can afford. Pay off your credit card balance in full each month
• Take advantage of low or zero-interest offers and pay off the balance entirely before the promotional period ends

Regret #1: Not saving for retirement earlier in life

Most Americans anticipate needing around $1 to 1.5 million to retire comfortably. This is a stark contrast to the average amount that’s actually in people’s retirement funds (around $89,000). This discrepancy is largely in part to Americans getting a late start contributing toward their retirement.

Experts advise saving about 10% of your income aside for your golden years as early as your twenties.  However, 6 out of 10 Americans don’t start until their thirties or later in life. The loss of a decade’s worth of contributions can make a big difference in the long run thanks to compound interest, which allows tiny amounts of money to accrue into some serious cash.

How to avoid this money regret:

• Take advantage of employer match (if offered)
• Make retirement savings automatic with transfers set up through your bank account
• Max out your retirement plans each year. If you’re 55 or older, take advantage of catch-up contributions which allow you to contribute more than the standard limit.