There is so much to learn form the generations that came before us. The financial mistakes of older generations can do a lot to teach us what to avoid at the beginning of the road. While it may be tiresome to hear, age does bring wisdom. What seniors don’t always mention is that wisdom comes with many mistakes. So, let’s go over some of the biggest financial regrets of seniors from their twenties. Hopefully you can take some of the wisdom without having to experience the struggle these mistakes can cause!
Buying New Cars
One of the most common financial mistakes nowadays is buying brand new cars. Seniors experienced this when they were young, too. It is such a timeless issue, and new cars can be so tempting, but taking debt for a new car in your twenties must be avoided. When you’re young, your credit usually isn’t the greatest. Even if it is, your first car purchase usually comes with a higher-than-normal interest rate. These car payments can hamper your ability to save, put money toward retirement, or even pay other bills.
So many seniors warn young people to wait until they can pay cash, at least for most of the purchase price. This is why you’ll often hear elders say to negotiate the total price, not the payment price. They are right. Wait on new cars until you are ready, and get a quality used car for cash.
Not Contributing to Retirement
It can be so easy to make excuses not to invest in a retirement fund early on in life. “I’ll wait until I make more money” or “I still want to be able to have fun” often come up as reasons to push off retirement contributions. The issue is, with retirement investments so often being matched by employers, this leaves so much money on the table by the time you do retire. Not only that, but you miss out on all the interest that earlier contributions would have made. A dollar today is worth more than a dollar tomorrow, so invest in a 401(k) or Roth IRA as soon as you can. So many seniors end up living solely off of Social Security benefits, and they will be the first to tell you that is often isn’t enough.
Here are some of the retirement apps that seniors should start investing on.
| Apps | Fees and Minimum | Best For |
|---|---|---|
| Betterment | 0.25% per year no account minimum | Saving for retirement |
| Ellevest | $1-$9 per month no account minimum | Retirement especially for women |
| Personal Capital | Free | Planning retirement |
Buying a House Before You’re Ready
Being ready to buy a house seems like such a fluid concept since there are so many low-to-no down payment options for mortgage loans now. This wasn’t the case in the past, which set better expectations among earlier generations for when you are really ready. Buying a house too early can leave you drowning in high payments, expensive insurance, and surprise repair bills. Making these mistakes early on can do permanent damage to your ability to retire well, so don’t be afraid of renting! Rent until you can very safely make all payments associated with home ownership, and when you can put at least 10-20% down on your home.
Racking Up Credit Card Debt
Credit card debt is high-interest, and can inflate very quickly. It is no secret that the past few generations have struggled with credit cards, and the advent of TV shopping networks and online stores hit many seniors who stay at home all day pretty severely. If you can’t afford something with cash, don’t buy it with your credit card. A credit card is a credit-building tool, not an extra stash of fun-money.
Not Saving Enough
Lastly, one of the biggest mistakes seniors make is not saving enough. For example, not using technology to save automatically.
| Apps | Fees and Minimum | Best For |
|---|---|---|
| Digit | 30-day free trial period. $5 per month | Setting aside automatically. |
| Acorns | $1 per month | Spare change investing. |
| Qapital | $3 membership | Letting you set rules to automate savings. |
Read More:
- 3 Personal Finance Influencers to Follow on TikTok
- The Ultimate Financial Planning Checklist
- How Much Interest Does $1 Million Earn Per Year?
Trey LaRocca is a freelance writer, financial sales worker, and tech guy. When he isn’t out and about or at work, he’s usually at home enjoying some video games and a beer. Currently residing in Newport Beach, this California Kid can be found at the beach on any given weekend. Trey has years of experience in day/swing trading, financial analytics, and sales.